STF injunction takes effect of billionaire judgment in STJ – 04/26/2023 – Market

An injunction by the Minister of the STF (Federal Supreme Court) André Mendonça ordered the suspension of the judgment in the STJ (Superior Court of Justice) that discussed the possibility of excluding ICMS tax benefits granted by the states from the base of incidence of two federal taxes (in this case, IRPJ and CSLL).

The judgment is of special interest to Minister Fernando Haddad (Finance), who announced this year his intention to submit a proposal to restrict the use of the instrument. He calculates an increase of up to R$ 90 billion a year in federal revenue if the changes are approved, helping in the task of rebalancing public accounts.

Currently, companies obtain favorable judicial decisions to withdraw the amount of benefits from the calculation base of federal taxes – which reduces the collection of the Federal Revenue Service.

Discussion on the subject had already begun in the First Section of the STJ this Wednesday afternoon when the court received Mendonça’s decision. The news was brought before the court by a lawyer for one of the companies who argue that the benefit should lead to the payment of a lower federal tax, but the court proceeded with the judgment until it received official notification.

In the injunction, the minister of the STF was based on the fact that there is a case in the STF that deals with the incidence of ICMS tax credits on the PIS/Cofins calculation basis, another federal tax, and that therefore it would be necessary to wait for a decision from the Supreme Court .

“I see the danger of irreparable damage and the need to safeguard the useful result of the judicial provision made by the STF in the current process”, wrote Mendonça in his decision.

For him, a definition by the STF on the subject “will very likely impact the judgment by the STJ of the controversy regarding the possibility of excluding tax benefits related to ICMS –such as reduction of the calculation base, rate reduction, exemption, immunity, deferral, among others – of the IRPJ and CSLL calculation basis”.

With that, the case should only proceed from a position of the STF. First, the plenary of the Supreme Court must decide whether the injunction will be maintained. If this is the case, the court must then judge the case involving PIS/Cofins and ICMS.

The request for an injunction to the STF was made by Abag (Brazilian Agribusiness Association), which is also participating in the case at the STJ.

The postponement is a frustration for the Ministry of Finance, which has the resources to reduce the fiscal deficit this year and also as part of the plan for the country to get out of the red next year. With the postponement, the decision is postponed – as well as the possible increase in the collection.

The trial initiated today at the STJ would have an impact on all similar cases being processed in the Judiciary by establishing a single understanding of the case. There are, according to the STJ, more than 450 monocratic decisions and 50 rulings on the subject in the body.

On Monday (24), Haddad met with STJ Minister Benedito Gonçalves to address the matter and classified the trial as an “important test” and criticized what he classified as a subsidy for funding (that is, for current expenses) . For him, companies could only benefit if they make investments.

The PGFN (Attorney General of the National Treasury), responsible for the defense of the government in the case, argues that the cost reduction for the company from the ICMS benefit does not increase the calculation basis of federal taxes and, consequently, should not be deducted.

The body makes a counterpoint with another important decision taken by the STJ involving the ICMS. In 2017, the court ruled against the federal government by pointing out that the presumed ICMS credit should be excluded from the IRPJ and CSLL calculation basis.

In that case, assesses the PGFN, the presumed credit entered the companies’ balance sheet as a positive value, which required its removal from the calculation basis of federal taxes. In this case, he points out, that doesn’t happen.