São Paulo taxpayers can celebrate: the interest rates over state tax debts in the State of São Paulo are now equal to the rate applicable to federal tax debts ("SELIC Rate" or "Taxa SELIC").
The State of São Paulo used to charge the highest tax debt interest in Brazil: the interest rate was 3.90% per month, reaching 47.45% per year (pursuant to article 96 of State Law No. 6,374/89, amended by State Law No. 13,918/09), while SELIC Rate, provided in Federal Laws Nos. 8,981/95 and 9,065/95, was approximately 14% in the last year.
The high interest rate demanded by the State of São Paulo motivated taxpayers to seek administrative and judicial courts to discuss the matter. The Special Chamber of the São Paulo Court of Justice has ruled that such interest rate is unconstitutional (Argument of Unconstitutionality No. 0170909-61.2012.8.26.0000), taking into consideration that it is higher than Taxa SELIC, in accordance to concurrent competence between federal States and the Union to legislate over finance, tax and economic rights (article 24, I, first and fourth paragraphs, Brazilian Federal Constitution).
Almost eight years after the increase of the interest rate, the State of São Paulo has finally issued Law No. 16,497, published in July 19, 2017, which amended article 96 of Law No. 6,374/89 and fixed the interest rate over state tax debts and fines at SELIC Rate.
Law No. 16,497 also reduced the limits of certain penalties, which shall not exceed 100% of the tax due, following the precedents of the Superior Courts, that recognize as abusive the application of penalty in amount higher than the total tax due, in respect to reasonability, proportionality, and non-confiscation constitutional principles.
However, this is still not the end of this discussion, since Law No. 16,497/2017 does not authorize refunds of interests paid prior to the enactment of such law. Consequently, taxpayers still need to claim the recovery of the higher amounts paid in the past.
Candido Martins Advogados is at full disposal for further clarifications on this matter.
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