STJ authorizes PIS/Cofins credits on substitute State VAT (ICMS-ST); check the newsletter

The 1st Panel of STJ recognized the right to claim PIS/Cofins tax credits on amounts paid as State VAT of tax substitution ICMS-ST; check the newsletter

Informative written by Felipe Omori, Matheus Barreto and André Koscak

In this Tax Law newsletter, you will find:

STJ authorizes PIS/Cofins credits on substitute State VAT (ICMS-ST)
STF rejects motion for clarification filed in “ADC 49” regarding the transfer of goods between establishments
STF will decide if fines superior to 20% of the transaction value are confiscatory
STJ decides that intermediate products generate State VAT (ICMS) credits

STJ authorizes PIS/Cofins credits on substitute State VAT (ICMS-ST)

The 1st Panel of the Superior Court of Justice (STJ) issued a decision denying a National Treasury’s appeal; and thus, recognizing the taxpayer’s right to claim PIS/Cofins tax credits on amounts paid as State VAT due on tax substitution (ICMS-ST).

Minister Regina Helena Costa argued that as the ICMS-ST is paid by the supplier and is not recovered by the seller, it represents a cost in the acquisition of the goods that should be included in the calculation basis for the credits of PIS/Cofins.

STF rejects motion for clarification filed in “ADC 49” regarding the transfer of goods between establishments

The Supreme Federal Court (STF) has denied a motion for clarification filed by Sindicom, which was admitted to the Constitutionality Declaratory Action (ADC) 49 as an “amicus curiae” (a third party allowed in the case to provide information).

The purpose of this motion was to have a decision that prevents the tax authorities from collecting State VAT (ICMS) for periods prior to 2024, even for taxpayers who did not file judicial proceedings before the judgment of ADC 49, which took place on April 29, 2021, regarding the exclusion of ICMS on interstate transactions between establishments of the same company.

However, the judges decided not to analyze the merits of the discussion. Reporting Justice Edson Fachin, argued that entities participating as “amicus curiae” in constitutional control proceedings (as “ADC”) do not have the legitimacy to file motions for clarification.

In April of this year, the STF established a temporal limitation of the exclusion of ICMS between establishments of the same taxpayer starting from January 2024; excepting the taxpayers that had filed administrative and judicial proceedings as of the date of the issuance of the merit judgment decision, which occurred on April 29, 2021.

STF will decide if fines superior to 20% of the transaction value are confiscatory

The STF will decide if fines higher than 20% of the transaction value are confiscatory.

In the case, the taxpayer is challenging the constitutionality of a provision from the State of Rondônia, which establishes a fine of 40% of the transaction value in situations such as the transportation of goods without the proper tax documentation.

There is no scheduled date for when the case will be included in trial.

STJ decides that intermediate products generate State VAT (ICMS) credits

The STJ granted the taxpayers right to tax credits on the acquisition of intermediate products, including those that are gradually consumed in the production process, provided their necessity for the company’s primary activity is proven.

The Ministers followed the understanding of the Reporting Minister Regina Helena Costa, who argued that it is possible to claim credit for the acquisition of materials used in the production process, including intermediate products, even those that are gradually consumed or worn out, provided their necessity for the company’s primary activity is proven, i.e., their essentiality in relation to the primary activity.

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