The highest court of the Administrative Council of Tax Appeals (Carf) has ruled, in different ways, on a series of appeals that analyze which costs generate PIS and Cofins credits. Yesterday, the 3rd Panel of the Superior Chamber upheld the right of the financial sector company Visa to PIS and Cofins credits for costs with hiring advertising. However, they denied Ri Happy Brinquedos the right to use tax credits resulting from expenses with gift packaging.
Although the Superior Court of Justice (STJ) has already defined the criteria to characterize which inputs grant this right, the analysis at Carf continues to be done on a case-by-case basis. According to experts, even a ruling on the issue by the Supreme Federal Court (STF) will not solve the problem – only a tax reform will.
Recently, the administrative body has expressed its views on several points that may or may not be considered inputs, including: translation costs, credit card fees, freight, port expenses, advertising and packaging.
In processes where inputs for PIS and Cofins credit are discussed, the counselors analyze the specific case to decide how to apply the decision of the 1st Section of the STJ, which defined, in 2018, that all essential and relevant goods, at any stage of production, can be considered inputs and generate credits.
At the time of the trial, the then president of the 1st Section, Minister Herman Benjamin, highlighted that the thesis was not operational and could lead to an increase in litigation.
In the case of Ri Happy, analyzed yesterday, for the rapporteur, counselor Tatiana Midori Migiyama, the packaging that is not sold as merchandise preserves the product and, therefore, should be treated as essential. However, for the majority of counselors, the sale is possible without the packaging. Ri Happy can appeal to the Judiciary (19311.720231/2017-12).
In the case of Visa, the counselors did not accept the paradigm case presented by the Treasury's appeal, which referred to retail. The company had alleged that services for the promotion of the brand are essential and relevant to its activity (no. 19515.721360/2017-23).
Regarding port expenses, which are common in foreign trade, the Superior Chamber allowed Ingredion, which mills corn and other vegetables for the industry, to use PIS and Cofins credits related to cargo loading and unloading, dispatchers and storage. In this case, the “subtraction test” was used, which is common to verify whether the removal of the input from production implies unfeasibility or loss of quality of the product or service (process no. 10314.720217/2017-14).
Cosan was not so lucky in the trial on the subject. It was unable to obtain credit for port expenses in the export of alcohol and sugar. This is because, in this case, the majority of the counselors understood that the expenses were incurred after the production process had ended (No. 13888.002438/2004-7).
The Supreme Federal Court will still judge the thesis. The case was scheduled for 2021, but was postponed. In it, the Union could lose R$15T 94.5 billion per year in revenue if the ministers understand that there are no restrictions on taking credits. If it has to return what taxpayers paid in the last five years, the impact will be even greater: R$15T 472 billion, according to estimates by the Attorney General's Office of the National Treasury (PGFN).
According to Moisés de Sousa Carvalho, coordinator of the PGFN's work at Carf, the discussion about the use of credits is a consequence of the PIS and Cofins legislation. “The solution will be on a case-by-case basis,” he says. For him, the way the legislation is currently, it is difficult for the Supreme Court to resolve the disputes. “The solution to this would be to reform the PIS and Cofins legislation,” he says.
On opposite sides of the trials, lawyers agree with the prosecutor on a possible solution. For tax specialist Ana Claudia Utumi, founding partner of the law firm Utumi Advogados, it is also the PIS/Cofins reform that will resolve the issue. However, the lawyer emphasizes that, as it was presented, the reform is not advantageous in this issue of credits.
The CBS Project expands the possibility of credits for any payment, but in addition to increasing the rate to 12% in relation to the 9.25% of PIS and Cofins, it will be calculated on the credit actually paid.
According to Leandro Cabral, partner at Velloza Advogados, it is not the STJ decision that has caused the dispute. “The discussions at Carf are prior to that,” he says. According to Cabral, the only way to solve the problem is through the reform of PIS and Cofins. “With the legislation in force, it is difficult to establish a thesis that will standardize because the law did not intend to standardize, so the Judiciary seems to be tied.”