The Extension of Public Concessions Contracts and its Impact on Investment’s Tax Amortization

Abstract

The purpose of this article is to analyze the impact of the extension of the length of a public service concession on the amortization quotas of the intangible asset corresponding to this concessionaire’s right of exploitation. Here, we will analyze the impact of this contractual extension specifically on income taxes (IRPJ and CSLL calculated on “real profit” basis), as a way to demonstrate that this adjustment will lead to an increase in the tax due in the original concession period, which may correspond to a new imbalance in the economic and financial equation of the public contract, giving rise to further measures to recompose the rate of return on the original investment.