The Brazilian Supreme Court (STF) will begin judging billion-dollar cases starting next week. The Court included on the agenda of the virtual plenary session that will run from December 9 to 16 the resumption of trials involving the ICMS tax rate differential (DIFAL); the collection of PIS and COFINS on revenues of financial institutions; and social security contributions in agribusiness. The Union estimates a loss of up to R$117.2 billion in five years if it is defeated in the cases.
ICMS Difal
The STF will resume the analysis of three lawsuits that discuss the start of the ICMS difal collection. The controversy is the subject of ADIs 7066, 7070 and 7078. The trial has been suspended since November 11 due to a request for review by Minister Gilmar Mendes. Previously, the score was 5X2 for the collection to be valid only from 2023.
The ICMS tax discussed in the lawsuits is charged on transactions involving goods destined for end consumers who are not taxpayers of the tax in another state. In this modality, as in e-commerce, the supplier of the good or service is responsible for collecting the entire tax and passing on the ICMS tax to the end consumer's state — that is, the difference between the internal tax rate of the state of origin and the interstate tax rate.
The trial seeks to define whether the complementary law that regulated the charge needs to observe the nonagesimal and annual priorities to begin to produce effects. This is LC 190/22, published on January 5, 2022.
The position with the majority of votes so far is the dissenting opinion opened by Minister Edson Fachin. The rapporteur concluded that the law corresponds to the institution or increase of a tax and, therefore, must comply with both prior provisions. In practice, this authorizes the collection from 2023. In a report sent to subscribers last week, JOTA showed that the delay in the judgment creates legal uncertainty and may make it difficult to refund amounts unduly paid by taxpayers.
PIS/Cofins on revenues of financial institutions
The STF will also begin judging on December 9 two extraordinary appeals that discuss the incidence of PIS and Cofins on the revenues of financial institutions. If the Supreme Court understands that these amounts should not be taxed, the decision could have an impact of R$105.2 billion for the Union in five years, according to data from the Budget Guidelines Law (LDO) of 2023.
The discussion is the subject of RE 609096 (Topic 372 of general repercussion) and RE 880143. The ministers will define whether the banks' financial revenues characterize revenue and, therefore, should form the basis for calculating PIS and Cofins.
Social security contribution in agribusiness
In the same round of trials, the STF will analyze two cases related to social security contributions in agribusiness. In RE 611601, Topic 281 of general repercussion, the ministers will discuss the social security contribution owed by agribusinesses. What is at stake is whether it is constitutional to collect social security contributions on gross revenue from the production of agribusinesses, instead of calculating this tax on the payroll of these companies. In the Budget Guidelines Law (LDO) of 2023, the Union estimates a loss in revenue of R$15T 12 billion in five years if it is defeated in this appeal.
The second case under consideration is ADI 4395. In this case, the ministers will decide whether it is constitutional to charge social security contributions on revenue, also in place of payroll, for individual rural producers. This is the so-called social contribution to the Rural Worker Assistance Fund (Funrural).