2022 Anuário Brasileiro do Cobre Brazilian Copper Yearbook 24 After decades of legal disputes, on March 15, 2017, Brazil’s Supreme court ruled on Extraordinary Appeal No. 574.706/PR to not include the Tax on Circulation of Goods and Services (ICMS) in calculating the Contribution to the Social Integration Program and Formation of Public Servant assets (PIS/Pasep) and the Contribution to Social Security Financing (COFINS). However, to consider the existence of omission, obscurity, and contradiction in the judgment and the possibility of modulating the effects of the decision, the Government opposed declaratory embargoes. The two central questions dealt with in the embargos were: i) the amount of the ICMS to be excluded from the PIS/COFINS calculation base, whether in the invoice or collected, and (ii) the modulation of the effects of the judgment. The Supreme Court ruled on the embargoes on May 13, 2021, making a final decision that the ICMS tax to exclude from the calculation basis of PIS/COFINS is the amount of the tax on the invoice, and this exclusion is valid for transactions that occurred as of May 15, 2017, which is when the thesis of general repercussion (Theme 69) was set, except for taxpayers who already had administrative or judicial discussions on this subject. Throughout the discussion, Brazil’s tax authority (RFB) sought to make it as difficult as possible for taxpayers to recover credits, especially when issuing the famous Consultation Solution 13/2018, according to which the ICMS value to be excluded from the PIS/COFINS calculation base would be the amount collected and not the amount on an invoice. The application of this understanding was based on a lack of legal basis since the Supreme Court, when ruling on RE 574,706 in March 2017, was clear in establishing that the ICMS tax should not make up the basis for calculating contributions and, of course, the ICMS that makes up the basis for calculating contributions is the ICMS tax on the invoice, and not the amount due. As we have previously stated, such a thesis was definitively ruled out in the ruling on the embargoes. However, surprisingly, even after the ruling on embargoes by the Supreme Court, the RFB continued to work to prevent the unquestionable legal effects of the decision by the Supreme Court on the non-inclusion of ICMS in the calculation base for PIS / COFINS, so trying to reduce a reduction in tax collection. The new – and, we hope, the final - attempt by the RFB to not be subject to the Supreme Court ruling was exposed by Opinion No. 10/2021 of the General Coordination of Taxation Office (Cosit). According to that Opinion, ICMS should be excluded from the cost of inputs used in the production and manufacturing of goods for resale to appropriate PIS/COFINS credits because it is a logical consequence of the Supreme Court ruling, which established the thesis that ICMS does not compose gross revenue for taxpayers for calculation of these contributions, and it claimed that the procedure would embrace the principle of reasonableness in particular because of the adverse effects on tax revenue. Fortunately, the threat to legal certainty embedded in the understandings expressed by Opinion No. 10 by Cosit was initially rejected by the General Coordination of Tax Affairs (CAT/ PGACCAT) in Opinion SEI No. 12943/2021/ME, which clarified the questions presented in Cosit’s Opinion No. 10 that the exclusion of ICMS from the basis for calculating the PIS/COFINS, as defined by the Supreme Court in the Theme 69 ruling, does not authorize extension to the calculation of the credits of these contributions due to regency legislation, especially articles 2 and 3 of Law No. 10,637/2002 and Law No. 10,833/2003. Interestingly, in addition to departing from any legal basis for ICMS to be excluded from the basis of calculation of PIS/COFINS credits, the Opinion also recommends that for such a claim to be possible, the proposed normative act that expressly contains the exclusion of ICMS from the acquisition value of PIS/COFINS credits is possible. If the clarity and proper interpretation applied in the preparation of Opinion SEI No. 12943/2021/ME were not sufficient, the PGFN further analyzed the issue in Opinion SEI No. 14483/2021/ ME, published on 09/23/2021, therefore shortly after the publication of the agreement on the ruling on declaratory embargoes, reinforcing the previously expressed understandings. The PGFN concluded clearly: “In conclusion, based solely on the content of the agreement, recalculating PIS/COFINS credits calculated in entry operations is not possible because the issue was not, and could not have been, discussed in the Theme 69 ruling.” After all the discussions of the broadest reach and most significant financial relevance, the taxpayers’ victory must be accepted by the RFB so that the legal security that so many crave may prevail. We hope to have seen the end of a long story. The end of a long and crucial tax dispute By Pedro Cesar da SIlva, CEO of Athros Auditoria e Consultoria
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