The mechanisms created for companies to compensate for the loss of ICMS (Value-Added Tax on Goods and Services) benefits resulting from the tax reform could lead taxpayers to litigation. Experts criticize the criteria established by the Federal Revenue Service (Ordinance No. 635 of 2025) for the use of resources from the ICMS Tax or Financial-Tax Benefit Compensation Fund (FCBF).
This fund, financed by the Union, will have R$160 billion, which will be distributed over the next eight years. The main problem, tax experts point out, is that the regulation includes more restrictive criteria than the law.
With the tax reform (Constitutional Amendment No. 132 of 2023), states and municipalities will begin to collect the Tax on Goods and Services (IBS), which will gradually replace the ICMS and ISS. The transition will begin in 2029, with a progressive reduction of these taxes until their total elimination in 2033.
As the ICMS (Tax on Circulation of Goods and Services) is reduced, the tax benefits or incentives linked to the tax will also be gradually phased out until the end of 2032. This is stipulated in article 128, paragraph 1, of the Act of Transitory Constitutional Provisions (ADCT). Therefore, the ICMS Tax or Financial-Tax Benefit Compensation Fund will be created (article 12 of EC 132).
Eligibility for participation in the fund was regulated by Revenue Service Ordinance 635, published on December 31, 2025. The problem, according to tax experts, is that the regulation exceeds the provisions of the Constitutional Amendment and the Transitional Constitutional Provisions Act.
The point that is likely to cause the most headaches for companies, they say, is the requirement to "demonstrate the economic impact borne" by companies for the use of the fund's resources. "There has been a shift in concepts, from an onerous tax benefit, which has been in effect since Complementary Law No. 160 [of 2017], to an economic-financial concept, requiring a counterpart that implies a negative result in equity," says lawyer Fernanda Lains, from the firm Bueno Tax Lawyers.
Fernanda explains that the term used in the ordinance, "onerous tax benefit," is a consolidated and established legal concept based on legislation and jurisprudence. However, she says, this concept does not include "measurable economic effect."
Sometimes, she says, the conditions that make the tax benefit burdensome are indirect counterparts, difficult to measure financially. "The company may be obligated to build and maintain a distribution center in a specific location, which is not a direct counterpart for the State and does not have a negative financial impact," she exemplifies.
The expert believes this should be the main point of contention in the legal battle over access to the fund, since companies are already seeking advice to understand whether or not they will be entitled to it. "It's possible to argue in court that there is a restriction on business freedom and a violation of the hierarchy of norms, since the tax authority's ordinance created a restriction that wasn't in the laws, which are hierarchically superior," says Fernanda.
Even if the company manages to measure the negative financial impact, there is a possibility of subsequent administrative and judicial challenges if the tax authorities disagree with the amounts presented, adds Flavio de Haro Sanches, partner at the law firm CSMV Advogados. "There may be a discrepancy in the quantification of the benefit, with the tax authorities trying to reduce it, and the taxpayer arguing that it was greater," he says.
Another point that could hinder companies that will be harmed by the end of tax benefits is the requirement to prove compliance with federal tax regulations. According to Leonardo Andrade, partner at ALS Advogados, taxpayers should start filing lawsuits challenging this requirement based on the argument that it violates the federal pact, since the compensation mechanism concerns state, not federal, taxes.
“The Union could not assume the prerogative of establishing a new rule to guarantee access to the fund; it should respect the rules that had already been established,” he argues. “It would be like creating a condition that was not originally foreseen and that falls under the legislative autonomy of the States,” Andrade adds.
Flavio Sanches also points out that, often, the requirements for maintaining tax compliance are not met due to service failures on the part of the tax authorities themselves. “Sometimes, a company has a debt registered in the Federal Public Sector's Information Registry of Unpaid Credits [Cadin] that it wasn't even aware of, for example, due to a fine from the National Department of Transport Infrastructure [Dnit] or the National Institute of Metrology, Quality and Technology [Inmetro],” he states. “It may even manage to suspend the collection later, but the tax authorities may not recognize the suspension, and the taxpayer may end up being prevented from doing so.”
Attorney Carolina Romanini, a tax specialist at the Schneider Pugliese firm, adds that the very status of being considered an "onerous benefit" can generate legal challenges, since it is difficult to determine whether the corresponding benefit qualifies as such.
Furthermore, Carolina points out that the Federal Revenue Service's decree introduced prohibitions for benefits intended for: maintaining or increasing commercial activities; interstate services involving agricultural and plant products in their natural state; port and airport activities linked to international trade; or granted to the Manaus Free Trade Zone or other free trade areas.
“These restrictions are not precise, because the taxpayer may understand that their benefit is not linked to international trade, for example, while the tax authorities may understand that it is. This classification has generated considerable doubt on the part of companies,” says the lawyer.
She also draws attention to other points that, while not opening avenues for litigation, could catch companies off guard. One of them is the time criterion: the tax benefit must have been granted by May 31, 2023, and may have been extended or renewed subsequently. The onerous nature of the benefit must also be declared by the granting State.
According to Carolina, the advice for companies is to "make a list of the requirements to see all the conditions that are in the legislation and try to qualify."
According to Flávio Sanches, the demand for legal advice is likely to intensify in the coming months. During this period, companies should begin to prioritize obtaining authorization to use the fund, among the various measures to be adopted to comply with the tax reform. "Companies aren't in such a rush with this yet, but the trend is for them to become increasingly attentive," says the expert.
Contacted by Valor, the Federal Revenue Service had not responded by the time this report was published.
Source: Economic Value