Review of Unused Tax Credits Becomes a Priority Amid the Transition to CBS and IBS

Brazil’s tax system imposes a significant compliance burden on taxpayers, characterized by constant legislative changes, overlapping rules, and a complex set of ancillary tax obligations. Against this backdrop, the overpayment of taxes has become a recurring issue, causing many companies to quietly accumulate significant financial assets vis-à-vis the tax authorities.

Tax credit mapping consists of a retrospective review of tax books and ancillary tax obligations covering the five-year statute of limitations provided for under Article 168, item I, of the National Tax Code. Its purpose is to identify, quantify, and enable the recovery of amounts unduly paid or credits that were not claimed due to operational inconsistencies, regulatory interpretations, or changes in case law.

In recent years, the Federal Supreme Court (STF) and the Superior Court of Justice (STJ) have established important precedents favorable to taxpayers, expanding the possibilities for tax recovery. Among these, STF Theme No. 69 stands out, known as the “case of the century,” whose reasoning gave rise to several related discussions concerning the exclusion of taxes from the calculation bases of contributions, as well as PIS and COFINS credits on inputs, ICMS credits relating to intermediate goods, and other claims with significant financial implications. In practice, however, these developments are not always reflected in companies’ day-to-day tax records, leaving legitimate opportunities unclaimed.

This scenario becomes even more relevant in light of the transition brought about by the Tax Reform. Established by Constitutional Amendment No. 132/2023 and primarily regulated by Complementary Law No. 214/2025, the reform provides for the gradual replacement of taxes such as PIS, COFINS, and ICMS by the new CBS and IBS systems. More than a legislative change, this represents a structural transformation that requires companies to review their tax credit balances before the definitive migration to the new system.

For PIS and COFINS credits, immediate attention is required. With the phase-out of these contributions as of 2027, duly established credits remain subject to the five-year statute of limitations for their use, whether through tax offsetting, cross-tax offsetting, or reimbursement, as applicable under the relevant legislation. The transition neither interrupts nor extends this period, meaning that older credits may ultimately be lost if they are not identified and properly formalized in a timely manner.

With regard to ICMS, the legislation provides that the offsetting of accumulated tax credits against the new IBS will not occur immediately or automatically. The balances will require prior approval by the relevant state authorities. Once recognized, the rules provide for the offsetting to be spread over up to 240 monthly installments, representing a 20-year period during which the funds may remain tied up, beginning in 2033.

Brazilian states establish specific rules governing the approval, transfer, and settlement of these credits. In São Paulo, for example, SRE Ordinance No. 65/2023 restructured the e-CredAc system and, in certain circumstances, allows for the early release of credits to taxpayers classified in A+ and A rating categories. In this context, accurate tax bookkeeping and the pre-validation of tax files are essential to enable the effective use of these credits.

In addition, the future implementation of Split Payment is expected to significantly alter the financial dynamics of tax collection, with taxes being automatically segregated at the time transactions are settled. This new mechanism further underscores the importance of converting historical tax credits into liquid assets before the operating environment becomes more restrictive.

Against this backdrop, specialized tax audits are no longer merely an opportunity for financial recovery but have become a strategic governance measure. This approach enables companies not only to recover amounts relating to the previous five-year period, but also to strengthen tax compliance and prepare for the full implementation of the new consumption tax system.