Brazilian Tax Review ' October 2021

• Published date: 02 November 2021
• Subject Matter: Tax, Inheritance Tax, Income Tax
• Law Firm: Gaia Silva Gaede Advogados
• Author: Gaia Silva Gaede & Associados

1 - Superior Court of Justice - STJ overturns late payment fine on federal taxation of imports supported by Drawback-Suspension

The STJ recently analyzed an appeal filed by a corporate taxpayer that claimed there was a discrepancy in the case law development regarding application of a late payment fine in cases of non-compliance with re-exportation obligation in operations supported by the Drawback customs system (Suspension modus operandi).

The Court ruled that the Drawback-Suspension is a system whereby the customs duties and other federal taxes on imports (Customs Duties - II, Social Contribution Program - PIS on importation, Social Security Finance - COFINS contribution on importation, and Excise Tax - IPI on importation) are suspended under the resolutive condition of the effective export of the finished products; in case of failure to re-export, interest and monetary restatement are due from the moment of registration of the Import Declaration.

On the other hand, the penalty for late payment would only be due after the 30-day period established in the Customs Regulations for timely extinction of the Drawback.

Thus, according to the STJ's interpretation, there is no delay in the obligation to re-export until the 30^th day of the deadline set therefor, which is why the late payment fine should not be applied in these cases.

2 - ITCMD on inheritances and donations from abroad

In the first half of 2021, the highest court in our land, the Brazilian Supreme Court (STF), ruled that state laws establishing the Gift and Inheritance Tax (ITCMD) on inheritances and donations from abroad were unconstitutional, due the lack of complementary federal law on the subject. The decision's effects are prospective, which means that they are valid from the judgment date onwards, except for the ongoing lawsuit.

Whereas the binding effect of the decision is restricted to the ongoing lawsuits, and not to the public administration, in May of 2021 the Attorney General's Office of the Brazilian National Treasury (PGR) filed 24 (twenty-four) Direct Unconstitutionality Lawsuits (ADI 6.817 to 6.840) against state laws that regulate the issue.

STF endorses the suspension of rules that regulate the ITCMD abroad.

3 - IOF-Loan Daily Rates Have Been Temporarily Increased

The Brazilian government temporarily increased the daily rate of the Financial Operations Tax (IOF) on loans involving transactions carried out in the 4^th Quarter of this year (i.e. between September 30 and December 31...