CARF Marks Centennial with Reduced Case Backlog

Brazil’s Administrative Council of Tax Appeals (CARF) celebrated its centennial in 2025 under challenging circumstances, with a strike by Federal Revenue tax auditors that began in late 2024 and continued through July 2025. The strike led trial sessions to be suspended, and by CARF’s own estimate, left BRL 156 billion in tax disputes on hold in the first two months of the year alone.

Despite the disruption continuing until mid-year, CARF bounced back with great efficiency, significantly accelerating the pace of adjudication. According to CARF President Carlos Higino Ribeiro de Alencar, the value of cases awaiting judgment decreased from BRL 1.15 trillion in early 2025 to BRL 950 billion by October, a reduction of nearly BRL 200 billion.

Among the innovations introduced during the year, extraordinary trial sessions – established by Decree No. 12,340/2024 – targeted simpler, lower-value cases, helping to reduce the backlog. CARF also began permitting hybrid trial sessions combining in-person and virtual participation.

Another key factor involved streamlining the process of establishing new precedents. CARF’s new Internal Regulations (RICARF) simplified the process for adopting these statements, reflecting its leadership’s aim of maintaining a steady workflow focused on issues that generate a high volume of repetitive decisions. The goal is to free up more time to review cases that raise novel legal questions.

Regarding case law, several topics came to prominence in 2025. Goodwill-related disputes remained among the most significant, as did debates on state tax incentives treated as investment subsidies. The latter has given rise to new disputes over the value of the tax benefit – exclusions apply where the presumed credit is conditioned on forgoing input credits, on payments into state funds, as well as in cases involving so‑called negative benefits. Precedents were also established on high-impact topics, such as making it impossible to retroactively register PIS and COFINS tax credits without first correcting ancillary obligations, and the use of input credits by exclusively commercial enterprises (retailers and wholesalers).

2026 has already seen a key development in federal tax litigation with the enactment of Supplementary Law No. 227/2026. The legislation has formally instituted an annual recess and suspension of deadlines at CARF that runs from December 20 to January 20, bringing processes at the administrative tribunal in line with long-established practices within Brazil’s judiciary.