On November 22, 2021, the Brazilian Supreme Court ("STF") ruled RE 714139 (Theme No. 745 with general repercussion) and decided that the increased ICMS rate levied on transactions with electricity and telecommunications services is unconstitutional.

According to STF, the ICMS rate for essential services such as electricity and telecommunications should not exceed the general internal tax rate of 17 percent.

In a virtual plenary session, STF will analyze the effects of the decision and determine when the reduced tax rate will be applied (the so-called "modulação de efeitos").

The decision of RE 714139 is binding only to the parties of the lawsuit. However, due to the recognition of the general repercussion of the subject, this ruling will now bind the judicial courts when judging similar cases that challenge state laws on the same subject.

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2020. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.