The rise of essential expenses in Brazil during the COVID-19 pandemic

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

The rise of essential expenses in Brazil during the COVID-19 pandemic

Sponsored by

pinheirologo.png
Companies have been adopting new work from home models

Tércio Chiavassa and Lívia Dias Barbieri of Pinheiro Neto explore how businesses in Brazil are evolving to remain competitive amidst the coronavirus outbreak.

One thing is certain: the crisis caused by the COVID-19 pandemic has reinforced the importance of companies investing in technology, digital platforms and IT services. Innovative solutions have become decisive for tackling the effects of COVID-19.



The social distancing measures recommended by the World Health Organization (WHO) to reduce the dissemination of the coronavirus has not only impacted the segments that require personal assistance to consumers, but also the wider economic sector in general. The exception has now become a rule, and that work, if possible, should be done remotely.



Given the need to adapt to this new scenario, many companies needed to reinvent themselves quickly. The home office, which until then was something novel, has become mandatory.



Investments in innovative solutions, IT infrastructure and digital communication have allowed companies to continue operating, and to provide their services remotely with quality and efficiency.



In addition, companies that were not in the digital market and those which did not do business online started to invest in e-commerce and digital marketing to enable the maintenance of their operations. In this regard, a study released by the coordinator of the MBA in Marketing and Digital Business Intelligence at the Getulio Vargas Foundation, André Miceli, points out that online sales and distance learning are expected to grow between 30% and 100%.



The new reality shows us that other disbursements and expenses have become essential and relevant, since companies have come to depend on these technologies to maintain the routine and continuity of their activities remotely and virtually.



In this sense, companies have been forced to invest in the development and maintenance of customised software to meet specific needs, digital communication systems, remote monitoring and management, virtual billing and payments, information security, and virtual training applications, among others. .



In spite of the fact that investments in technology are often encouraged by the government, in the current scenario, such expenditures to meet the recommendations of social distance and external changes that affect the development of business activity, cannot be considered a mere liberality, but a need to ensure business continuity.



Thus, it is pertinent to consider that expenses with technological innovations and IT infrastructures, necessary for the development of remote or virtual work, must guarantee the right to discount PIS and COFINS credits, under the terms of Article 3, item II, of the Brazilian Federal Laws Nos. 10.637/2002 and 10.833/2003, as they have become essential and relevant for the development of economic activity. It has no longer become an option for a company to work against modernisation.



At this specific point, it is important to consider that the legal imposition of measures as a result of the COVID-19 pandemic is an additional credit to the analysis of the essentiality and the relevance of spending on technological innovations and IT infrastructure to justify the determination of PIS and COFINS credits. Although, it is important that this must be realised when considering the specific case of each company, as defined by the Superior Court of Justice (STJ) in the judgment of the Anhambi case (REsp 1,221,170).




Tércio Chiavassa

T: +55 11 3247 8648

E: tchiavassa@pn.com.br



Lívia Dias Barbieri

T: +55 11 3247 6034

E: lbarbieri@pn.com.br

more across site & shared bottom lb ros

More from across our site

Despite this boost for investors, the OECD also said that extensive reliance on income-based instruments across economies is concerning
A recent UK First-tier Tribunal decision highlights the broad application of an anti-avoidance rule to deny tax relief, say Robert Waterson and Matthew Cummings of Eversheds Sutherland
The world’s largest legal market is typically alive with activity, with tax firms jostling for position ahead of the World Tax Rankings and ITR Awards
Public funding will allow the firm to invest in lateral hires, technology and further bolt-on acquisitions, MHA said
William Paul is being replaced as IRS chief counsel just two months after starting, it is understood
Wopke Hoekstra implored US officials to ‘truly look into the facts’; in other news, the EU Council has reached a political agreement on DAC9
The US president’s flippant approach to international trade will cause chaos for corporations, but there are opportunities for intrepid tax advisers
The ruling underscores that tax authorities must provide ‘detailed, well-supported, and logically sound justifications’ when determining reference prices in tax assessments, one expert told ITR
Tax teams and the IT experts they rely on should be wary of increased compliance, says Richard Sampson, chief revenue officer at Tax Systems
The law firm was representing a businessman in the commodities sector who had previously been convicted of tax fraud
Gift this article