Judge issues injunction on corporate income tax laws

A federal judge declared the government’s reform of the income tax law last year that created new corporate fiscal consolidation rules unconstitutional. The judge was acting on suits filed by many of the country’s largest corporations that objected to the change in the Income Tax Law that limited their ability to use tax losses from one subsidiary to offset taxable income from another. Previously, companies had 10 years to use tax losses; last year’s measure reduced this to five. The judge held that the changes violated the constitutional protection against retroactive law. The case now goes to the Supreme Court, which is not expected to take up the case until mid-2011. The judge’s decision does not affect the obligation of the companies to continue paying taxes under the new rules. (Reforma 10/12)