The Brazilian Federal Supreme Court (STF) has concluded the trial of the Motion for Clarification in the Direct Action of Unconstitutionality (ADC) nº 49. On the merits, the Justices had already declared the unconstitutionality of provisions of Complementary Law nº 87/1996 (Kandir Law) that provide the charge of the State VAT (ICMS) in the interstate transfer of goods between establishments of the same taxpayer, excluding such taxation since there would be no change in the ownership of such goods.

Now, in the Motion for Clarification presented by the State of Rio Grande do Norte, the Court has modulated the decision to determine that its effects will only take place as of 2024, except for administrative and judicial proceedings pending conclusion until the date of publication of the minutes of the decision on the merits, of April 29, 2021.

In addition, the Court established that taxpayers will have the right to maintain and transfer ICMS credits between their branches, if there is no new law to regulate such aspects until next year.

Procedurally speaking, this modulation reflects a questionable position of the STF regarding the criteria for restricting the effects of its decision. The law stipulates that modulation must be declared by a two-thirds majority of its members (eight Justices).

In this case, all the Justices voted for some type of modulation, but there was no majority of eight votes for any of the proposed theses. At the session on April 19, however, the Justices agreed that the required quorum only applies to the decision of whether or not to apply modulation, while the actual criteria for modulation could be decided by a simple majority. In this case, the winning group had six votes.

Thus, taxpayers who have not paid ICMS on their transfers between establishments and do not have a pending lawsuit filed before April 2021 may be charged for the uncollected tax on such operations.


For further information, please contact:
Henrique Lopes
Victor Polizelli
Álvaro Lucasechi 
José Flávio Pacheco
Juliana Nunes
Luís Flávio Neto
Felipe Omori

Leave a Reply

Your email address will not be published. Required fields are marked *