Protective masks against COVID-19 and alcohol gel provided to employees in the production area of an industry are inputs and generate PIS and Cofins credits. The guidance is in Cosit Consultation Solution No. 164, published on Friday by the Federal Revenue Service. However, the same personal protective equipment (PPE) and masks intended for protection against COVID-19 that have been provided by the company to workers in administrative activities are not inputs.<\/p>\n\n\n\n
In the guidance, the IRS explains that, although they are not considered PPE, protective masks that, in compliance with the exceptional and temporary rule provided for in the legislation to combat COVID-19, have been provided by the company to workers allocated to its goods production activities may be considered inputs for the purposes of using PIS and Cofins credits, during the period in which the legislation on the pandemic is applicable.<\/p>\n\n\n\n
PPE and masks that have been provided by the legal entity to workers allocated to administrative activities cannot be considered inputs for the purposes of appropriating credits in the non-cumulative calculation of the contribution to PIS and Cofins.<\/p>\n\n\n\n
The inquiry was made by a company that manufactures parts and accessories for vehicle engines. For the IRS, alcohol gel and protective gloves can be classified as PPE. Equipment provided for production activities are inputs, but those intended for administrative activities are not.<\/p>\n\n\n\n
Masks are not considered PPE, but their use has become mandatory due to legislation to combat COVID-19. Since they are used by legal requirement, they are an input in productive activity. But in administrative activity, like PPE, they are not.<\/p>\n\n\n\n
\u201cThe consultation solution also gives service providers room to do so. Commerce is still controversial. But even in the administrative part of the industry, the legislation requires the use of masks, and what happens?\u201d asks tax specialist F\u00e1bio Calcini, partner at the firm Brasil, Salom\u00e3o e Matthes.<\/p>\n\n\n\n
According to Pedro Lima, advisor at the Administrative Council of Tax Appeals (Carf), where he judges the issue, and author of a book on \u201cpandemic inputs\u201d, the IRS guidance is the first on the subject.<\/p>\n\n\n\n
According to Lima, PPE is required by law and Carf allows the use of credit for this input on a large scale. The advisor believes that the matter will be taken to court with the understanding of the IRS that it rules out credits in the case of employees in the administrative area.<\/p>\n\n\n\n
Not allowing inputs for administrative purposes goes against the precedent of the Superior Court of Justice (STJ) on the subject, according to Marcelo Bolognese, from Bolognese Advogados. According to the lawyer, the items may or may not be essential or relevant to the company as a whole. But it cannot be said that they are partially essential. Furthermore, the IRS did not address the issue of purchasing thermometers or totems at the doors of establishments containing alcohol gel.<\/p>\n\n\n\n
In one case, the 3rd Federal Court of Sorocaba denied the request of an electrical materials retailer (case no. 5003996-98.2020.4.03.6110). The company, citing a precedent set by the Superior Court of Justice, stated that supplies should be analyzed according to their essentiality or relevance. During the pandemic, it said, it had to make extraordinary expenses to provide masks and alcohol gel for its employees.<\/p>\n\n\n\n
Judge Sylvia Marlene de Castro Figueiredo denied the request. According to her, the idea of inputs directly related to the company's core business must be taken into account, which is not the case in the case of expenses incurred to adopt measures to contain the pandemic.<\/p>\n\n\n\n