Law 14.789/2023 offers a paradigm shift in the federal tax treatment of state incentives provided to taxpayers. In the previous model, based on Law 12.973/2014, the benefit consisted of a direct exclusion from the income tax calculation base. The new approach allows for the creation of a credit from a portion of the tax that will be levied on the benefits.

It will be possible to generate a fiscal credit at an income tax rate of 25% related to Corporate Income Tax (IRPJ) and corresponding to the outcome of the subsidy revenues. Therefore, the credit will be based only on the subsidy revenues for investment that have been granted by state regulations, which stipulate the need for investments in the implementation/expansion of the enterprise, and as such, these revenues must be closely related to these investments made. Lastly, investment subsidy revenues must be qualified with the Brazilian Federal Revenue (RFB).

The fiscal credit must be calculated in the Fiscal Accounting Bookkeeping (ECF) for the period in which the subsidy revenues are recognized and will be exempt from IRPJ, CSLL, PIS, and Cofins.

To take advantage of the benefit, the company must register with the Brazilian Federal Revenue via electronic qualification. The qualification will depend on meeting certain requirements set forth in the law, such as the need for a grant act of the subsidy that is prior to the date of implementation or expansion of the economic enterprise.

It should be noted that the calculated credit may be used to offset due or overdue tax debts or be reimbursed in cash. The period for reimbursement is 24 months.

Lastly, the law also provides for those taxpayers who did not comply with the rules in Law 12.973/2014, which was applicable until December 31, 2023, the possibility of a transaction and self-regulation, offering discounts on fines and interest, as well as installment payments on the remaining balance, in order to incentivize these specific taxpayers to come forward.