Politics · Brazil · 3 hrs ago
Businesses seek to block limits on tax credit offsets in Brazil
Brazil’s Senate approved the main text of a fiscal adjustment bill, but a vote on proposed changes is still to come.
Businesses want senators to remove limits on tax credit offsets that let companies use credits owed by the tax authority to pay taxes.
The government says the measure would help control spending as it pursues the midpoint of its budget target.
Senator Eduardo Braga revised the text to stop companies from using some credits across different types of tax, while allowing offsets within the same tax category.
Companies say cross-tax offsets are widely used because the government does not repay the credits, and limiting them could put pressure on business cash flow.
The Senate is due to vote next Tuesday on a proposal to remove the measure, introduced by Republicanos leader Alan Rick.
The bill also leaves the federal government to set the reduction rates, which may vary based on the amount or type of credit.
Brazilian businesses plan to seek changes in the Senate to block limits on companies’ use of tax credits to offset taxes.
The Senate approved the main text of a fiscal adjustment bill that would allow the federal government to limit these offsets.
Senator Eduardo Braga said his revision would restrict cross-tax offsets, while preserving offsets between credits and taxes of the same type.
Business representatives say cross-tax offsets are widely used and that the revision does not address their concerns.
A Senate vote on an amendment to remove the restriction was scheduled for the following Tuesday.
- Who
- Brazilian businesses are seeking changes. Senator Alan Rick proposed an amendment to remove the restriction.
- What
- The dispute concerns a bill allowing the government to limit companies’ use of tax credits to offset taxes.
- When
- The Senate approved the bill’s main text on November 12, 2026. A vote on amendments was scheduled for November 17.
- Where
- Brazil’s Senate.
- Why
- The government’s fiscal adjustment plan would allow limits on offsets as part of efforts to contain spending and pursue the central budget target. Businesses say the limits could tie up working capital and reduce competitiveness.
Brazilian businesses and Senator Alan Rick
Senator Eduardo Braga and the government
Scope of restriction
Brazilian businesses and Senator Alan Rick
Businesses want the provision removed and argue that companies rely on cross-tax offsets.
Senator Eduardo Braga and the government
Braga said the change would prevent cross-tax offsets but allow unlimited offsets between credits and taxes of the same type.
Economic impact
Brazilian businesses and Senator Alan Rick
Rick argued that restricting offsets would tie up working capital and reduce competitiveness, especially in exports.
Senator Eduardo Braga and the government
Braga said cross-tax offsets posed a risk to the country’s economic, financial and fiscal balance.
The Senate approved the main text of the fiscal adjustment bill, with votes on amendments still pending.
The Senate was scheduled to vote on Alan Rick’s amendment to remove the provision limiting tax-credit offsets.
- Bill
- Complementary Law Bill (PLP) on fiscal adjustment
- Restriction
- Article 6-F would allow the federal executive to set reduction rates for tax-credit offsets
- Amendment
- Senator Alan Rick proposed removing the provision
- Tax reform
- PIS/Pasep and Cofins were scheduled to end on January 1, 2027
1 source
What people are saying
We are establishing solely and exclusively the end, without limit, of cross-tax offsets; that is, if you have a tax credit related to PIS/Cofins, you can use it, without limitation, to pay PIS/Cofins.
Retaining them does not reduce the Union’s liabilities. The company pays in cash what it would have settled with a credit, the primary balance improves only on paper and the obligation is pushed into future fiscal years, while the credit loses value.
This is compulsory financing of the Treasury by the productive sector, which puts pressure on working capital and reduces competitiveness, especially in exports.