Debit Balance Offsetting: From A Benefit To Companies To A Thorn In Their Side

The tax offsetting, currently regulated by Federal Revenue's Normative Instruction (IN/RFB) no. 1 300/12, is a tool extremely effective for companies computing or accruing credits subject to offsetting.

However, lately, it has been increasingly frequent to observe rulings that do not ratify companies' set-offs on the argument that "the credit informed in the Declaration of Set-off ("DCOMP") is not sufficient to prove the settlement of the payable Corporate Income Tax ("IRPJ") and Social Contribution on Net Income ("CSLL") and the computed debit balance."

This has been occurring because, by a coincidence, companies computing and paying Income Tax based on the taxable-income method have been increasingly resorting to offsetting to settle monthly payments of the IRPJ and CSLL - based on estimates thereof - and have been computing debit balances in the end of the calendar year.

The non-ratification of set-offs associated with estimates of the IRPJ and CSLL has been generating, in a ripple effect, the non-acknowledgment of the debit balances determined in the year end, and that situation has been causing a multitude of proceedings.

Since we are in the front of two different decisions, but having a same substantiation (non-acknowledgment of the credit right used to offset the estimated IRPJ or CSLL), we consider it fully possible to apply to these cases articles 103 and 105 of the Code of Civil Procedure, which provide for the principle of connection in civil proceedings, in supplement to art. 47 of the Internal Regulation of the Administrative Council of Tax Appeals ("CARF"), with the purpose of preventing contradictory decisions.

Furthermore, that leads to a double collection of the same taxable event ("bis in idem"), given that, undoubtedly, the final result of the offsetting related to IRPJ and CSLL estimates will not cause any negative impact on the computed debit balance amount, because either the decision favorable to the taxpayer will determine the cancellation of the estimates via offsetting (validation of the credit), or the decision unfavorable to the taxpayer will determine that the latter shall settle the debts (estimates) indicated therein for offsetting, but still not offset, what will confirm, as a consequence, the ground for the respective credit right.

This is so true that the own Brazilian Federal Revenue, by means of its Office for Coordination of...