The 1st Panel of the Superior Chamber of the Administrative Council of Tax Appeals (Carf) decided that expenses with gifts can be considered advertising expenses and deducted when calculating the Real Profit. The panel unanimously followed the understanding of the rapporteur, who denied the Treasury's appeal to reverse the lower panel's decision.
The case reached Carf after the taxpayer was fined in 2008 for collection of IRPJ on the allegedly undue deduction of a series of expenses. In the Superior Court, only the possibility of deducting expenses with gifts was analyzed. The process is 19515.001156/2008-00.
According to the rapporteur, counselor Fernando Brasil de Oliveira Pinto, expenses with gifts, as long as they are small, can be deducted as advertising expenses, in accordance with Normative Opinion CST 15/1976.
The counselor argued that, in the specific case, the gifts were CDs and bore the company's brand. Furthermore, the offer of the CD was conditional on purchases of R$1,500 or more. “The IRS understands that, when [the gift] is of low value and linked to the company's activity, it is permissible to deduct it as an advertising expense,” observed the rapporteur.