Juliano Marini Siqueira
Lawyer at Marcos Martins Advogados
In Brazil, e-commerce grew by 24% in 2014 compared to 2013, with revenues of R$35.8 billion. 103.4 million orders were placed over the internet, 17% more than in 2013, and for 2015, E-Bit predicts a turnover of approximately R$ 43 million.
The information is available in the WebShoppers report carried out by E-Bit[1].
Given the growth in the number of transactions carried out over the internet, e-commerce has become one of the main areas of dispute between the states with regard to the Tax on Circulation of Goods and Services (ICMS).
This is because, until the end of 2015, the ICMS tax on goods bought at a distance, whether over the internet or by telephone, remained entirely with the state where the seller’s online store was located. The state of residence of the buyer, or the destination of the goods, had no share in the tax collected.
As a result, most of the tax collection was concentrated in the states of São Paulo and Rio de Janeiro, which are home to the majority of shopping sites, and at the other end, the loss was concentrated in the North, Northeast and Midwest regions.
In order to put an end to this situation, Constitutional Amendment 87/2015[2] was enacted by the National Congress in April 2015, the result of three years of discussions on the subject. The Constitutional Amendment created a timetable to equalize the distribution of ICMS on virtual purchases with other types of consumption, given that in purchases made in physical stores, part of the interstate ICMS remains with the producing state and part with the consuming state.
According to the senators who took part in the voting process, this measure was necessary based on a realistic and current view of the retail scenario in the country, since e-commerce has brought a new reality to the economic balance between the federal entities, which must be corrected by redistributing the collection of ICMS between the states.
As of this year, the tax in question will be shared out on a staggered basis: in 2016, the tax on transactions will be divided as follows: 60% to the state of origin and 40% to the state of destination. In 2017, the rate will be 40% at origin and 60% at destination; in 2018, 20% at origin and 80% at destination; and in 2019, 0% at origin and 100% at destination.
It turns out that, with this new sharing rule, taxpayers opting for Simples Nacional would have a significant increase in their tax burden, as they would pay separately the portion of ICMS that concerns the state of destination. Before the Constitutional Amendment, the amount of this tax was already included in Simples.
The obligation to include companies in Simples Nacional was determined by clause nine of Agreement 13/2015[3], which was signed by Confaz as a result of Constitutional Amendment 87/2015.
However, the Simples Nacional tax regime was created to differentiate and, above all, favor entrepreneurs with lower economic and contributory capacity, since the taxes due are calculated by applying a single rate on monthly gross revenue and, subsequently, the proceeds are shared between the taxing entities. ICMS is therefore not levied on each sales transaction.
In addition, Simples Nacional was regulated by Complementary Law 123/2006[4], which sets out the taxes for which payment will be made through a unified collection document, including ICMS, as indicated in article 13, item VII.
In view of this reasoning, clause 9 of the agreement signed by Confaz is totally illegal as it is in breach of Complementary Law 123/2006.
On September 3, 2015, the Attorney General’s Office itself, in Opinion No. 1226/2015, expressed its opposition to the imposition of the new ICMS rules on micro and small companies that have joined Simples. According to the opinion, the differentiated treatment for these companies should be respected. Below is an excerpt.
In fact, alongside the constitutional regulation of taxes, the Magna Carta enshrines differentiated and favored legal treatment for micro-enterprises and small businesses, according to articles 179[5] and 170[6], item IX, providing, in the tax sphere, that complementary law defines this treatment, including special or simplified regimes in the case of ICMS (Constitution, article 146[7], III, “d”), and there has been no change to this constitutional provision with the advent of Constitutional Amendment No. 87. (emphasis added).
Applying the new rules of this state tax to companies adhering to Simples would undoubtedly threaten the survival of their business activities. This is because legal entities of this size are not financially prepared for such a change, not only because of the increase in the tax burden, but also because of the whole procedural adaptation phase.
With this in mind, the Brazilian Chamber of Electronic Commerce – Camara.net, sent a letter to SEBRAE’s Deliberative Council, clarifying the following:
The overwhelming majority of these companies (micro and small companies opting for the Simples Nacional regime) are not prepared for this change and cannot afford to adapt to it, given that giants in the sector have already “invested” more than R$1,000,000.00 just in systems and adaptations to comply with the new rules. (Ofício 1901/2016 Camara.net. p. 6)
Observing all these issues, on January 29 the Brazilian Bar Association filed a Direct Action of Unconstitutionality – ADI No. 5.464[8] with the Federal Supreme Court (STF), asking for the suspension of the clause that obliges Simples companies to follow the new ICMS distribution rules. According to the lawsuit, the article ignores the law that establishes that micro and small companies are entitled to unified taxation.
The OAB requested an injunction to suspend the effectiveness of this clause. The Rapporteur of the action, Justice Dias Tóffoli, took note of the reasons raised in the Direct Action of Unconstitutionality and recognized that the requirements for granting the injunction were present.
For the Minister, not suspending clause nine would jeopardize the maintenance of the business activities of companies opting for Simples, since it burdens taxes payable, brings bureaucratic and financial costs, makes products more expensive, makes it more difficult to comply with ancillary obligations, increases “compliance costs at a time of economic crisis” and hinders the viability of small businesses that sell products to other states.
As a result, since February 18, taxpayers opting for the Simples Nacional tax system who carry out interstate transactions and services that are destined for final consumers who are not ICMS taxpayers are exempt from paying the portion of the tax corresponding to the difference between the internal rate and the interstate rate.
[1] Webshoppers. Available at: < http://www.ebit.com.br/webshoppers>. Accessed on: February 29, 2016.
[2] BRAZIL. Constitution (1988). Constitutional Amendment 87 of April 16, 2015. Available at: <http://www.planalto.gov.br/ccivil_03/constituicao/Emendas/Emc/emc87.htm>. Accessed on: 29 Feb. 2016.
[3] BRAZIL. National Finance Policy Council. ICMS Agreement 13, of March 18, 2015. Available at: < https://www.confaz.fazenda.gov.br/legislacao/convenios/2015/cv013_15>. Accessed on: 29 Feb. 2016.
[4] Complementary Law 123/2006:
Art. 13. Simples Nacional implies the monthly payment, through a single collection document, of the following taxes and contributions:
VII – Tax on Operations Relating to the Circulation of Goods and OnPrestações de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação – ICMS.
[5] Art. 179. A União, os Estados, o Distrito Federal e os Municípios dispensarão às microempresas e às empresas de pequeno porte, assim definidas em lei, tratamento jurídico diferenciado, visando a incentivá-las pela simplificação de suas obrigações administrativas, tributárias, previdenciárias e creditícias, ou pela eliminação ou redução destas por meio de lei.
[6] Art. 170. A ordem econômica, fundada na valorização do trabalho humano e na livre iniciativa, tem por fim assegurar a todos existência digna, conforme os ditames da justiça social, observados os seguintes princípios:
IX – tratamento favorecido para as empresas de pequeno porte constituídas sob as leis brasileiras e que tenham sua sede e administração no País.
[7] Art. 146. Cabe à lei complementar:
III – estabelecer normas gerais em matéria de legislação tributária, especialmente sobre:
d) definição de tratamento diferenciado e favorecido para as microempresas e para as empresas de pequeno porte, inclusive regimes especiais ou simplificados no caso do imposto previsto no art. 155, II, das contribuições previstas no art. 195, I e §§ 12 e 13, e da contribuição a que se refere o art. 239.
[8] BRASIL. Supremo Tribunal Federal. Ação Direta de Inconstitucionalidade – ADI nº 5.464. Disponível em: <http://www.stf.jus.br/portal/processo/verProcessoAndamento.asp?incidente=4918380>. Acesso em: 29 fev. 2016.
