The Worker Food Program (PAT) is a government initiative established by Law No. 6,321/76 aimed at improving workers’ nutritional conditions, enhancing quality of life, and increasing productivity in the workplace.

To encourage adherence to the program, Article 1 of Law No. 6,321/76 authorizes legal entities enrolled in PAT to deduct, when determining taxable income for Corporate Income Tax (“IRPJ”) purposes, twice the expenses duly incurred with the program, thereby reducing the tax payable.

Over the years, the State has illegally restricted this right, which increased the IRPJ due from companies. As a result, taxpayers sought—and largely succeeded before—the Judiciary to strike down these limitations.

Recently, echoing the illegality set forth in Decree No. 5/91 that had already been overcome by case law, Decree No. 10,854/2021 provides that PAT expenses may be deducted in double only from the income tax due on the amount equivalent to applying the basic rate to those expenses, disregarding the term “taxable income” found in Law No. 6,321/76.

Thus, Decree No. 10,854/21 unlawfully reduced the benefit established by law—namely, by excluding from the credit calculation the tax arising from the additional 10% IRPJ.

As noted, the case law is absolutely unanimous that the full text of Law No. 6,321/76 must prevail—which authorizes legal entities participating in PAT to deduct, in determining taxable income for IRPJ purposes, twice the expenses duly incurred with the program. This understanding should once again prevail, and there are already decisions recognizing the State’s attempt to repeat past abuses through the use of a decree, overstepping the limits set by law.

Accordingly, to restore legality and generate tax savings, it is advisable to file a legal action to secure the removal of the following illegalities:

• Stipulating a reduction of the benefit based on income tax due, whereas the law established the deduction directly from taxable income, thus causing an illegal increase in the tax payable;

• Determining that the deduction would equal the IR rate applied to PAT operating expenses, whereas the Law prescribes a deduction from taxable income of twice the PAT expenses;

• Establishing a deduction limitation for employees who earn up to five minimum wages;

• Requiring coverage only of the portion of the benefit that does not exceed one minimum wage; and

• Setting a limit of R$ 1.99 per meal (IN 267/2002).

• Given the mandatory application of the law, the only way to avoid the damages perpetuated by Decree No. 10,854/21 is to file a lawsuit to set aside these illegalities.

Article written by TECH Advogados’ Tax Practice Coordinator: Maria Lucia de Moraes