The 1st Section of the Superior Court of Justice (STJ) began the trial, this Wednesday (11/23/2022), of Special Appeals 1,896,678/RS and 1,958,265/SP, under the Repetitive Appeals system (theme no. 1,125). However, after the favorable vote of the Rapporteur of the case, Minister Gurgel de Faria, who spoke in favor of the exclusion of ICMS-ST from the calculation basis of PIS and COFINS, the trial was suspended, due to a request for review by Minister Assusete Magalhães.

In this case, the possibility of excluding the Tax on the Circulation of Goods and Services due under the substitution tax system (ICMS – ST) from the calculation basis for contributions to the Social Integration Program (PIS) and the Contribution for the Financing of Social Security (COFINS) owed by the substituted taxpayer is being discussed. The controversy is represented in Theme No. 1,125, the decision of which, when handed down, will have a repetitive effect, that is, it will be replicated by other courts throughout Brazil in proceedings involving legal issues and similar cases.

In the tax substitution regime, the taxpayer, known as the substitute, is responsible for collecting all ICMS levied on the other links in a consumption chain, in advance, becoming an important tool for optimizing inspection. On the other hand, the taxpayer, known as the substitute, that is, the one who is in a subsequent position in the chain, claims that the ICMS-ST collected in the previous stage is incorporated into his acquisition cost of the goods that will be resold in the future, thus improperly composing his turnover and gross revenue, which are the calculation bases for PIS and COFINS.

It should be noted, briefly, that the discussion on the possibility of exclusion arises from the understanding adopted in 2017 by the Federal Supreme Court (STF) in topic no. 69, in the context of General Repercussion, in which it was decided that “ICMS does not form the calculation basis for the incidence of PIS and COFINS”, as it does not constitute revenue or revenue resulting from the companies' activities. Thus, taxpayers began to argue that the same understanding should be applied in similar discussions.

Within this context, our team will monitor the reinclusion of topic no. 1,125 on the agenda by Minister Assusete Magalhães, which should occur within 60 days, as well as any developments on this topic and is available for any clarifications.