Add a bookmark to get started

6 March 20232 minute read

Brazilian Government issued provisional measure changing PIS and COFINS calculation basis

Country-specific update: Brasil

Brazilian Government issued Provisional Measure 1159/23, which removes from the PIS and COFINS calculation basis, the value of ICMS (State VAT) levied on the sale of goods or services.

The provisional measure #1,159/23 changes the Laws #10,637/2002 and #10,833/2003, that establishes general rules on Social Integration Program (Programa de Integração Social - PIS) and Social Contribution on Revenues (Contribuição para o Financiamento da Seguridade Social - COFINS), determining that State VAT would be excluded from the calculation basis of the social contributions.

Such modification on the legislation follows Brazilian Supreme Court (STF) understanding, as per final decision issued in 2017 (and concluded in 2021), in which the Court determined the exclusion of State VAT from the domestic PIS and Cofins calculation basis.

Besides, the provisional measure also determined that State VAT should be included on PIS and COFINS credits basis, with effect from 1 May 2023.


Key takeaway

Therefore, as of 1 May 2023, taxpayers who calculate PIS and COFINS through the non-cumulative regime, must exclude the State VAT levied on the purchase invoice from the credit calculation.

It is important to note that the provisional measure will now be analysed in the plenary sessions of the Chamber of Deputies and the Senate, which may make changes to the original text.