The Brazilian Federal Revenue Service (Receita Federal do Brasil — RFB) published, in the Brazilian Federal Official Gazette (Diário Oficial da União — DOU) of August 10, 2026, Cosit Tax Ruling (Solução de Consulta) No. 134, dated August 4, 2026, addressing the basis for calculating Interest on Equity (juros sobre o capital próprio — JCP), a tax-deductible form of shareholder remuneration calculated by reference to specified shareholders’ equity accounts, in light of the tax incentive reserve provided for in Article 195-A of Law No. 6,404 of December 15, 1976 (the Brazilian Corporations Law). The ruling consolidates the position of the General Tax Coordination Office (Cosit) on the effects of Law No. 14,789 of December 29, 2023, which redesigned the tax treatment of government grants and, as part of the same reform, amended Article 9 of Law No. 9,249 of December 26, 1995, to exclude that reserve from the calculation of deductible JCP.
The ruling was requested by a company in the meatpacking industry that benefits from presumed ICMS credits (créditos presumidos de ICMS) granted by the State of Rio Grande do Sul (AGREGAR Program, State Decree No. 41,620/2002). Relying on a judicial decision obtained in a writ of mandamus (mandado de segurança) filed in 2014 and on the Superior Court of Justice’s precedent in Embargos de Divergência no Recurso Especial No. 1,517,492/PR (EREsp 1,517,492/PR), the taxpayer argued that presumed ICMS credits are not subject to registration in a tax incentive reserve and, because they are recognized in earnings without being required to be allocated to that reserve, should be included in the shareholders’ equity accounts considered in the JCP calculation.
The main aspects of the ruling, and its implications for companies subject to Brazil’s Lucro Real (actual-profit) regime, are examined below.
What has changed in the treatment of government grants since 2024?
Cosit reaffirms the premise that has guided its recent rulings: as of January 1, 2024, upon the entry into force of Law No. 14,789/2023 and the revocation of Article 30 of Law No. 12,973 of May 13, 2014, no statutory basis remains for excluding government grant revenues from the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL) bases. The rule reaches both operating and investment grants, including presumed ICMS credits, when characterized as government grants, under any tax regime. The same position had already been stated in Cosit Tax Ruling No. 216, dated October 8, 2025.
One point deserves emphasis from the outset: Cosit did not classify the presumed credit received by the taxpayer as a government grant. The ruling itself notes that, depending on the regime under which a presumed credit is granted, it may or may not qualify as a grant, and that the elements needed to classify the AGREGAR Program incentive were not provided. That limitation is expressly reiterated in the conclusion, so the answer was framed in the abstract, for donations and government grants in general, and not for the Rio Grande do Sul incentive specifically.
As for the judicial decisions cited by the taxpayer, the RFB takes the view that decisions rendered under the previous regime, such as the one obtained in 2014, do not apply to taxable events occurring after January 1, 2024, because a different legal framework was examined in those proceedings. This is the RFB’s administrative position and must therefore guide the Federal Tax Administration. The temporal scope of any particular judicial decision, however, must be assessed in light of the terms of the respective judgment and of subsequent legislation.
Is the allocation to the tax incentive reserve mandatory?
From a corporate law standpoint, the creation of the reserve under Article 195-A of the Brazilian Corporations Law has always been optional, as it depends on a resolution of the shareholders’ meeting. Under the previous regime, however, the RFB conditioned the tax exclusion of grants subject to Article 30 of Law No. 12,973/2014 upon the creation of that reserve, as stated in Cosit Tax Ruling No. 169, dated September 27, 2021. Cosit Tax Ruling No. 134/2026 clarifies that, under the current regime, the creation of the reserve is no longer a condition for excluding the grant revenue from the IRPJ and CSLL tax bases, since the current framework requires its inclusion in taxable income; any tax benefit now operates, where the statutory requirements are met, through the tax credit created by Law No. 14,789/2023.
The corporate law effect nevertheless remains: if the reserve is created, the corresponding amounts may be excluded from the mandatory dividend base (Article 202 of the Brazilian Corporations Law). And it is precisely this accounting and corporate choice that now determines whether the amounts fall within the exception of Article 9, § 8, III, of Law No. 9,249/1995, provided that such allocation is permissible under applicable corporate and accounting rules. In the words of the ruling’s headnote, grants “will fall within the exception provided for in Article 9, § 8, III, depending on the accounting treatment adopted by the company” (free translation).
How is the JCP calculation base affected?
Since January 1, 2024, deductible JCP has been calculated exclusively on the shareholders’ equity accounts listed in Article 9, § 8, of Law No. 9,249/1995, as amended by Law No. 14,789/2023, a rule that also applies to the CSLL (Article 9, §§ 8-C and 11). Among the conclusions of Cosit Tax Ruling No. 134/2026, the following stand out:
- profit reserves are included in the JCP calculation base, with the express exception of the tax incentive reserve under Article 195-A of the Brazilian Corporations Law (Article 9, § 8, III, of Law No. 9,249/1995);
- amounts of donations and government grants allocated to that reserve may not be included in the base for calculating deductible JCP for IRPJ and CSLL purposes;
- the exclusion also reaches amounts originally recorded in the tax incentive reserve and subsequently allocated to share capital or to a capital reserve, pursuant to Article 75, § 1, V, of Normative Ruling RFB No. 1,700, dated March 14, 2017.
The last point warrants attention. Under Cosit’s interpretation, amounts originally allocated to the Article 195-A reserve remain excluded from the JCP calculation base even after they are subsequently capitalized, although they then form part of paid-in capital, which is ordinarily included in that base.
What are the practical implications for companies?
For companies under the Lucro Real regime that remunerate shareholders through JCP and receive government grants, the accounting allocation of those amounts has become a decision with direct tax effects. If the amounts are kept in retained earnings or in other profit reserves, they are included in the JCP calculation base, subject to the applicable timing rules (for this purpose, Normative Ruling RFB No. 1,700/2017 considers only retained earnings determined in the prior fiscal year and incorporated into shareholders’ equity after the closing of that period); if they are allocated to the Article 195-A reserve, they leave that base and, in Cosit’s reading, remain excluded even after subsequent capitalization. Although the reserve has lost, for new grants, its former role as a requirement for excluding the revenue from the IRPJ and CSLL bases, its creation continues to produce corporate law consequences and, as Cosit Tax Ruling No. 134/2026 demonstrates, tax consequences as well.
In our view, the extension of the exclusion to amounts already capitalized invites reflection. The statute expressly excludes the tax incentive reserve as one of the specified shareholders’ equity accounts (Article 9, § 8, III, of Law No. 9,249/1995), whereas Article 75, § 1, V, of Normative Ruling RFB No. 1,700/2017 looks to the historical origin of the amounts rather than the shareholders’ equity account in which they are currently recorded. That regulation may be open to challenge on the ground that an administrative rule cannot broaden an exclusion that the statute itself ties to a specific shareholders’ equity account, although Cosit’s guidance binds the Federal Tax Administration and is expected to steer tax audits.
Tax and accounting teams should revisit the profit allocation policies approved at shareholders’ meetings, the Part B controls of the e-Lalur within the Tax-Accounting Bookkeeping (ECF), and the JCP calculation records, precisely segregating the portions of shareholders’ equity originally allocated to the tax incentive reserve. We will continue to monitor developments in this area, including any further RFB guidance on whether and under what circumstances presumed ICMS credits qualify as government grants, and we remain available to discuss the practical implications of this ruling.
MILANEZ VILLELA ADVOGADOS