A company from Espírito Santo has obtained a decision to remove from the PIS and Cofins calculation basis amounts related to an ICMS tax incentive – early settlement, with a discount, of financing of the state tax itself. The injunction was issued by the 2nd Federal Civil Court of Vitória, which dismissed the Federal Revenue Service's understanding that these are financial revenues.
The taxpayer filed a writ of mandamus against a decision by the Regional Office of the Federal Revenue Service in Vitória. He argued that the inclusion in the calculation of social contributions of profits obtained from the Port Activities Development Fund (Fundap), a tax benefit granted by the state government, would be improper.
Fundap was created by State Law No. 2,508, of 1970. The fund's resources are intended to promote increased imports and exports through the Port of Vitória.
The State, in addition to deferring the ICMS-Importation until the moment the goods leave and extending the deadline for collecting the tax until the 26th day of the month following that in which the operations carried out occur, grants companies authorized to operate in the system “financing” in the amount of 8% for operations involving the departure of goods.
In this case, the company enters into an ICMS “financing” contract on the transaction carried out and can subsequently settle it with a discount of 90%. Due to this transaction, it ends up having to recognize a “gain”.
For the Federal Revenue Service, the Fundap regime was not designed as an ICMS tax benefit, but as a financial incentive, although with the same type of purpose. According to the Tax Authority, it is precisely the advance payment with a discount that constitutes the distinguishing element of Fundap and characterizes it as a financial incentive and not a tax benefit.
In the preliminary decision, substitute federal judge Aylton Bonomo Junior, of the 2nd Federal Civil Court of Vitória, states that not every entry or accounting entry constitutes revenue. “The ICMS tax incentives, even though they can prevent a greater decrease in assets, do not constitute revenue, because they do not represent an effective entry of cash into the company's assets. In other words, they do not create new wealth”, he states (case no. 5029699-53.2021.4.02.5001).
In his decision, the judge states that the issue of including presumed ICMS credits resulting from tax incentives in the PIS and Cofins calculation basis is awaiting judgment by the Federal Supreme Court (STF). Six ministers voted that the measure is unconstitutional, but the judgment will be restarted after a request for a ruling.
For Aylton Bonomo Junior, the understanding is also applicable to other types of state tax incentives, which do not constitute the granting of presumed ICMS credit. The discount resulting from the early settlement of Fundap financing, he says, represents a tax benefit, which cannot be included in the calculation basis for PIS and Cofins.
“ICMS tax benefits or incentives do not generate an increase in assets, nor do they produce revenue or profit, as they operate, through a transversal route, to reduce the tax burden. Therefore, as they do not represent an increase of any kind, they do not constitute taxable revenue”, states the judge.
One of the lawyers representing the company, Flavio Tudisco, from the Tudisco e Rodrigues Advogados law firm, says that the judge also took into consideration a ruling by the Superior Court of Justice (STJ) that analyzed presumed ICMS credits, which is a type of benefit, and agreed that the reasoning applied to Fundap, which is an ICMS deferral with subsidized interest rates and sale of the asset at a discount. “The judge had to agree that Fundap is a benefit like any other,” he says.
The National Treasury Attorney General's Office (PGFN) was contacted by Valor, but had not responded by the time this edition went to press.