Post by account_disabled on Mar 7, 2024 0:47:22 GMT -8
The loss of a controlled or associated company located abroad cannot be deducted from the calculation base of the Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) of the controlling or associated company in Brazil. The understanding is from the nd Panel of the Superior Court of Justice. The ministers decided that this understanding prevails even after Provisional Measure ,/, which changed the moment in which profits obtained by an affiliate or controlled company abroad become available to the national company.
The case analyzed is that of Marcopolo S/A. For the company, article of MP ,, introduced in the th reissue of the standard, partially repealed the provisions of article , paragraph , of Law ,/ The paragraph prohibits the offsetting of losses abroad with profits in Brazil. However, in the company's view, by stating that profits abroad would be considered available to the controlling company in Brazil on the balance sheet date on which they were calculated, this prohibition would be revoked.
According to the company, the change in the temporal criterion would reflect on the material criterion for the incidence of IRPJ and CSLL because it would allow taxation on profits or dividends not yet distributed to the controlling company, before excluding losses incurred abroad. In the appeal addressed to the STJ, the company argued that the legislation no longer considers these incomes as those of third BTC Number Data parties, taxable only when economic or financial availability is acquired, through the distribution of dividends, starting to consider them as if produced by the national company itself, adopting the “universal basis criterion”. For Marcopolo, this system should be fully adopted, allowing tax losses recorded by affiliates or subsidiaries abroad to be deducted from the IRPJ and CSLL calculation base owed by the Brazilian investor.
Minister Mauro Campbell Marques, rapporteur of the appeal, did not agree with the company's vision. He explained that the legal and tax relationships of investing, affiliated and controlled companies are distinct. “Each one is taxed by IRPJ and CSLL (or equivalent taxes in the country where they are located) due to their own calculation base, which is determined according to the profits and losses that each one obtained in the period”, he stated.
“However, the investing company, as it has capital employed in the other two, can make its own profit resulting from the profitability that this capital represented in the period, through the good performance of related and controlled companies, of which it is a partner”, stated the rapporteur. In this way, MP , would only have regulated the moment in which the national investor's own profit is calculated, bringing it forward from the date of distribution of dividends to that of the associate or controlled company's balance sheet.
The case analyzed is that of Marcopolo S/A. For the company, article of MP ,, introduced in the th reissue of the standard, partially repealed the provisions of article , paragraph , of Law ,/ The paragraph prohibits the offsetting of losses abroad with profits in Brazil. However, in the company's view, by stating that profits abroad would be considered available to the controlling company in Brazil on the balance sheet date on which they were calculated, this prohibition would be revoked.
According to the company, the change in the temporal criterion would reflect on the material criterion for the incidence of IRPJ and CSLL because it would allow taxation on profits or dividends not yet distributed to the controlling company, before excluding losses incurred abroad. In the appeal addressed to the STJ, the company argued that the legislation no longer considers these incomes as those of third BTC Number Data parties, taxable only when economic or financial availability is acquired, through the distribution of dividends, starting to consider them as if produced by the national company itself, adopting the “universal basis criterion”. For Marcopolo, this system should be fully adopted, allowing tax losses recorded by affiliates or subsidiaries abroad to be deducted from the IRPJ and CSLL calculation base owed by the Brazilian investor.
Minister Mauro Campbell Marques, rapporteur of the appeal, did not agree with the company's vision. He explained that the legal and tax relationships of investing, affiliated and controlled companies are distinct. “Each one is taxed by IRPJ and CSLL (or equivalent taxes in the country where they are located) due to their own calculation base, which is determined according to the profits and losses that each one obtained in the period”, he stated.
“However, the investing company, as it has capital employed in the other two, can make its own profit resulting from the profitability that this capital represented in the period, through the good performance of related and controlled companies, of which it is a partner”, stated the rapporteur. In this way, MP , would only have regulated the moment in which the national investor's own profit is calculated, bringing it forward from the date of distribution of dividends to that of the associate or controlled company's balance sheet.