SUPREME COURT DEFINES WHERE HEALTH INSURANCE AND FINANCIAL COMPANIES MUST PAY ISS
On June 2, 2023, the Supreme Federal Court (STF) concluded the trial of ADIs No. 5835, 5862, and ADPF 499, to determine the location for the collection of ISS (Service Tax) on services provided by health insurance and financial companies, specifically, whether it should be paid to the municipality where the company is located or to the municipality where the client is located.
The discussion began with the filing of lawsuits by Consif (National Confederation of the Financial System) and CNSEG (National Confederation of General Insurance, Private Pension and Life, Supplementary Health, and Capitalization Companies), challenging sections of Complementary Law No. 157/2016, which changed the place of taxation, stipulating that companies should pay ISS to the municipalities where the services are utilized.
The Reporting Justice, Alexandre de Moraes, based on the constitutional principle of legal certainty, found the actions to be well-founded and voted for the unconstitutionality of the challenged articles of Complementary Law No. 157/2016, as well as Complementary Law No. 175/2020.
Justice Nunes Marques made some reservations and was supported by Justice Gilmar Mendes, but the Reporting Justice's vote prevailed by a majority.
FEDERAL SUPERIOR COURT OF JUSTICE TO DETERMINE APPLICATION OF REFUND RULES FOR ICMS-ST DIFFERENCES
The 1st Panel of the Superior Court of Justice (STJ) is currently analyzing, in a trial of repetitive appeals (Resp 2,034,975, 2,034,977, and 2,035,550), the applicability of Article 166 of the National Tax Code in claims for refund of excessive ICMS payments in the tax substitution regime, when the actual calculation base of the operation is lower than the presumed base.
Tax substitution occurs when the State VAT (ICMS) is collected in advance, based on a standard calculation and a list of products issued by the National Council of Fiscal Policy (Confaz).
The mentioned provision of the Tax Code, in its turn, prevents the taxpayer from requesting a refund of an indirect tax which has been economically borne by another person. The only exception to this rule occurs when the third party expressly authorizes the taxpayer to recover such amount.
This controversy has been registered as Theme 1,191. The STJ has determined the suspension of the proceedings of Special Appeals and Internal Appeals related to this issue, both at the STJ and at the second instance.
FEDERAL SUPERIOR COURT OF JUSTICE RULES FOR THE INCLUSION OF ICMS IN THE CALCULATION BASE OF IRPJ/CSLL FOR COMPANIES UNDER THE PRESUMED PROFIT SYSTEM
On May 10, 2023, the Superior Court of Justice (STJ) ruled on Special Appeals No. 1,767,631 and 1,772,470 (Theme 1,008).
The ministers of the 1st Panel of the Superior Court of Justice (STJ) decided, by 5 votes to 1, that ICMS (State Value-Added Tax) must be considered in the calculation base of Corporate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL) under the presumed profit system.
This decision represents a defeat for taxpayers and contradicts one of the "offshoot theses" of Theme 69 of the Supreme Federal Court (STF), in which the Court decided that the ICMS should be excluded from the PIS/COFINS basis.
During the trial, the dissenting opinion of Minister Gurgel de Faria prevailed. He argued that the position of the STF in Theme 69 is limited to PIS and Cofins and cannot be applied to IRPJ and CSLL under the presumed profit system. According to the minister, the presumed profit system does not allow for the exclusions from the calculation base that are permitted under the actual profit system. He proposed the following thesis: "ICMS is included in the calculation base of IRPJ and CSLL when assessed under the presumed profit system."
The majority of ministers agreed with this interpretation, against the vote rendered by the the reporting judge of the case, Minister Regina Helena Costa.
This decision has binding effect and must be applied to the resolution of other cases that deal with the same subject matter.
SUPREME COURT DETERMINES THE NATIONAL SUSPENSION OF ALL CASES REGARDING THE EXCLUSION OF ICMS PRESUMED CREDITS FROM THE PIS/COFINS CALCULATION BASIS
On May 5, 2023, Minister André Mendonça of the Supreme Federal Court ordered the suspension in the context of the Extraordinary Appeal 835,818, which is the leading case for the Theme 843, dealing with the possibility of excluding the ICMS presumed credits resulting from tax incentives granted by states and the Federal District from the calculation basis of PIS and COFINS.
This means that all cases related to this issue, nationwide, will now be suspended until the conclusion of the leading case.
On May 15, 2023, Minister André Mendonça requested the case to be withdrawn from the virtual session for judgment in the physical session, which will restart the voting, that was favorable to the taxpayers in the virtual trial. There is no scheduled date for the trial.
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.