The Brazilian Federal Supreme Court (“STF”) has recognized, by a majority of votes and with general repercussion, that the State Value-Added Tax on the Circulation of Goods and Services (“ICMS”) does not form companies’ income or gross venues, and, thus, should not incorporate the tax base for Federal Contributions for the Social Integration Program (“PIS”) and to the Social Security Financing (“COFINS”).
The Reporting Justice Minister Carmen Lúcia rejected from the present judgement the Federal Tax Revenue Attorneys’ (“PGFN”) application for the decision to be effective as from January 2018, since the same had only been made orally at the judgment session and not previously in the legal proceedings.
In the context of the foregoing, notwithstanding the binding nature of the decision, the STF will still have to rule on the extent of its effects, at which time it will also have to be decided whether the exclusion of ICMS from the PIS and COFINS tax base will be valid retroactively, so as to allow taxpayers who have not yet filed lawsuits to discuss this matter judicially to do so.
Therefore, while a ruling regarding this matter is pending, it is still possible to file a claim for the refund or the right to offset overpaid PIS/COFINS amounts in the last 5 (five) years as a result of the undue inclusion of ICMS in the tax base of both contributions, even though there is a risk that new claims may be dismissed whithout prejudice as a result of the possible approval of the formal application to be made by the PGFN.
Source: Brazilian Federal Supreme Court