On December 13, 2023, the First Panel of the Superior Court of Justice (STJ) ruled that the Tax on the Circulation of Goods and Services (ICMS) in the Tax Substitution modality, ICMS-ST, does not form part of the PIS and COFINS tax base owed by the substituted taxpayer.
At the STJ, the justices examined the special appeals defined in the ruling summary: "Possibility of excluding the amount corresponding to ICMS-ST from the PIS contribution and COFINS tax base owed by the substituted taxpayer." Regarding the referral of REsp 1,896,678, the rapporteur recalled that the STF, when ruling on Theme 69 of General Repercussion, established that ICMS "does not form part of the tax base for the levy of PIS and COFINS".
"As a general rule, in such cases, the substituted taxpayer files a lawsuit claiming that the ICMS-ST collected by the tax substitute, despite being remitted to the state treasury, is incorporated into the cost of acquiring goods for resale to the end consumer and improperly forms part of its revenue/gross income, which is the tax base for the PIS and COFINS contributions," noted rapporteur Gurgel de Faria.
According to Gurgel de Faria, the exclusion is justified considering that "whether substituted or not, they occupy identical legal positions of submission to ICMS taxation, the distinction lying solely in the special collection mechanism." Therefore, any interpretation that results in an increased tax burden on the substituted taxpayer merely due to the method of enforcing tax collection is inadmissible.
In a unanimous decision, the following holding was established: "ICMS-ST does not form part of the PIS contribution and COFINS tax base owed by the substituted taxpayer under the progressive tax substitution regime."
This represents an important victory for taxpayers, who will now be able to reduce their tax costs. The justices held that the position adopted by the STF in its ruling on Theme 69 of General Repercussion, concerning standard ICMS, also applies to cases of ICMS tax substitution. The decision allows taxpayers to reduce the amounts paid to the federal government.
The justices held that the substituted taxpayer may exclude from the PIS and COFINS tax base the amounts corresponding to ICMS paid under tax substitution upon the acquisition of goods for resale.
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