Accounting and Taxable Regime Applicable to Tax Credits Arising from Judicial Decisions

Abstract

The accounting recognition of tax credits arising from judicial decisions have been a highly controversial matter for companies in recent years. The Brazilian federal tax authority argues that these amounts should be taxed when the decision acquires the status of res judicata. Such an interpretation is not coherent, as it relativizes the concept of Income, ability-to-pay principle and prohibition of confiscatory tax. Based on procedural, accounting and tax law assumptions, this study aims to analyze the differences in accounting recognition and recognition for tax purposes of tax credits arising from legal decisions, as well as to investigate at what point there is a relevant tax event in the federal offset procedure and in the issuance of writ of payment.