THE SUPREME COURT RULED THAT IMMUNITY OF LABOR UNIONS, POLITICAL PARTIES AND EDUCATIONAL INSTITUTIONS APPLIES TO THE TAX ON FINANCIAL TRANSACTIONS – IOF
The Supreme Court decided, in a trial held on March, 12, that the tax immunity granted by the Federal Constitution to labor unions, political parties and educational institutions applies to the Tax on Financial Operations (“Imposto sobre Operações Financeiras” – IOF).
The National Treasury filed an extraordinary appeal on the grounds that the IOF would be outside the scope of the immunity since it is levied on financial transactions and not on the assets, income or services of the taxpayer, and therefore there would be no connection with the purpose of the entities.
The Plenary Session of the Brazilian Supreme Court found that such interpretation was too restrictive and established the following thesis: “The immunity provided for in the section 150, VI, ‘c’, of the Constitution of the Republic to political parties, including their foundations, labor unions and non-profit educational and social assistance institutions, which meet the conditions of the law, applies to the IOF, including the IOF levied on financial investments”.
WHARFAGE COSTS SHOULD BE INCLUDED IN THE CALCULATION BASIS OF THE IMPORT TAX, SAYS THE SUPERIOR COURT OF JUSTICE
Taxpayers discussed for years the illegality and unconstitutionality of the Federal Revenue’s Normative Ruling no. 327/03, which determined the inclusion of wharfage services (services related to the cargo handling in ports) in the import duty calculation basis (and other taxes levy upon importation).
The Superior Court of Justice had a consolidated understanding, both by the First and Second Panels, for the illegality of the inclusion of such expenses in the customs value.
However, those precedents have recently been overturned, since the 1st Section of the Superior Court of Justice finalized the judgment of Theme No. 1014, surprising taxpayers by establishing the following thesis: “Wharfage services are included in the composition of the customs value and are part of the import tax calculation basis”.
In addition, the Federal Supreme Court, which on other occasions had determined that the customs value should be that determined by the Customs Valuation Agreement, when analyzing the matter (ARE No. 1.305.313 and No. 1.299.840) stated that the case did not have a constitutional nature, therefore the understanding of the STJ prevails.
SUPERIOR COURT OF JUSTICE DECIDES THAT THE HEADQUARTER HAS LEGITIMACY TO CLAIM TAX REFUNDS OR OFFSETS ON BEHALF OF ITS BRANCHES.
The First Panel of the Superior Court of Justice, during the trial of appeal no. 731.625/RJ, analyzed the legitimacy of the headquarter of the company to claim tax offsets on behalf of its branches, which was being denied by decisions of single Judges of the court
The First Panel of the Superior Court reversed that tendency to recognize that “credits related to tax overpayment belong to the company as a whole, therefore the headquarters may claim tax refund or offsets with regard to overpayments of its branches“, recognizing that the autonomy of the establishments for tax ascertainment purposes does not reflect a separate legal personality or capacity to act judicially.
Although this understanding has no binding effect, it represents a good precedent for taxpayers who had been suffering limitations by the Courts that did not recognize the legitimacy of the headquarter to claim the offsetting on behalf of the branches.
THE SUPERIOR COURT ISSUED SUMMARY OF RULING PREVENTING THE LEVY OF ICMS ON THE TRANSPORTATION OF GOODS DESTINED ABROAD.
On April 28, the First Section of the Superior Court approved the Summary of Ruling No. 649, establishing that “ICMS is not levied on the services of interstate transportation of goods destined abroad”.
With this ruling, the Superior Court of Justice reinforces and reaffirms its understanding on the subject and brings a strong orientation to the other Courts in the country.
STATUTE OF LIMITATION PERIOD FOR THE GIFT TAX (ITCMD).
At the end of April, the Superior Court finalized the trial of Special Appeals no. 1841798/MG and no. 1841771/MG, with binding effects (Theme No. 1048), defining the initial term for the statute of limitation period for the Gift Tax (“ITCMD”).
The First Section of the Superior Court rejected the State Treasury’s thesis that the initial term should be counted as of the first day of the year subsequent to that in which the State acquired knowledge of the lack of payment, through the taxpayer´s income tax returns, stating that the statute of limitations must observe the effective occurrence of the taxable event establishing the following thesis: “For the Tax on Transmission Causa Mortis and Donation – ITCMD, regarding donation not timely declared by the taxpayer to the state tax authorities, the counting of the statute of limitations period starts on the first day of the fiscal year following the one in which the assessment could have been issued, observing the taxable event, in accordance with Sections 144 and 173, I, both of the National Tax Code“.
THE SUPREME COURT AUTHORIZED THE LEVY OF INCOME TAX ON BANK DEPOSITS WITHOUT PROVEN ORIGIN.
The Supreme Court, by majority vote, confirmed, with binding effects (Theme no. 842), the constitutionality of section 42 of Law 9,430/1996, which provides for the so-called presumption of omission of income, in the cases where the taxpayer fails to prove the origin of bank deposits or to show that such deposits have been duly declared and taxed. In these cases, article 42 allows the collection of Income Tax under the presumption that such deposits represent an increase in the taxpayer’s patrimony.
THE SUPERIOR COURT OF JUSTICE RULED FOR THE LEVY OF SERVICE TAX ON THE MANAGEMENT OF A FOREIGN INVESTMENT FUND.
A fund administrator filed a lawsuit to dispute the levy of Tax on Service (“ISS”) on the service of managing a foreign investment fund, under the argument that this would represent an exportation of services, which is not subject to the ISS.
When examining the case, the First Panel of the Superior Court of Justice, in an unprecedented decision on the matter, ruled that “the result of the service provided by a company located in Brazil for the management of an investment fund portfolio, even if incorporated abroad, takes place in the country where it is located, since it is there that the income (or losses) resulting from the orders for purchase and sale of assets taken by the manager are calculated, and are materially reflected in the equity variation of the fund“.
Although this case has no binding effects, it represents an important unfavorable precedent to the taxpayers.
LEVY OF CORPORATE INCOME TAX AND SOCIAL CONTRIBUTION ON PROFIT ON MONETARY CORRECTION OF FINANCIAL INVESTMENTS
The First Panel of the Superior Court of Justice ruled the Special Appeal no. 1.660.363 unfavorably to the taxpayer, affirming that Corporate Income Tax (“IRPJ”) and Social Contribution on Profit (“CSLL”) should be levied on the monetary correction of a financial investments.
The understanding expressed by the First Panel of the Superior Court upheld the previous judgments rendered by the Panel, as well as followed the line of understanding of the Second Panel of the Court.
Therefore, the thesis remains with unfavorable precedents to taxpayers. However, so far, there is no decision with binding effects, and the thesis may be reversed by the STJ, depending on the composition of the Panels.