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Brazil's tax appeal board rules against B3 in goodwill amortization case

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Brazil's tax appeal board rules against B3 in goodwill amortization case

The higher chamber of Brazil's tax appeals board, CARF, ruled against exchange operator B3 SA - Brasil Bolsa Balcão in a case relating to the amortization of goodwill resulting from the company's 2008 acquisition of Bovespa Holding SA.

The CARF body decided to accept an appeal filed by the National Treasury's attorney-general office regarding a tax assessment on the goodwill amortization issued by the federal revenue service in 2015. The latest decision means that the tax assessment, which applies to fiscal years 2010 and 2011, will remain in place.

The latest ruling reversed a 2017 decision by CARF's lower chamber in favor of B3. In the same year, the board rejected an appeal from B3 concerning the amortization of the goodwill for 2008 and 2009. According to the federal revenue service, the tax obligations on the goodwill were under-reported.

B3 said it will challenge the decision in a Brazilian court after all CARF procedures are finished. The tax assessment was valued at 2.7 billion reais as of June 30.

B3 is the entity formed from the merger of BM&FBOVESPA SA and Cetip SA – Mercados Organizados.

As of Sept. 11, US$1 was equivalent to 4.06 Brazilian reais.