The judgment of important tax theses is scheduled for next October 25, 2023 (Wednesday), by the First Section of the Superior Court of Justice (“STJ”), the body responsible for unifying precedents between the two Panels that judge tax issues in that Court.

We emphasize the following judgments:

Repetitive Appeals Topic No. 986 refers to the thesis of excluding the Distribution System Usage Tariff (TUSD) and the Transmission System Usage Tariff (TUST) from the calculation basis for ICMS on electricity. The 1st Panel of the STJ has precedents that include TUSD and TUST in the calculation basis for the state tax, considering that the tax is levied on the entire electricity supply process. The 2nd Panel of the STJ has precedents in favor of excluding tariffs from the ICMS calculation basis, based on the grounds that the triggering event would occur when the electricity actually consumed leaves the supplying establishment. The ruling on the topic by the STJ will possibly represent the final decision on the topic, since the Supreme Federal Court recognized, in 2017, that there is no constitutional issue on the matter in the ruling on Topic No. 957 of General Repercussion.

Regarding this topic, it is worth remembering that Complementary Law No. 194/2022 changed the wording of article 3, item X, of Complementary Law No. 87/1996, to determine that ICMS does not apply to transmission services and sectoral charges related to operations with electric energy. However, the Supreme Federal Court suspended the legal provision in the Precautionary Measure in Direct Action of Unconstitutionality No. 7,195 in March 2023, resuming the discussion on the topic.

Topic 1,079 of Repetitive Appeals – Will define whether the limit of 20 minimum wages is applicable for determining the calculation basis for “parafiscal contributions collected on behalf of third parties” (FNDE, INCRA, SENAI, SESI, SENAC, SESC, SEBRAE, SEST, SENAT, SENAR, etc.); a social security matter that affects a large portion of Brazilian taxpayers, also discussed for some time in the Higher Courts, it will be up to the STJ to solidify its position on the subject;

Repetitive Appeal Topic No. 1125 refers to the exclusion of ICMS due in the tax substitution system (ICMS-ST) by the substituted tax from the PIS and COFINS calculation basis. The thesis arises from the judgment of Topic No. 69 of General Repercussion by the Federal Supreme Court, which recognized that ICMS does not compose the PIS and COFINS calculation basis, but without specifying whether ICMS-ST could be excluded. In the judgment of Extraordinary Appeal No. 1,258,842, the Federal Supreme Court also recognized that the subject matter of the discussion was infraconstitutional, so that the STJ will probably resolve the discussion.

Given the significant number of legal discussions currently underway on such matters, the outcome of the trials will have a significant impact on Brazilian taxpayers.

Our team will closely monitor the development of the topics and is available to provide any clarifications.