Use of PAT as a Tax Incentive

On November 10, 2021, the Federal Government, through Decree No. 10,854/2021, brought significant changes to the Worker’s Food Program (PAT) as a means to enhance its effectiveness as a tax incentive and provide better clarity regarding its administration. These changes impact the deductibility of expenses from Corporate Income Tax (IRPJ) for companies that participate in the program.

What is PAT?

The PAT, established under Law No. 6,321/1976, was designed to promote the health and nutrition of employees by encouraging employers to provide meal or food assistance. Companies participating in the program benefit from tax incentives, including the deduction of food-related expenses from their taxable income, provided they meet specific requirements.

Recent Changes under Decree No. 10,854/2021

The Decree introduced new regulations to address certain ambiguities surrounding the use of PAT incentives. Specifically, the following points were clarified:

1. Eligibility for Tax Deduction: Companies can deduct expenses incurred under PAT from their IRPJ base, provided these costs directly relate to food or meal assistance for employees.

2. Limits on Deductibility: The amount deducted cannot exceed 4% of the IRPJ due. Any excess expenses must be borne by the company and will not be eligible for deduction.

3. Regulatory Oversight: The new decree emphasizes stricter compliance and transparency in how companies administer PAT-related benefits.

Implications for Employers

The updated rules reinforce the importance of compliance to avoid penalties or the disqualification of tax incentives. Employers are advised to:

• Review their current PAT implementation;

• Ensure that all expenses comply with the legal framework;

• Maintain accurate records to substantiate deductions.

Final Considerations

The changes introduced by Decree No. 10,854/2021 aim to modernize the PAT framework and strengthen its role as a social and fiscal policy. For companies, this means balancing the benefits of tax incentives with the need to adhere to stricter compliance measures.

As new updates and interpretations of the decree arise, companies should consult legal and tax professionals to maximize their use of the program while minimizing risks.