Originally published in the August 6, 2010 edition of World Tax Daily (Copyrights Tax Analysts)
Brazil’s official gazette of August 4 published Federal Revenue Department (FRD) Normative Instruction 1060/2010, which regulates the special procedure set out by Ministry of Finance Ordinance (Portaria) 348 (published June 17) to expedite tax refunds for exporters.
Normative Instruction 1060 allows Brazilian exporters to file for tax refunds under the special procedure, which can be considered a fast-track refund procedure for some situations. The special procedure applies to refunds of:
- the Program for Social Integration contribution (P.I.S.) and the Contribution for the Financing of Social Security (COFINS) related to tax credits from costs, expenses, and allowances connected to export income as long as they have not been deducted or used by the taxpayer; and
- the federal excise tax (IPI) credit balance at the end of each quarter generated from acquisitions of raw materials, intermediate products, and packaging materials used in manufacturing activities that the taxpayer has not applied to IPI debits on outputs.
Under the special procedure, the FRD must advance 50 percent of the claimed tax refund within 30 days of the date the refund claim was filed as long as the taxpayer:
- is in good standing, meaning it holds a federal tax clearance certificate;
- has not been subject to a special tax audit procedure;
- is required to adopt Digital Tax Bookkeeping;
- has carried out exports in all four years preceding the year the tax refund claim was filed; and
- has not been denied a tax refund claim or tax setoff claim within 24 months before the filing of the tax refund claim under the new special procedure.
Because tax refunds under the special procedure must cover an entire civil quarter as from April 1, 2010, exporters may now claim tax refunds for the second quarter of 2010. Refunds relating to the third quarter of 2010 (ending September 30) will be available only after October 2010.
David Roberto R. Soares da Silva