The exclusion of ICMS from the calculation basis of contributions to PIS and Cofins was the subject of a great deal of discussion
It is not news that a major discussion began years ago regarding the exclusion of ICMS from the calculation basis for contributions to PIS and Cofins.
The core of the discussion basically concerned the subsumption of state tax under the concept of revenue or turnover, defined by tax legislation as the basis for calculating social contributions.[1].
After decades of analysis by the Federal Supreme Court (STF), the matter seemed to have finally been definitively resolved with the judgment of extraordinary appeal (RE) 574.706. The STF's decision, in the sense of the impossibility of including ICMS, was made under the rite of general repercussion - that is, its application must be extended to all cases that deal with the topic, and not just the case analyzed.
More than two years after the judgment of RE 574.706, the desired and expected peacefulness of the discussion in question, however, is far from being achieved.
After the publication of the decision that excluded the tax from the PIS/Cofins calculation base, the National Treasury filed an embargo for clarification requesting, among other issues, that the STF comment on the modulation of the effects of the decision and decide the portion of the ICMS must be excluded from the contribution calculation basis.
The judgment on the motions for clarification was scheduled for December 5th. However, the consideration of the appeal was removed from the STF agenda and rescheduled for April 1, 2020.
Initially, the STF's slowness in considering the issue would not be particularly alarming given the notoriety that permeates the speed of the Judiciary, making it almost utopian to expect speed from the court.
However, what can be seen in the present case is that, in the interim period between the judgment of RE 574.706 and the judgment of the embargoes, the National Treasury has repeatedly adopted positions that restrict the rights of taxpayers. This is because, following the judgment of RE 574.706 by the STF, several decisions authorizing the exclusion of ICMS from the PIS and Cofins calculation base became final, resulting in a high “loss” for the public coffers. What is noticeable is that the National Treasury has taken advantage of the STF's silence to alleviate the aforementioned “loss”, issuing rules that are contrary to the thesis defined by the Court.
The first manifestation of the Tax Authorities post-judgment of RE 574.706 was through the publication of COSIT Internal Consultation Solution No. 13/2018 by the Federal Revenue Service, compliance with which is mandatory by the tax authorities.
According to this solution, the ICMS to be excluded from the PIS/Cofins calculation base is that calculated by taxpayers and actually collected, as opposed to the taxpayers' argument that the amount to be excluded would be the value of the tax highlighted in the invoices issued by them. To support the publication of such a rule, the Federal Revenue indicated that, in the judgment of RE 574.706, the STF had reached a majority understanding that the amount to be excluded from the monthly calculation basis of contributions is the monthly amount of ICMS to be collected .
From the analysis of the entire content of SC COSIT nº 13/2018, the transcription of some of the votes given by the STF ministers can be identified, in which it is possible to verify the indication that the ICMS paid does not make up the PIS/Cofins calculation basis. In this regard, an excerpt from the vote — unsuccessful — of Minister Edson Fachin was collected, according to which “the controversy brought to court is limited to defining whether the value collected as ICMS consists of revenue, or even revenue in a broader context , of the taxpayer, in turn the basis for calculating contributions for PIS and Cofins”.
Such an argument, however, cannot be used to infer (based on an unfounded intuition) which ICMS should be removed from the basis for calculating social contributions in question the STF was referring to. Especially because Minister Fachin himself also stated, in his unsuccessful vote, that “the conviction is that revenue, a type of gross revenue, encompasses the entire amount earned from the sale of goods and the provision of services, including the amount of ICMS highlighted in the invoice”.
It is also important to mention that the STF itself has already stated — after the judgment of RE 574.706 — that the ICMS to be excluded would be the one highlighted in the invoices, and not the amount actually collected. In a monocratic decision handed down in the analysis of extraordinary appeal 954.262, minister Gilmar Mendes stated that, in the analysis of RE 574.706, “the Federal Supreme Court stated that the amount of ICMS highlighted in the invoices does not constitute revenue or revenue, which is why they cannot be part of the PIS and Cofins calculation base”.
In the same sense as SC COSIT nº 13/2018, the Tax Authorities expressed their opinion again by issuing Normative Instruction (IN) nº 1.911/2019. The standard, issued as a way of updating and consolidating all regulations regarding PIS and Cofins, is even commendable in terms of the attempt to simplify the national tax system, as it consolidates rules that until then were extremely sparse. However, once again it reinforced the understanding of the National Treasury regarding ICMS, which must be removed from the basis for calculating social contributions. Once again, the total irresponsibility of the Federal Revenue Service in not recognizing the judgment carried out with general repercussion by the STF is demonstrated.
However, IN No. 1.911/2019, in addition to accentuating the illegalities already manifested in SC COSIT No. 13/2018 regarding the exclusion of only ICMS collected from the PIS/Cofins calculation base, revoked the previously current provision of Normative Instruction No. 404/2004, which allowed taxpayers under the non-cumulative tax regime to calculate contribution credits on the cost of acquiring goods and services, including the ICMS eventually included in the acquisition invoices.
In other words, IN nº 1.911/2019 established a “double advantage” scenario for the National Treasury: for the purposes of calculating PIS and Cofins, the rule determines that only the ICMS actually collected must be excluded from the calculation base; on the other hand, the IN establishes that all ICMS highlighted in invoices must be excluded from the basis for calculating contribution credits.
Therefore, pending judgment — by the STF — of the motion for clarification filed by the National Treasury against the decision given by the court in RE 574.706, what has been experienced is a scenario of complete legal uncertainty. Taxpayers, who should be protected from their right to exclude ICMS from the PIS/Cofins calculation base, in fact find themselves at the mercy of the National Treasury and its abusive interpretation and in disagreement with the thesis defined by the STF. All that remains is to wait for the appeal to be considered by the STF so that the discussion finally has the necessary outcome.
*Pedro Cunha, lawyer at Freitas Ferraz Capuruço Braichi Riccio Advogados, collaborated.
[1]Complementary Law No. 7/1970: “Art. 3rd-The Participation Fund will be made up of two installments: […] b) the second, with the company's own resources, calculated based on revenue […]” Complementary Law nº 70/1991: “Art. 2° The contribution referred to in the previous article will be two percent and will apply to monthly revenue, thus considering the gross revenue from sales of goods, goods and services and services of any nature.”