Brazil guidance on refunds of ICMS VAT
- Feb 13, 2013 | Richard Asquith
The Brazilian Appeal Court has recently ruled that refunds of Brazilian ICMS or VAT are not subject to income tax or net profit taxes.
The ruling on the 28 January 2013 covered a case whereby a business received refunds on Imposto sobre circulacao de mercadorias e service detraporte internunicipal, interstadual e de comunicacao – ICMS. The company had been receiving these investment credits for a number of years as part of an agreement to build factories and create jobs in two states, Ceare and Bahia.
However, the Brazilian tax authorities took the view that this refunds amounted to income for the business, and therefore subject to corporate income tax. But the Administrative Tax Appeals Court has now sided with the business.
You can read more about Brazilian indirect taxes here.
