By Mariana Martins

Recent court decisions issued after the publication of Internal Consultation Solution COSIT 13, dated October 18, 2018, indicate that taxpayers have won the case in terms of excluding the ICMS highlighted in the invoice from the PIS/COFINS calculation basis, to the detriment of the tax actually collected in favor of the State Public Treasury, as the Federal Revenue intended to institutionalize through the aforementioned Internal Consultation Solution.

The most recent decisions, issued by the TRF4, although still isolated in a certain way, reflect the judiciary's willingness to accept the understanding of the majority of taxpayers (and that of the STF itself in the judgment of RE 574.706/PR), thus avoiding the generation of new litigation and the reduction of credits to be administratively offset after the final judgment of the actions filed throughout the country to discuss the topic.

We reproduce below some excerpts from the aforementioned decisions:

“TAX. CALCULATION BASIS FOR PIS AND COFINS. EXCLUSION OF ICMS. UNDERSTANDING OF THE STF. RE 574,706/PR, UNDER THE GENERAL REPERCUSSION PROCEDURE. TOPIC Nº 69 STF. ACT Nº 12,973/2014. DECLARATIONS OF APPEAL. SUSPENSION. FINAL JUDGMENT. MODULATION OF EFFECTS. UNNECESSARY. As established by the STF, in Theme 69, “ICMS does not comprise the calculation basis for purposes of levying PIS and COFINS” (Extraordinary Appeal with general repercussion No. 574,706), since it does not constitute revenue. Therefore, ICMS should not be part of the calculation basis for COFINS and the PIS contribution, whether considering revenue (art. 195, inc. I, of the Federal Constitution – original wording) or income (art. 195, I, "b" – wording given by EC nº 20/98), including during the period of validity of Laws 10.637/02 and 10.833/03 (non-cumulative regime). The changes produced by Law No. 12,973/2014 in Laws No. 9,718/96, No. 10,637/2002 and No. 10,833/2003 do not legitimize the incidence of COFINS and PIS on ICMS, since ordinary law cannot change constitutional concepts (art. 110 of the CTN) and, therefore, must respect the constitutional concept of revenue, as established by the STF when judging the aforementioned RE No. 574,706.. When calculating the amounts collected unduly, the full amount of ICMS shown on the outgoing invoices must be considered, regardless of the use of credits to reduce the amount to be collected for public coffers.. The pending judgment of the declaration of opposition filed by the Union does not have the power to suspend the processing of the proceedings on the subject. The case law of the STF remains settled to the effect that, in order to apply a decision handed down in RE with general repercussions, it is not necessary to wait for the final judgment or possible modulation of effects.”

(TRF4 5018316-80.2017.4.04.7000, SECOND PANEL, Rapporteur ANDREI PITTEN VELLOSO, added to the case on 11/28/2018)

TAX. EXCLUSION OF ICMS FROM THE CALCULATION BASE. OF PIS AND COFINS. TOPIC 69 OF THE STF (RE 574,706). LAWS 9,718/1998 AND 12,973/2014. RETRACTION. 1. According to the statement of Theme 69 – STF, the ICMS highlighted in the invoices does not form the calculation basis for the incidence of PIS and COFINS. 2. The legal thesis arising from the judgment of RE 574,706 also applies to payments made under the aegis of Law 12,973/2014 (TRF4, Argument of Unconstitutionality No. 5051557-64.2015.404.0000).

(TRF4, AC 2007.71.00.041899-6, FIRST PANEL, Rapporteur ALEXANDRE ROSSATO DA SILVA ÁVILA, DJe 11/30/2018)

“(…)

As for the ICMS value to be excluded from the PIS and Cofins calculation basis, there is some controversy about which value should be excluded, whether it is “ICMS collected” or “ICMS paid”, or even “ICMS highlighted in the outgoing tax documents”.

The ICMS to be excluded is the one highlighted in the outgoing tax documents, as this is the amount that forms part of the calculation basis in question.

Note that the ICMS calculation basis is the value of the transaction (art. 13, I of LC 87/96).

The ICMS levied on the transaction is calculated by applying a rate to the transaction value. The value of the sales transaction makes up the company's revenue/income, which is the basis for calculating PIS and COFINS. The discussion, therefore, refers to the inclusion of this amount.

In the leading case “RE No. 574,706” judged by the STF, the company that filed the lawsuit made it clear in the request that it intended “the recognition of the right to deduct the ICMS portion, highlighted in the invoices, from the PIS and COFINS calculation basis” and it was this request that was ultimately granted by the Supreme Court. It is important to illustrate that the “ICMS paid” is not related to the value of ICMS unduly included in the PIS and COFINS calculation basis, as this value is normally much lower or even non-existent, depending on the circumstances of the case.

It should be noted that ICMS, being non-cumulative, results from the reduction between the tax credit (due to the State) and the taxpayer's credit (due by the State), thus, it is possible that if the taxpayer has a large credit, nothing will be paid.

In this sense, the STF indicated in the summary of RE 574,706, already mentioned: The non-cumulative regime requires that, although the portion still to be offset by ICMS is recorded, it is not included in its entirety in the definition of revenue used by this Supreme Federal Court. ICMS does not form part of the calculation basis for the incidence of PIS and COFINS.

(…)”

(TRF4, AG 5043480-61.2018.4.04.0000, SECOND PANEL, Rapporteur ANDREI PITTEN VELLOSO, added to the case on 11/27/2018)

We hope to soon identify new decisions contrary to the Federal Revenue Service's claim, issued by other Courts in addition to the 4th Region.

The Mazzucco e Mello Advogados tax team is available to provide any clarification on this topic.