Many taxpayers achieved favorable outcomes in lawsuits seeking to exclude ICMS from the PIS/COFINS tax base, following the Brazilian Supreme Federal Court's (STF) decision in the case widely known as the "Thesis of the Century" (Theme 69 of general repercussion).
As a result, these taxpayers were entitled to recover the overpaid PIS/COFINS amounts for the five years preceding the filing of their individual lawsuits. Many of these cases became unappealable around 2020 and 2021, following the STF's final ruling.
Nearly five years later, some taxpayers are now facing a new challenge concerning the recovery of these tax credits.
This is because the Brazilian Federal Revenue Service (RFB) holds the position that:
- taxpayers have a five-year period, counted from the final and unappealable judicial decision, to offset tax credits; and
- this period is suspended during the timeframe between the request for credit recognition and its approval by the tax authorities.
Consequently, taxpayers with substantial amounts of credits now face the possibility that they may not be able to fully offset these credits within the prescribed timeframe. The alternative has been to once again seek a judicial decision.
Judicial precedent indicates that there is no legal requirement in Brazilian law compelling taxpayers to conclude the offsetting of their credits within five years from the final judgment that recognizes such credits. Rather, this period should be regarded solely as the timeframe within which taxpayers must initiate the offsetting procedures.
However, this matter has not yet been subject to binding analysis by the Superior Courts. In this context, we believe that, if the company is nearing the five-year mark with the likelihood of being unable to fully offset the credits, it is possible to file a lawsuit to challenge this limitation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
