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.
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