Brazil: Supreme Court decision confirms exclusion of ICMS from PIS/COFINS calculation basis

published on 27 May 2021 | reading time approx. 2 minutes

On May 13th, the Federal Supreme Court (STF) concluded the judgment of RE 574.706/PR, aiming to establish the modulation of the effects of the aforementioned decision that established the thesis “state VAT ICMS does not compose the calculation basis for the incidence of federal VAT PIS and COFINS”, as well as the calculation methodology to be applied to the calculation of the corresponding tax debt.

The unconstitutionality of the inclusion of ICMS in the PIS and COFINS calculation base had already been declared in the judgment of March 2017, however, the modulation of the effects of the decision published on May 13, 2021 establishing important rules for the refund of the amounts paid in excess, mainly for taxpayers who filed a judicial or administrative proceeding after March 2017 and for taxpayers who have not filed any proceedings to date.

Therefore, it is possible to request a refund of the amounts paid in excess of PIS and COFINS since March 2017. However, it is important to evaluate each case for an exact definition of the initial refund dates.

In addition to the definition above, the STF also defined that the full value of the ICMS to be excluded is that highlighted in the invoice. After this manifestation by the court, a discussion ends on which amount to be excluded, as previously, the tax authority stated that the amount to be excluded would be the ICMS actually paid, which goes against the STF's decision.