Billionaire judgment at the STJ is the first test for Haddad’s fiscal adjustment – 04/25/2023 – Market

The STJ (Superior Court of Justice) starts judging this Wednesday (26) a billionaire case that may increase the taxation of some large companies, with a relevant impact on public accounts.

The PGFN (Attorney General of the National Treasury) told the Sheet that the Judiciary has technical and legal arguments to give the Union a victory, separating the current case from another analyzed in 2017, which resulted in a defeat for the federal government.

The STJ will define whether it is possible to exclude ICMS tax benefits granted by the states, such as a reduction in the calculation base, reduction in the rate, exemption, immunity, postponement, among others, of the base of incidence of two federal taxes on corporate profits ( IRPJ/CSLL).

The thesis established by the court will be applied in the solution of all similar judicial cases under discussion in the country, as it is analyzed as a repetitive appeal.

The STJ’s decision only affects taxpayers who are in the real profit system, that is, large companies. Mainly those in the retail and industrial sectors that received state benefits, for the installation of industrial parks and distribution centers, for example. Banks are not impacted.

In 2017, the federal government suffered a defeat at the STJ regarding the taxation of another type of tax benefit, the presumed ICMS credit, by defining that these amounts cannot be considered as part of the profit. Now, it tries to obtain a victory in the discussion about the extension of the same understanding to the other types of tax favors.

Currently, there are companies that collect IRPJ/CSLL without making this deduction. Others have judicial measures that allow them to pay less taxes. Therefore, the impact of a defeat would have different effects on each company.

Finance Minister Fernando Haddad has cited an impact of up to R$90 billion in additional revenue per year if taxes are once again paid in full, putting an end to what he classified as one of the “tax tortoises” that reduce revenue and generate undue benefits.

Last Monday, Haddad met with STJ minister Benedito Gonçalves to discuss the case, classified the trial as an “important test” and said he was more concerned about the fiscal impact of the decision in 2024.

The Deputy Attorney General for Judicial Representation of the PGFN, Lana Borges Câmara, says that the first focus of the Union’s arguments is to show that there is a difference between presumed credit, an issue decided unfavorably to the Union in 2017 by the STJ, and the other benefits tax.

In the first, there is a positive value (the credit) that increases the company’s revenue and, therefore, the discount to reduce federal taxation is valid. Benefits that do not generate tax payment, but only cost reduction for the company, such as an exemption, do not increase the calculation basis of federal taxes. Therefore, there is nothing to be deducted.

“The big difference for us at the National Treasury is that the presumed credit is a quantity that enters the company’s accounting. There is a credit. If it is not included in the company’s revenue, in profit, there is no way to remove it from the federal tax calculation basis “, says attorney Lana Borges Câmara.

“This is the most sensitive point, because it has an accounting concept and it is not an easy thesis to explain. That is why it is so easy to confuse.”

The Treasury will also use the argument that, in all cases, the benefits must be linked to investment expenses, as provided for in the Income Tax law, and not to the subsidy of other expenses.

A third argument is that the erosion of the Income Tax calculation base affects not only the collection of the Union, but also the portion of this tax that is distributed to states and municipalities.

“We have hundreds of municipalities that depend exclusively on the Participation Fund. If I erode the IRPJ tax base, I have a decrease in what the Union will pass on to municipalities. This is a very relevant political and social point.”

In a note released last week, Abrasca, an entity that represents large publicly traded companies, asks for the trial to be postponed and states that a defeat by taxpayers at the STJ will have an impact on investments, by reducing the effect of the tax benefit granted by the states. .

For the tax experts Artur Muxfeldt, Daniel Zugman and Frederico Bastos, from the BVZ Advogados office, the same grounds already adopted by the Superior Court in relation to the presumed ICMS credit should be applied to other tax benefits. They also argue that supplementary law 160/2017, which deals with the tax war, made any differentiation between funding subsidy or investment irrelevant for IRPJ/CSLL taxation purposes.

“It will be necessary to wait for the STJ’s final word, which will have repercussions both for taxpayers who have been experiencing legal uncertainty on the subject for years, and for the Ministry of Finance itself in defining its strategy for implementing the intended fiscal policy.”