Brazilian courts weigh tax treatment for power transmission firms and new consumption taxes

Brazil's Superior Court of Justice (STJ) is set to rule on Tema 1.415, which will determine whether electricity transmission concessionaires must apply the higher construction‑related tax coefficients (32% for IRPJ and 12% for CSLL) or the basic rates (8% for IRPJ and 12% for CSLL) when calculating taxable income. The decision will standardise the tax treatment of transmission revenues and affect profit‑presumption calculations for companies in the sector.

Separate commentary highlights uncertainty surrounding the future of tax litigation after the introduction of the new IBS (Goods and Services Tax) and CBS (Consumption Tax). Analysts note questions about jurisdiction, the possibility of a three‑fold increase in lawsuits, and whether the reforms will reduce disputes by unifying tax bases and eliminating credit‑generation fraud. The fragmented jurisdiction of federal, state and municipal courts could still generate conflicting rulings despite the intended simplification.