The STF began this Wednesday, the 28th, the trial of ADIs 1945 and 5659, which discuss the possibility of transactions involving licensing or assignment of use of computer programs and software, already taxed by ISS, also being taxed by ICMS. ADI 1945 was proposed by the PMDB in light of the legislation of the State of Mato Grosso and is being reported by Minister Cármen Lúcia. ADI 5659, under the reporting of Dias Toffoli, was presented by the National Confederation of Services (“CNS”) and has as its object the legislation of the State of Minas Gerais.

The STF has already addressed the taxation of software in the late 1990s. However, at the time, software was recorded on physical media, which was considered a commodity and was sold at retail. In this context, the case law previously established by the STF is no longer relevant to current operations.

In short, such operations are currently taxed by the ISS, with a rate of up to 5%, since the consumer does not purchase the software as a product, but rather the transfer of the right to use or license it.

This is yet another chapter in the already well-known tax war – in this case, resulting from the impact of technological development on consumer relations – between municipal and state tax authorities.

Regardless of the classification adopted, double taxation in relation to such transactions has had a significant impact on software companies, which are forced to deal with the management of a tax liability that is beyond their control and independent of the way in which their operations are conducted. Our tax team is monitoring the possible developments of this ruling and remains available to clarify any questions regarding the matter.