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Taxpayers obtain favorable preliminary injunctions to ensure the inclusion of ICMS in the PIS/Cofins credits base

As previously informed (click here), following the judgment of the General Repercussion Theme No. 69 (RE 574.706) by the Federal Supreme Court (STF), which established that ICMS (State VAT tax) should not be considered in the calculation base of PIS and Cofins, the Federal Government has been trying to minimize the economic impact of the decision in various ways.

One of them was the publication of Law 14.592/23, that provided for the exclusion of ICMS from the calculation of PIS and Cofins credits. However, the new legislation can be questioned, both in formal and material aspects.

In this context, it’s already possible to find some favorable decisions issued by the Judiciary.

In one of the cases, the judge stated that the STF’s judgment did not change the way credits are calculated, maintaining the current legislation on the matter. He argued that the PIS/Cofins credit did not consider the value actually paid in the preceding transaction. Thus, there’s no necessary correlation between the exclusion of ICMS from the PIS/Cofins calculation base and its inclusion in the right to credit. The ICMS paid in the acquisition of inputs continues to be an unrecoverable tax, according to the judge granting the injunction.

In another precedent, the judge in the case stated that the new system of the Treasury practically nullifies the purpose of non-cumulative taxation, because initially it generates greater revenue for the Treasury, but in the long run, it could be detrimental to the economy by increasing the tax burden.

Despite the favorable decisions, the matter is still expected to generate a lot of discussion, which will ultimately be decided by the Higher Courts in Brazil.


São Paulo State Court of Justice rules that judicial deposit resulting from attachment of assets does not exempt the debtor from late payment charges

The 15th Public Law Chamber of the Court of Justice of the State of São Paulo (TJ-SP) has ruled that the difference between the amount of the debt and the remuneration of the judicial deposit is due by the defendant in a tax foreclosure.

The Municipality of Taboão da Serra (SP) argued in its appeal that the attached amount was not sufficient to fully settle the debt.

The Chamber accepted the Municipal Treasury’s appeal and overturned a judgment that had closed the tax execution.

The presiding judge of the case, Eurípedes Faim, argued that if the taxpayer’s deposit were made as payment rather than as guarantee, the debtor would be exempt from the consequences of late payment, as there would no longer be any non-compliance. However, in the case of the deposit being made as guarantee for the execution or arising from the attachment of financial assets, the difference between the charges applicable to the tax debt and the rates used by the financial institution to remunerate the judicial deposit would be the responsibility of the debtor.

This decision is still subject to appeal, especially as it directly contradicts the provision of the Tax Foreclosure Law.


STJ rules on IRPJ/CSLL regarding interest on contract default

The Superior Court of Justice (STJ) ruled on August 8, 2023, on the appeal regarding the imposition of Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL) on amounts received as late payment interest arising from contract default.

In the case under review, the taxpayer is appealing a decision rendered by the Federal Regional Court of the 2nd Region that upheld the taxation, based on the understanding that such amounts should be considered “lost profits,” i.e., amounts that the company failed to receive due to a detrimental event, in this case, the contract default.

The taxpayer, on the other hand, argues that the Brazilian Supreme Federal Court (STF), in the ruling of Theme 962, declared the unconstitutionality of IRPJ and CSLL imposition on amounts related to the Selic rate received as a result of refund of tax overpayment and that such understanding should be applied to other interest rates.

In the trial, Justice Benedito Gonçalves decided in favor of the tax collection. He argued that STF’s Theme 962 (taxpayer’s argument) does not apply to this case, as previously ruled in the judgments of STJ’s Themes 504 and 505.

The case is still awaiting the publication of the full decision.


>> This newsletter was written by Felipe Omori, Matheus Barreto and André Koscak

For additional information, contact our Tax team:
Henrique Lopes
Victor Polizelli
Álvaro Lucasechi 
José Flávio Pacheco
Juliana Nunes
Luís Flávio Neto
Felipe Omori

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