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Brazil tax board questions B3's goodwill amortization for 2014-2016


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According to Market Intelligence, April 2023

Brazil tax board questions B3's goodwill amortization for 2014-2016

B3 SA - Brasil Bolsa Balcão said Brazil's tax authority questioned again its amortization of the goodwill relating to the acquisition of Bovespa Holding SA in 2008, this time for tax years 2014, 2015 and 2016.

The taxes in question amount to about 3.09 billion reais related to the IRPJ corporate income tax and about 1.12 billion reais tied to the CSLL social contribution, with both cases including fines and interest, according to an Oct. 18 filing.

The notice is based on an alleged undue reduction of the basis for the income tax and social contribution calculations, which reflect the value assigned to the goodwill, B3 said.

The lower chamber of Brazil's tax appeal board CARF earlier issued a judgment favorable to B3 relating to the tax assessment of the goodwill for tax years 2012 and 2013. However, the upper chamber of the same tax board maintained the goodwill tax assessment for 2010 and 2011.

The stock exchange said it will challenge the latest assessment and maintained that the creation of the goodwill conformed with tax laws. It will also continue to amortize, for tax purposes, goodwill created in other transactions.

As of Oct. 18, US$1 was equivalent to 4.13 Brazilian reais.