In April 2021, in the judgment of Declaratory Action for Constitutionality No. 49 (‘ADC No. 49’), the Full Bench of the STF declared unconstitutional certain provisions of Supplementary Law 87/1996 (‘Kandir Law’) that instituted the incidence of the ICMS on the transfer of goods between establishments of the same taxpayer. The winning vote on this occasion was cast by the minister reporting the case, Edson Fachin, who held that the operation of circulation of goods must constitute a legal transfer (of possession and ownership) for the taxable event to be established, and therefore the physical and economic circulation of the goods alone is not enough.
Despite the incidence of the ICMS was rejected by the Supreme Court, as the decision rendered in the judgment was pending analysis of the modulation of its effects, the taxpayers remained uncertain as to such collection and, in particular, as to how the issue of ICMS credits in the circulation of goods between establishments of the same taxpayer with respect to their transfer would stand.
In other words, it was not known whether the ICMS credit, held by the establishment that made the remittance of the goods, could be transmitted together with the goods to the other establishment of the same taxpayer.
Almost two years after the thesis was established, on April 12, 2023, the Supreme Court finally pronounced its position on the modulation of the effects of the decision, defining that the decision rendered in April 2021 will be effective as of the fiscal year 2024, except for the administrative and judicial proceedings pending conclusion until the date of publication of the minutes of the decision on the merits.
Furthermore, the STF has defined that if the States do not regulate the transfer of ICMS credits between establishments of the same owner, the right of taxpayers to transfer such credits is recognized.
This decision still does not put an end to the taxpayer’s situation since it is not possible to know whether the transfer of credits by the States will take place between establishments of the same taxpayer.
In addition, it is also not clear how the transfer of credits will be carried out, should the States not regulate the matter.
Amidst this scenario, the taxpayers can only wait and monitor how the matter will be tackled by the States until fiscal year 2024 or even if there will be further appeals filed in ADC No. 49 in order to clarify the matter.
Our tax team is available to provide clarification and guidance on the subject addressed.
Co-authored by: Phillipe da Cruz Silva
