The Supreme Federal Court (STF) has finally ruled on the declaratory motions in Extraordinary Appeal No. 574,706/PR on May 13, 2021, four years after establishing the thesis that “ICMS does not compose the tax base for PIS and COFINS purposes” (General Repercussion Theme 69) on March 15, 2017.

Despite the favorable decision for taxpayers in 2017, there remained uncertainty regarding the possibility of modulation of the decision’s effects, as well as which amount should be excluded from the PIS and COFINS tax base: whether it should be the value of ICMS highlighted on the invoices or the value of ICMS actually paid.

Resolving this issue was of great importance, as the last four years were marked by significant legal uncertainty. This was due to the National Treasury’s insistence that the correct amount to be excluded by taxpayers was the ICMS to be paid, which is considerably lower than the amount highlighted on invoices.

To clarify this difference, it is essential to explain that while the ICMS highlighted on an invoice represents the total tax levied on the taxpayer’s transactions, the ICMS to be paid is the amount due after deducting any credits for the tax charged on previous transactions, due to the non-cumulativeness principle.

However, this dispute has been resolved, with the Supreme Court explicitly stating that, “on the issue of the ICMS excluded from the PIS-COFINS tax base, the understanding prevailed that it is the ICMS highlighted.” As mentioned above, this thesis is more favorable to taxpayers because the value of the highlighted ICMS is greater than the ICMS to be paid, leading to a larger deduction of this tax from the PIS and COFINS tax base, resulting in a more substantial reduction in the tax burden for companies.

Regarding the modulation of effects, the Supreme Court set the limit as the date of the first judgment of the thesis, i.e., March 15, 2017. This means that taxpayers who have not yet requested any refunds or offsets can only do so for amounts overpaid from that date onward, except for those who had already filed legal or administrative claims before March 15, 2017, who will have the right to claim refunds for prior periods.

The Attorney General’s Office (PGFN) responded by issuing Opinion SEI No. 7698/2021/ME, approved on May 24, 2021, to guide the tax administration regarding the Supreme Court’s understanding. The thesis unfavorable to the tax authorities was recognized, with general repercussion, which means that PGFN is exempt from contesting, counter-arguing, or appealing, as well as from withdrawing previously filed appeals on the matter, as long as there are no other relevant legal grounds.

This exemption also applies to auditors from the Special Revenue Secretariat, who will no longer audit taxpayers for tax credits related to the issue. This will even allow the revision of tax assessments already made and the administrative repetition of undue payments, without the need for new legal actions, as stipulated by Law No. 10,522/2002.

However, it is important to clarify that the understanding set forth in the PGFN Opinion is not automatically applicable. It must first be evaluated by the Federal Revenue Service (RFB), which may provide comments or inquiries to PGFN regarding the implementation of the Supreme Court’s understanding, according to Joint Ordinance PGFN/RFB No. 01/2014. It is PGFN’s response to the RFB’s inquiries that will bind the tax administration to the STF’s General Repercussion Theme 69 understanding.

In any case, these bureaucratic procedures by the Treasury to assimilate the exclusion of the ICMS highlighted on invoices from the PIS and COFINS tax base are a positive indication for taxpayers, who will have greater security to correctly calculate these Contributions and will be able to more quickly and simply seek refunds for overpaid amounts.

Published in Estadão.