Superior Court Of Justice Publishes Ruling Regarding The Levying Of IRPJ/CSLL Upon ICMS Tax Benefits

• Published date: 20 June 2023
• Subject Matter: Tax, Income Tax, Tax Authorities
• Law Firm: Koury Lopes Advogados
• Author: Mr Henrique Lopes, Victor Polizelli, 'lvaro Lucasechi, José Fl'vio Pacheco, Juliana Nunes, Luís Fl'vio Neto and Felipe Omori

On June, 12st the full content of the decision issued in the trial of the Special Appeal No. 1.945.110 (Theme No. 1.182) was published by the Superior Court of Justice (STJ).

The discussion refers to the exclusion of State VAT (ICMS) tax benefits from the calculation base of Federal Income Tax (IRPJ) and Contribution on Net Profit (CSLL), and whether there would be a differentiation between the types of benefits granted by the states. Such a decision has binding effects on other ongoing cases.

We highlight the following points:

The first positive aspect of the decision is the reaffirmation of the Court's understanding that presumed ICMS tax credits should not be included in the calculation basis of IRPJ and CSLL, following the previous precedent judged by the STJ on that matter (EREsp 1.517.492/PR).

In that case, the Ministers decided that such taxation violates the Federative Pact, as it would correspond to taxation by the Federal Government upon the States' revenues.

On the other hand, the Ministers stated that this understanding does not apply to other types of ICMS benefits (reduction of the calculation basis, reduction of the tax rate, exemption, immunity, etc.).

Minister Benedito Gonçalves, reporting Minister of this case, stated that since 2017, the 1st and 2nd Panels of the STJ have been granting taxpayers' requests, but with different grounds, as follows:

• The 1st Panel extended the precedent on presumed ICMS credits to other tax benefits; and,
• The 2nd Panel understood that it was not possible to extend the same understanding, but admitted that based on Complementary Law 160/17 and Law 12.973/2014, would allow taxpayers to avoid taxation provided that some requirements are met.

In his vote, the reporting minister followed the second Panel's understanding, which states that the other types of tax benefits do not represent an actual transfer of patrimony of the States to taxpayers, as they are somehow captured subsequently by the non-cumulative regime. Therefore, there would be no amounts to be excluded from the IRPJ/CSLL basis, and there would be no undue taxation on the State's patrimony by the Federal Government. This position was followed by all the other Ministers.

On the other hand, the judgment emphasizes that, since the amendments introduced by Complementary Law No. 160/2017 in the Law no. 12.973/2014, it would be possible to exclude such benefits from the IRPJ/CSLL basis, following some conditions, including primarily the allocation of...