For a long time now, taxpayers have been fighting with the federal tax authorities to try to avoid taxation on the tax benefits granted by the states and the Federal District for the Tax on the Circulation of Goods and Services (ICMS).
After lengthy discussions involving everything from the legal nature of the benefits (e.g. whether they are an investment grant or a costing grant) and even the constitutional competence of another federal entity to levy taxes on these amounts, the issue reached the Superior Court of Justice (STJ) which, in the judgment of Repetitive Theme No. 1.182, established the following thesis:
“It is impossible to exclude tax benefits related to ICMS – such as reduction of the calculation base, reduction of the rate, exemption, deferral, among others – from the calculation base of IRPJ and CSLL, except when the requirements provided for by law are met (article 10 of Complementary Law 160/2017 and article 30 of Law 12.973/2014), and the understanding established in EREsp 1.517.492, which excluded the presumed ICMS credit from the calculation bases of IRPJ and CSLL, does not apply to them. In order to exclude tax benefits related to ICMS – such as a reduction in the calculation base, rate reduction, exemption, deferral, among others – from the IRPJ and CSLL calculation base, it should not be required to demonstrate that they were granted as a stimulus to the implementation or expansion of economic ventures. Considering that Complementary Law 160/2017 included paragraphs 4 and 5 in article 30 of Law 12.973/2014 without, however, revoking the provisions of paragraph 2, the waiver of 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 assessing the IRPJ and CSLL if, in an inspection procedure, it is found that the amounts arising from the tax benefit were used for purposes other than guaranteeing the viability of the economic enterprise.”
Although this decision has not yet become final, in anticipation of a possible unfavorable scenario in the judicial sphere, the Federal Government issued Provisional Measure (MP) 1.185 revoking art. 30 of Law 12.973/2014, which offered legal support for the non-taxation of the amounts corresponding to these tax benefits. As a result, the thesis established by the STJ would no longer be applicable to future cases.
In addition, the MP establishes a new system by which it replaces the exclusion of ICMS benefits from the calculation basis of Corporate Income Tax (IRPJ), Social Contribution on Net Income (CSLL), contribution to the Social Integration Program (PIS) and Contribution to Social Security Financing (COFINS), with a “tax credit” system.
In a nutshell, the Provisional Measure stipulates that companies opting for the real profit regime that receive investment subsidies from the Federal Government, States and Municipalities will be allowed to calculate a tax credit that can be offset against other federal taxes or reimbursed to the taxpayer.
In order to do this, the aforementioned rule stipulates that the taxpayer must be previously authorized by the Federal Revenue, which will carry out an analysis to check whether or not the benefit can be considered an investment subsidy.
In other words, the Federal Revenue now has greater control over these operations, and it is up to it to identify which benefits may or may not generate the aforementioned credit.
Finally, under the terms of art. 16 of Provisional Measure No. 1.185/2023, this rule can only take effect from 01/01/2024. In addition, for the Provisional Measure to come into force, it must be voted on and approved in 2023 or, alternatively, a new Provisional Measure or Law must be enacted.
Our tax team is available to provide clarification and guidance on the subject.
Co-authors: Thais Riberio Casado e Phillipe da Cruz Silvia
