Angelo Francisco Barrionuevo Ambrizzi
Lawyer at Marcos Martins Advogados
COSIT Internal Consultation Solution No. 13/2018, which deals with the exclusion of ICMS from the PIS and COFINS calculation basis, was published on the Brazilian Federal Revenue Service website on the 23rd.
It applies only to taxpayers who have a final court decision authorizing the exclusion and deals with both the procedures and the amount to be excluded.
According to the Revenue Department’s understanding, the amount to be excluded from the basis for calculating the contributions is not the ICMS highlighted on the invoices, but only the monthly ICMS payable.
In practice, this drastically reduces or even nullifies the possibility of tax savings with the exclusion, since the ICMS to be paid is not, as a rule, the ICMS highlighted on the invoice.
Under the non-cumulative system, the ICMS to be paid is calculated by offsetting the total tax due on outgoing transactions against that charged on previous incoming transactions.
To put it simply, if a taxpayer buys goods for R$100.00, with ICMS tax of R$18.00, and resells these goods for R$150.00, with ICMS tax of R$27.00, he will be credited with the R$18.00 related to the purchase and will pay the state coffers R$9.00 (R$27.00 – R$18.00).
According to the Federal Revenue Service, the ICMS to be excluded from the PIS and COFINS calculation basis, in the example above, would only be R$ 9.00, and not the R$ 27.00 due on the taxpayer’s outgoing transaction.
If the taxpayer has an ICMS credit balance, it will not be able to exclude any amount from the taxpayers’ calculation base, which could even affect the amount to be refunded over the last 5 (five) years.
This understanding goes against the decision handed down by the Federal Supreme Court in Extraordinary Appeal No. 574.706, creating enormous legal uncertainty and is likely to lead to endless administrative and judicial discussions.
It is therefore of the utmost importance to adopt administrative and judicial legal measures to prevent this understanding from jeopardizing the possibility of reducing the tax burden achieved as a result of the STF’s decision.
In this context, Marcos Martins Advogados Associados puts its Tax Law team at the disposal of any interested parties to clarify doubts about this understanding and the measures that can be adopted to prevent it.
