Brazil: Supreme Court rules over 30% Lock-In for loss carried forward

Currently, there is a 30% Lock-In for loss carried over and negative calculation bases for the CSLL tax in Brazil.

This limitation has been deemed unconstitutional by lawyers and companies alike wherefore they submitted complaint No. 591,340 to the Supreme Court. The complaint has been added to the list of rulings from the Supreme Court which are supposed to be carried out until the end of May 2019. The goal of the ruling is to provide legal certainty for the affected taxpayers.

However, it remains questionable how changes to the 30% cap will fiscally affect Brazil`s tax revenue. Additionally, it is unclear whether only the plaintiffs would retroactively profit from a ruling in their favor or whether it would apply to all affected taxpayers.