Tax | Brazilian Superior Court of Justice Sets Precedent That Impacts Companies’ Tax Organization and Strategic Planning

The Brazilian Superior Court of Justice (STJ) has set a precedent that restricts taxpayer’s allegations in tax enforcement proceedings.

It is no longer possible to discuss matters regarding tax credits compensation (tax credits used to pay tax debts, which is performed administratively) within the scope of tax enforcements in the Judiciary system.

In other words: a very important procedural aspect has changed, what will affect the way tax debts are discussed and even companies’ daily businesses. When the dispute is about tax credits compensation, it demands a whole discussion apart, in an annulment lawsuit or recovery of undue payments lawsuit (outside of execution proceeding), which implies additional costs and a previous strategy regarding the guarantees for each lawsuit.

In such context, it is important that companies act quickly in order to: (1) redefine strategies due to the impacts of this procedural issue on existing processes; (2) analyze the kind of warranty (cash, insurance, bank guarantee, real estate) that has been or will be presented; and (3) plan the filing of independent lawsuits to discuss tax compensation matters and to recovery undue tax payments.

It is up to each company to verify the possible direct and indirect tax impacts arising from the new precedent, as well as (re)planning strategies on how to discuss tax debts in court, both in existing and future lawsuits.


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