The Brazilian Federal Revenue Service has issued a decree on tax transactions to allow the use of tax loss carryforwards and negative CSLL (Social Contribution on Net Income) bases to amortize the principal amount of tax credits. This provision is included in Decree RFB 676/2026, published this Thursday (April 30th) in the Official Gazette of the Union (DOU).
The change comes days after a decision by the Federal Court of Accounts (TCU) that revised its previous understanding and removed a section that considered the use of tax losses and negative CSLL bases to be irregular when resulting in a debt reduction percentage exceeding 65%. The decision came after the analysis of appeals from the Attorney General's Office of the National Treasury (PGFN).
As JOTA previously reported, the expectation is that the TCU's decision will "unlock" the tax transaction mechanism, leading to the publication of new calls for proposals for transactions with the PGFN (Attorney General's Office for the National Treasury), as well as individual agreements, mainly involving companies undergoing judicial reorganization.
Many tax settlement notices are issued jointly by the PGFN (Attorney General's Office for the National Treasury) and the Federal Revenue Service. Until then, the Revenue Service regulation allowed the use of tax loss carryforwards and negative CSLL (Social Contribution on Net Profit) tax bases to settle up to 70% of the remaining balance of debts after the application of discounts.
The previous text stipulated its use to amortize fines, interest, and legal charges, and made an exception for cases of companies undergoing judicial reorganization, in which case it could also amortize the principal amount.
Now, the ordinance allows the use of credits and negative bases to "amortize the principal amount of the tax credit and the legal surcharges that apply to it.".
Legal certainty and attractive negotiations
The TCU (Brazilian Federal Court of Accounts) ruling is celebrated by tax lawyers who, in general, argue that tax losses and negative tax bases are "instruments for settling tax credits, not revenue waivers." This is the perspective of lawyer Leonardo Filipe Pestana, from Candido Martins Cukier.
According to him, "with this decision, the progress of the various transaction agreements signed by taxpayers is resumed, which corroborates the legal certainty of negotiations with the Public Authorities, with the consequent reduction of litigation." The issuance of the Revenue Service's ordinance, says Pestana, is "a reflection of this.".
Maria Andréia dos Santos, a partner at Sanmahe Advogados, agrees. “Adapting to this new scenario, the Federal Revenue Service amended RFB Ordinance 555/25 through Ordinance 676/26 to expressly provide that tax losses and negative tax bases may also be used to amortize the principal of tax credits.”.
“This is a major step forward, providing greater security for taxpayers and helping to make transactions more effective mechanisms for settling liabilities, since the restriction imposed by the TCU would have made several recovery plans unfeasible,” says the lawyer.
From a practical standpoint, tax lawyer Natália Quinalha, from the HMLaw firm, says that "now, in general, all companies can use credits to also amortize the principal amount of the credit, in addition to general surcharges and legal surcharges." She states that the change is considered important because it "significantly increases the effectiveness of tax transactions with a tax regularization instrument, especially for those companies that have a history of accumulated tax losses.".
Attorney Diego Diniz Ribeiro, partner at the law firm Daniel, Diniz & Branco – Tax and Customs Law, considers the new regulatory provision from the Revenue Service to be "quite interesting insofar as it creates an 'extension' to allow the use of tax losses and negative CSLL (Social Contribution on Net Profit) tax bases for the purpose of paying negotiated debts." It is also important for companies seeking to "negotiate tax debts and, consequently, regularize their liabilities, acting in accordance with tax requirements.".
Quinalha further points out that "the amendment was published just days after the Federal Court of Accounts recognized the possibility of this broader use of credits, which shows an alignment between the regulation and the understanding of the oversight body." In practice, he concludes, "this measure tends to make negotiations more attractive and viable for taxpayers.".
Source: JOTA