The Federal Revenue Service has blocked the possibility of a beverage industry taking advantage of PIS and Cofins credits on expenses with plastic film and cardboard used to compact and transport sets of cans or bottles. The decision is in Consultation Solution No. 177, published by the General Coordination of Taxation (Cosit).<\/p>\n\n\n\n
According to the tax authorities, only goods and services used in production that are relevant or essential can generate PIS and Cofins credits. Expenses incurred after the production process is completed, it adds, would not be considered inputs.<\/p>\n\n\n\n
\u201cTherefore, film paper and cardboard used for the purpose of transporting goods are not considered inputs, preventing the calculation of credits under this title in the non-cumulative calculation of the contribution to PIS\/Pasep and Cofins\u201d, says the Federal Revenue Service in the consultation solution.<\/p>\n\n\n\n
The guidance comes in the context of high judicialization over expenses that can generate credits for the purpose of deducting the amount to be collected from PIS and Cofins in the cumulative regime, in which a rate of 9.25% is required on companies' revenue.<\/p>\n\n\n\n
Tax lawyers question the guidance. They claim that it goes against the understanding of the Superior Court of Justice (STJ) which, in a repetitive appeal, defined that the concept of inputs for the purposes of taking credit is the essentiality or relevance of the good or service for the development of the taxpayer's economic activity (REsp 1771170).<\/p>\n\n\n\n
\u201cI don\u2019t see it as clear that the STJ restricted crediting for expenses incurred in the production process. The Court talks a lot about economic activity,\u201d says tax lawyer Thais Veiga Shingai, from Mannrich e Vasconcelos Advogados. According to her, there should be a discussion about what the production process is. \u201cFor the IRS, it ends when the can of beer is ready, for example.\u201d<\/p>\n\n\n\n
The tax authority bases its restrictive understanding on the STJ decision. It states that, according to Cosit Normative Opinion No. 5, of 2018, expenses with packaging for the transportation of finished goods cannot be considered inputs. The opinion is an analysis by the Federal Revenue Service on the application of the higher court's ruling.<\/p>\n\n\n\n
\u201cThe IRS does not consider that the industry uses the material to prevent bottles from colliding. Furthermore, by packaging bottles in packs of 6 or 12, it ends up transforming the product into another one, which will be offered to the consumer,\u201d says Leonardo Castro, partner at Bueno e Castro Tax Lawyers.<\/p>\n\n\n\n
According to the report from the alcoholic beverage industry made during the consultation, packaging materials would be \u201cessential\u201d in the last stage of the industrialization process because it is what makes it possible to transport the merchandise, which is fragile.<\/p>\n\n\n\n
These materials, the manufacturer adds, also have the function of packaging the beverages in batches intended for sale. Palletizing, the company states, would be the last stage of the activity in the factory before the goods are sent to distributors and retailers.<\/p>\n\n\n\n
The Administrative Council for Tax Appeals (Carf) has issued isolated decisions on the subject. In 2019, for example, the 3rd Chamber of the 2nd Ordinary Panel allowed the taxpayer to claim credit for expenses on extensible paper, paper labels, cardboard boxes and cardboard (case no. 13502720469\/2012-00).<\/p>\n\n\n\n
Lawyer Leonardo Castro also draws attention to the fact that, in the consultation, the IRS denies the crediting of PIS and Cofins, but leaves room for the taking of IPI credits on the same expenses, if the taxpayer proves that he uses the materials in the production process. \u201cIt is contradictory and even schizophrenic.\u201d<\/p>\n\n\n\n