The Unconstitutional Taxation of Public Service Concession Arrangements in the Initial Adoption of Law 12,973/2014

Abstract

After years of tax neutrality of the international accounting standards ensured by the Transitional Tax Regime, the Law 12,973/2014 set forth a set of rules that established the new accounting paradigms as an initial parameter of corporate taxes calculation (income and revenue taxes). In the specific case of public service concession contracts, the initial adoption of Law 12,973/2014 gave rise to the taxation of the positive difference between (i) the result that served as tax basis for calculating the taxable income until Law 12,973/2014 and (ii) the result that would be verified if the tax basis had observed the rules established in that law, assuming it had to have been applied. This paper aims to demonstrate the unconstitutionality of such prediction, based on the fact that new legislation is not allow to set forth taxation of results related to previous periods due to the principle of non-retroactivity of tax law. From the infraconstitutional perspective, it is demonstrated that there are substantial arguments to support the understanding that the aforementioned taxation – related to the initial adoption of Law 12,973/2014 – is unconstitucional and violates the premisses of income taxatiom.