SUPREME COURT TO ANALYZE THE CASE OF THE EXCLUSION OF ICMS FROM THE BASIS OF PIS/COFINS ON APRIL 29.
The long-awaited trial of the Federal Government request for clarification in the case of exclusion of the ICMS (State VAT) from the basis of PIS/COFINS (federal social contributions on revenue) at the Supreme Court (RE nº 574.706 – Subject nº 69) is about to gain another chapter.
Justice Luiz Fux scheduled the case for judgment by the Plenary of the Supreme Court on April 29, 2021.
In early March, Fux sent an official letter to the Federal Regional Courts advising them not to send new appeals to the STF until the final judgment of the leading case, to avoid unnecessary movement of cases.
According to a note released by the STF, the letter did not represent an order for the suspension of the proceedings currently underway but served only as an orientation to the Regional Courts.
There were rumors that the case could be docketed soon, which would justify such orientation, since after the trial by the STF the Regional Courts themselves should apply the understanding to each case and, therefore, there would not be any reason to send the cases to the Supreme Court. These rumors were confirmed, and the Court scheduled the case for the trial.
Since 2017, taxpayers have been waiting for the judgment of the motion for clarification filed by the Federal Government in this case. Among the issues to be discussed are the following: (i) the modulation of the effects of the decision that ruled unconstitutional the inclusion of VAT in the PIS/COFINS calculation basis; and (ii) the quantification of the VAT to be excluded from the calculation basis of those contributions, whether the VAT shown on the invoices or the VAT actually paid by taxpayers.
PIS/COFINS ON ICMS PRESUMED CREDIT
In a virtual session concluded on 03/12/2021, the STF continued its analysis of Theme no. 843 of the General Repercussion list, which discusses the constitutionality of including VAT presumed credits resulting from tax incentives granted by the States and the Federal District in the PIS and COFINS calculation basis.
The taxpayer claims that the amount corresponding to the VAT presumed credit represents a mere reimbursement of cost, not constituting revenue or turnover. On the other hand, the National Treasury claims that the VAT credit definitively enters the taxpayer’s patrimony and, for this reason, it represents revenue and should be computed into the PIS/COFINS tax calculation base.
The session was suspended with 6 votes in favor of the taxpayers, a majority that in theory is enough to establish the following thesis: “It is incompatible with the Federal Constitution the inclusion, in the COFINS/PIS tax calculation base, of the VAT presumed credit“.
Justice Dias Toffoli stayed the judgment with a request for examination of the case records.
IRPF ON INTEREST ON LATE PAYMENT OF SALARIES
On March 15, 2021, the Federal Supreme Court finalized the judgment of Theme No. 808 on the list of General Repercussion, having defined the following thesis: “Income tax is not levied on interest due for late payment of remuneration for the exercise of an employment position or function“.
The STF, in examining the case filed by an individual employee to question the levy of income tax on interest received in connection with a labor indemnification arising from an agreement, adopted, by majority vote, the understanding that the legal interest in arrears would have the nature of “damages “, regardless of whether the amount originally due has a remuneration or indemnity nature.
In the words of the Reporting Justice Dias Toffoli “once the remuneration due to the worker arising from the exercise of employment, position or function is an obligation to pay in cash, in my point of view, the delay in its fulfillment generates emerging damages for the creditor to say that, if the payment had been timely made, this would normally result in increase in his patrimony”.
The vote of Reporting Justice Dias Toffoli was followed by the majority of the Justices of the Plenary. The only Justice who did not agree with the decision rendered by the Reporting Justice was Gilmar Mendes, who voted for the constitutionality of income tax levied on legal interest.
FEDERAL TREASURY ACKNOWLEDGES THE NON-LEVY OF SOCIAL SECURITY CONTRIBUTIONS ON INDEMNIFIED NOTICE PERIOD AND SICKNESS ALLOWANCE
The Superior Court of Justice (“STJ”), in 2014, concluded the judgment of Themes no. 738 and no. 478, having established the thesis that social security contributions are not due on (i) the amounts paid during the first fifteen days of leave due to illness (“sickness allowance”); and (ii) the amounts paid as indemnified notice period.
Although the thesis deals only with the employer’s social security contribution (article 28, I of Law 8212/1991), the STJ’s position has been applied to all other contributions calculated upon “payroll” (workers’ accident insurance contribution – SAT – and contributions to third parties – National Institute for Agrarian Reform (“INCRA”); National Foundation for the Development of Education (“FNDE”); and the entities of the called “Sistema S”).
Therefore, despite the judgment having occurred more than 6 years ago, only recently the National Treasury Attorney-General’s Office issued Orders no. 40 and 42 of 2021, authorizing the Public attorneys not to present defense or/and appeal in lawsuits dealing with the assessment of social security contributions on sickness allowance and indemnified notice period. Such orders not only cover the employer’s contribution, but also the SAT/RAT and the Contributions for Third Parties.
ICMS AGREEMENT EXTENDED UNTIL MARCH 31, 2022
On March 15, 2021, the National Finance Policy Council (CONFAZ) approved new ICMS Agreements, including the ICMS Agreement 28/2021, which extends until March 21, 2022 the provisions set forth in other 201 ICMS Agreements previously approved by CONFAZ and which term was about to expire.
The ICMS Agreements that had their termination date extended involve the granting of exemptions, taxable basis reductions and presumed credits in internal, interstate and import transactions. Several industries of the Brazilian economy will benefit from the extension as of April 1st, 2021.
In view of the current Coronavirus pandemic scenario, the health industry, including pharma, medical and related equipment industries, was benefited and, therefore, is entitled for the ICMS exemption until March 31, 2022. Other relevant economy sectors were also granted with the incentives extension, such as food and fuel industries.