An injunction from the 15th Public Treasury Court of São Paulo reinstated the collection of the Tax on Services of Any Nature (ISS) in the capital of São Paulo based on a fixed value of companies whose professionals provide personal services. The measure removes the progressive table established by law 17.719/21, and affects professionals such as lawyers, doctors, dentists, psychologists, engineers and accountants.
The table sets a monthly gross revenue for the incidence of the ISS rate of 5% according to the number of professionals in the companies. For a company with up to five professionals, for example, it would be R$ 1,995.26 per person. In the case of six to ten professionals, it would be R$ 5,000 multiplied by the number of professionals. For companies with 11 to 20 professionals, it would be R$ 10,000 multiplied by the number of professionals. The value increases progressively, up to companies with more than 100 professionals, whose gross revenue would be R$ 60,000 multiplied by the number of professionals.
The injunction was granted by Judge Gilsa Helena Rios, after analyzing a collective security order proposed by the São Paulo section of the Brazilian Bar Association (OAB-SP), the Center for Studies of Law Firms (Cesa) and the Union of Law Firms of the States of São Paulo and Rio de Janeiro (Sinsa).
Although the injunction was filed by legal entities, the injunction extends to other companies covered by Law 17,719/2021, which should come into effect from February 26.
When granting the injunction, the judge stated that “the progressive nature of the tax and the taxable capacity are not in dispute”, but “it cannot be accepted that the taxable capacity be measured by the presumed gross income of a variable nature”. She also cited Decree-Law 406/68 and Theme 918 of the Federal Supreme Court (STF).
Decree-Law 406 establishes that single-professional law firms are subject to fixed or variable taxation, provided that it is due to the nature of the service provided. On the other hand, Topic 918, established after the judgment of Extraordinary Appeal (RE) 940769, under the general repercussion regime, states that “a municipal law that establishes impediments to the submission of professional law firms to the fixed taxation regime on an annual basis as established by national law” is unconstitutional.
According to Gustavo Brigagão, president of Cesa, the form of taxation proposed by the city of São Paulo violates the principles of reasonableness and tax capacity. “It has such an exorbitant value that all the principles governing taxation fall to the ground,” he says.
For Brigagão, the injunction is important to prevent other federative entities from adopting similar collection criteria. “Every time an authority issues a law changing taxes, other municipalities and states in the federation quickly follow suit. This injunction granted has the power to demonstrate that this type of initiative by the Government will not prosper,” he says.