The federal government has submitted to the National Congress the second complementary bill (PLP 108/24) that regulates the tax reform approved last year. The first project, PLP 68/24, was submitted in April and addressed some aspects of the IBS, CBS, and Selective Tax.
PLP 108/24 aims to regulate the IBS Management Committee, the tax administrative process for this tax, as well as provide changes to ITCMD and ITBI, and specify the allocation of revenues collected with the Contribution for the Cost of Public Lighting Services (Cosip).
Book II of PLP 108/24 addresses the ITCMD and includes modifications introduced by Constitutional Amendment No. 132 (tax reform). The project details definitions of successors and donations, presenting a non-exhaustive list of gratuitous transfers considered donations for the purposes of ITCMD incidence.
Furthermore, the PLP states that “corporate acts resulting in disproportionate benefits for a partner or shareholder, done gratuitously and without justifiable business reason, including disproportionate distribution of dividends, disproportionate split, and capital increase or reduction at different prices,” will be considered a donation for the purposes of ITCMD incidence.
In practice, this provision aims to mitigate tax planning by equating the disproportionate distribution of profits, disproportionate split, and capital reduction to donations.
This attempt to tax the disproportionate distribution of profits as a donation is not new. Some states, such as Santa Catarina, already foresee this in their legislation, arguing that the disproportionate distribution of profits implies a non-onerous transfer of rights, as the participation in profits is a right of the partners and it is the partners themselves who decide on the distribution, not the company. They also argue that the operation must have a justifiable business purpose.
The government justifies the inclusion of this provision to introduce specific anti-abuse rules, providing objectivity and predictability for both the taxpayer and the tax authority.
Although this measure aims to prevent fraud, it is necessary for the states, through an administrative procedure, to prove the absence of a justifiable business purpose, without a prior and legitimized presumption of irregularity in the transactions carried out by taxpayers.
It is important to remember that the tax assessment is an administrative act that must be motivated and accompanied by evidence obtained during the inspection procedure, formalizing the tax legal fact. The absence of a business purpose cannot be presumed by law.
If such wording prevails, it will potentially intensify administrative and judicial debates on the legality of tax planning. For argument’s sake, there are favorable precedents for taxpayers regarding the legality of the disproportionate distribution of profits, provided it is duly stipulated in the articles of incorporation and in compliance with the Civil Code.
The text of the PLP was delivered to the House of Representatives, will be analyzed by the responsible committees, and submitted to a vote in the Plenary in two rounds. After approval, the project will proceed to the Senate, which will hold a single-round vote, and finally, it will go to the President for sanction or veto.
The Tax Planning Team at Marins Bertoldi Advogados is closely monitoring the developments on this topic and is fully available to clarify any doubts and delve deeper into each business reality.
By: Mariana de Meira Todeschini and Ana Caroline Ferreira
