The Supreme Court decides to exclude the ICMS from the PIS and COFINS tax base

The Supreme Court (STF) decided on Wednesday, 15 march, that the federal government should exclude the Tax on Goods and Services (ICMS) from the calculation basis of contributions to the Social Integration Program (PIS) and the Contribution to the Financing of Social Security (COFINS).

The decision of the Supreme Court will have a general impact on the judiciary so, from now on, the lower courts of justice will also have to follow this new guide.

PIS and COFINS are taxes paid by companies from all sectors and contribute to the financing of Social Security and unemployment insurance.
In a statement, the Ministry of Finance reported that the Union will file a judicial appeal called “Embargos de Declaração ” when the judgment of the STF is published, “in order that the request for modulation of effects is evaluated by the Court.”

By means of this appeal the Union requires that the decision of the Supreme Court might take effect from 2018. The impact of this decision can just be measured when the analysis of the said resource is made by the Plenary of the Supreme Court.

The model of the current collection is complex and there are different forms of tax incidence, non-cumulative (for companies that are in real income, which is a method of calculating income tax) and cumulative system ( For companies that are in assigned revenue), as well as a differentiated system for micro and small companies.

The current model of calculation is complex and there are different ways for the tax application: non-cumulative (For companies that adopt the “real profit” regime, which is a method of calculating corporate income tax) and the cumulative system (for companies that adopt the “presumed profit” regime), in addition to a differentiated system for micro and small companies.

According to government estimates, with the change in the tax base, the Treasury will stop raising R $ 250.3 billion in taxes, which has been discussed in court since 2003.

The trial began on Thursday, March 9, but was interrupted when the vote was 5×3 against the government because ministers Gilmar Mendes and Celso de Mello were not there. Both voted last Wednesday: Gilmar voted in favor of the government to not change the formula for calculating two taxes, but Celso de Mello took the advice of the speaker of the case, the minister de Carmen Lucía, and voted for untie the ICMS from PIS and COFINS.