These updates aim to consolidate the RFB’s guidance, reducing legal uncertainty and the risk of tax disputes.
Brazil’s tax authority, the Federal Revenue Service (RFB) announced that it updated Normative Instruction RFB No. 1,700/2017 on 4 December 2025 to clarify the tax treatment of credit losses and interest on equity (JCP).
The changes respond to requests from financial institutions and other entities supervised by Brazil’s central bank, aiming to standardise procedures and reduce ambiguity.
Key updates include:
Debt settlements
Assets or rights received in settlement must be recorded at the lower of the credit value, any court decision, or book value of the asset.
Deduction of recovered losses
For credits delinquent until 31 December 2024, institutions can choose between a full deduction and a fixed monthly deduction (1/84 or 1/120 of the value), simplifying calculations without affecting public finances.
Interest on equity (JCP) calculations
Only retained earnings from the previous fiscal year can be included. The objective is to prevent the use of temporary results that could unduly reduce the calculation bases for Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL).
These updates allow the Federal Revenue Service (RFB) to consolidate its guidance on the matter, reducing the risk of legal uncertainty or tax disputes.
More details can be found in the Normative Instruction RFB No. 2,296, of 3 December 2025, published in the Official Gazette on 4 December 2025.
