STF discusses additional fine of 50% on tax compensation denial – 03/10/2023 – What tax is this

The STF (Federal Supreme Court) starts this Friday (10) the judgment, in virtual plenary, on the legitimacy of the additional 50% fine applied when the Federal Revenue Service rejects requests for tax compensation. The impact in the event of defeat by the Tax Authorities was estimated at R$ 3.7 billion by the government.

In addition to the so-called isolated fine of 50%, the Tax Authorities apply a fine of 20% in these cases, which represents a double punishment for the taxpayer. The debt amount is also corrected by the basic interest rate.

The action has general repercussions. That is, the understanding will be applied to others that deal with the same topic. The trial runs until next Friday (17).

The analysis of the constitutionality of the fine began in 2020 in a virtual plenary session, but was suspended at the request of Minister Luiz Fux. Now, it will resume with the score zero.

At the time, the case’s rapporteur, Minister Edson Fachin, assessed that the charge is unconstitutional. “The mere non-approval of tax compensation does not consist of an illicit act capable of giving rise to tax sanctions”, he said in his vote.

He was accompanied by four other ministers, Gilmar Mendes, Luiz Fux and Alexandre de Moraes, who are participating in the new trial, and Celso de Mello, now retired. The other six ministers did not comment at the time.

The action under analysis is an appeal by the Federal Government against a decision favorable to the taxpayer, a transport company, at the Federal Regional Court of the 4th Region (RS/SC/PR).

Tax lawyers argue that the additional fine violates the taxpayer’s right to petition. They also state that the non-approval is automatically given by the Tax Authorities system after crossing data from several declarations.

“It’s a punitive fine for the fact that you have filed a request, for exercising the right to petition, a fundamental right that is in Article 5 of the Constitution. You apply the fine of the tribute itself, which is the late payment fine of 20 %, and another 50% just because I made a request that was denied”, says Pedro Siqueira, partner in the tax area at Bichara Advogados. “Most of the unapproved compensations are due to cadastral differences.”

“It doesn’t matter what the cause of the compensation is, whether it’s the thesis of the century —exclusion of ICMS from the PIS/Cofins base— or compensation for taxes paid abroad. All of this falls under the hypothesis of a 50% fine”, says Luiza Lacerda, partner from the Tax Law area of ​​the BMA office.

“It’s a fine simply because you filed a petition with the Revenue, a request for compensation.”

Salvador Cândido Brandão Jr., partner at Galvão Villani, Navarro, Zangiácomo e Bardella Advogados, says that the same penalty of 50% was applied when requests for reimbursement were rejected. This application was revoked by Law No. 13,097/2015, but in the case of compensation, the fine was maintained in the legislation.

“There is no reasonable motivation or justification for the application of this fine, because, when compensation is not approved, the Treasury charges for the confessed debt, with interest and late payment penalty, with no damage to the treasury”, he says.

Tax experts Rafael Vega and Jessica Passarini, from Cascione Advogados, claim that the sum of the fines of 20% (delinquency) and 50% (isolated) means that the taxpayer’s punishment for non-approved compensation is, in economic terms, practically equivalent to ex-officio fine of 75% for those who do not declare and do not collect a tax.

“That is, the current financial impact is equivalent to a tax offense, which is not the case, leading us to the conclusion that there is a disproportion between the penalties applied and the fact practiced by the taxpayer.”

They claim that there is a double imposition of penalties on the same committed act, which goes against the principle that it is not possible to apply a double punishment on a single act.

According to the Federal Revenue Service, a fine of 50% is applied on the amount of the unduly compensated debt, even when there is an ongoing administrative discussion about the refusal to compensate.

In this case, according to the agency, the enforceability of the fine is suspended until the end of discussions. If the result is completely favorable to the taxpayer, resulting in total approval of the compensations under discussion, the fine is cancelled.

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