The Brazilian Federal Supreme Court (STF) established a significant precedent by linking the revocation of tax benefits to the principles of annual prior notice.
This understanding, now endowed with general repercussion, ensures that the elimination or reduction of incentives—when resulting in an indirect tax increase—will only take effect after the constitutional deadlines have passed (90 days or the following fiscal year), except for expressly stated exceptions (IOF, IPVA, IPTU, or bad faith).
Below, we highlight some key points arising from this decision that warrant closer attention regarding its effects and strategic implications:
1. Legal certainty for benefits without a defined term: Companies can plan operations based on the predictability that changes will not have retroactive effects.
2. Risk control: Assessments based on immediate revocations are subject to legal challenge, with a high likelihood of success given CARF’s alignment with this thesis.
3. Planning efficiency: Time windows (90 days/next fiscal year) allow for investment optimization or transaction acceleration.
Strategies Derived from the New Paradigm: (i) review of tax assessments that disregarded the prior year rule; (ii) inclusion of protective clauses in corporate contracts involving tax incentives; (iii) acceleration of transactions during legal transition periods.
The decision balances legislative discretion and taxpayer protection, reinforcing fairness in tax relations. In this scenario, companies should promptly assess the impacts on their respective tax regimes.
