It is possible to exclude tax benefits related to ICMS from the calculation basis of Corporate Income Tax and Social Contribution on Net Profit, provided that the requirements set forth in article 10 of Complementary Law 160/2017 and in article 30 of Law 12,973/2014 are met.
This was the conclusion reached by the 1st Section of the Superior Court of Justice in a trial this Wednesday (26/4), under the repetitive appeals procedure. The decision, for now, is suspended by order of Minister André Mendonça, who granted a preliminary injunction hours before the trial began.
This decision by the STJ represents a major victory for the tax authorities and, especially, for the Ministry of Finance. The fact that ICMS benefits are not automatically excluded from the IRPJ and CSLL calculation basis could generate an impact of up to R$15T 90 billion per year in revenue, which contributes to the fiscal adjustment pursued by the government.
According to the Attorney General of the Union, Jorge Messias, “the unanimous decision of the STJ is an important precedent because it prevents the extension of the understanding that presumed ICMS credits do not enter the IRPJ/CSLL basis to other benefits granted by the states”.
Benefit vs. credit
The discussion started with a ruling by the 1st Section of the court, which in 2017 understood that presumed ICMS credits do not constitute income or profit. Therefore, they could not be included in the IRPJ and CSLL calculation basis. The taxpayer's objective was to extend the solution to other benefits related to ICMS, such as reduction of the calculation basis, reduction of the tax rate, exemption and deferral.
Since then, the case law of the STJ Private Law panels has been divided regarding this possibility. Justice Benedito Gonçalves adopted the prevailing position in the 2nd Panel: that it is possible to withdraw the benefits from the IRPJ and CSLL base, as long as the requirements set forth by law are met. The alternative would be to allow the exclusion automatically, as the 1st Panel did.
For the rapporteur, it is not possible to give ICMS tax benefits and presumed credits the same legal treatment. Only in the second case is there an effective expenditure of funds by the tax authorities, by giving up a portion of the revenue that would otherwise be collected. Tax benefits and incentives that reduce the burden on operations merely represent the deferral of tax incidence.
The approved theses also indicate that, to exclude these ICMS benefits from the IRPJ and CSLL base, when the requirements set out by law are met, it is not necessary to prove that such tax stimulus served to implement or expand an economic enterprise.
Finally, the 1st Section also guarantees the Federal Revenue the possibility of charging IRPJ and CSLL on such benefits if, after inspection, it verifies that the amounts were used for any purposes other than the viability of the enterprise.
What about federalism?
No one disagreed with the rapporteur because Minister Regina Helena Costa reserved her personal position. When speaking, she made some considerations about the need to vote on tax causes taking into account the cooperative federalism established in Brazil by the Federal Constitution of 1988.
“He advocates that there should be concerted action between political figures and harmonious taxation between them; that there should be purposes that jointly aim to best benefit society,” she said.
The possibility that the 1st Section's position could open the door to a tax war between states by offering presumed ICMS credits or tax benefits as an incentive for companies was widely discussed in the stands by the lawyers who made oral arguments.
The panel also accepted a suggestion made by Minister Regina Helena Costa: to remove tax immunity from the list of ICMS benefits — which is not, in fact, a tax benefit, but an exemption established by the Constitution. And, in fact, this issue could only be analyzed from this perspective by the Supreme Federal Court.
See below the theses approved this Wednesday:
- It is impossible to exclude tax benefits related to ICMS, such as reduction of the calculation basis, reduction of the tax rate, exemption, deferral, among others, from the calculation basis of IRPJ and CSLL, except when the requirements provided for by law are met — article 10 of LC 160/2017 and article 30 of Law 12.973/2014 —, not applying the understanding of EREsp 1,517,492, which excluded the presumed ICMS credit from the calculation basis of the federal taxation already mentioned;
- To exclude tax benefits related to ICMS, such as reduction of the calculation basis, reduction of the tax rate, exemption, deferral, among others, of the calculation basis of IRPJ and CSLL, proof of concession as an incentive to the implementation or expansion of an economic enterprise should not be required;
- Considering that LC 160/2017 included paragraphs 4 and 5 in article 30 of Law 12.973/2014, without, however, repealing the provisions of its paragraph 2, the exemption from prior proof by the company that the tax subsidy was granted as a measure to stimulate the implementation or expansion of the economic enterprise does not prevent the Federal Revenue Service from proceeding with the assessment of IRPJ and CSLL if, in an inspection procedure, it is found that the amounts originating from the tax benefit were used for a purpose other than guaranteeing the viability of the economic enterprise.
REsp 1.945.110
REsp 1.987.158
Source: https://www.conjur.com.br/2023-abr-26/beneficios-icms-nao-sao-automaticamente-excluidos-irpj-csll