The Government Grants and the Income Tax Occurrence

Abstract

This paper aims to analyze the income tax occurrence on the government grants, a very controversial subject nowadays. After studying and considering the main theorys for the income tax in our doctrine, we conclude that the meaning and scope of this term for our current legal system is conditioned more properly to a theory that include any equity gains, fact that determines the inclusion of any government subsidies in the income tax’s hypothesis. With this in mind, we present an analysis of the main arguments used by the STJ to exclude from the income tax the governments grants coming from another Federal Entities. We conclude that the judgment exalted by the Superior Court is unreasonable and violates several constitutional principles and that the alleged invasion of State autonomy does not aply.