Federal Government Implements New Taxation Rules on ICMS Benefits with MP 1185

• The Senate has approved the Provisional Rule (MP) 1185, which changes the taxation of government subsidies.
• The MP targets the ICMS tax benefits, which have been exempt from taxation by the Federal Government.
• Under the new mechanism outlined in the MP, the subsidy amount will be included in the calculation basis of various taxes.
• Taxpayers may prequalify with the Federal Revenue and receive a tax credit for the IRPJ tax.
• This measure increases the tax burden for many taxpayers and revokes the provisions of Law 12,973/2014.
• There are concerns about the legitimacy of this measure and its impact on taxpayers.
• Arguments include violations of the federal pact and reciprocal immunity, as well as violations of the constitutional concept of income and revenue.
• There is also an argument that the new taxation cannot be applied to ICMS benefits instituted before the new Law.
• The Law provides for the possibility of a special arrangement for taxpayers to regularize debts that do not comply with the rules set by Law 12,973/2014.
• The MP also includes modifications to the calculation method of the Interest on Equity (JCP).

Source: klalaw.com.br

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---