STF Agenda – Exclusion of the ISS of the taxable basis of PIS/COFINS, and of the ICMS of the CPRB

In 2017, the Federal Supreme Court (“STF”) ruled that the Tax on the Circulation of Goods and Services (“ICMS”) must not be included in the taxable basis of the social contributions – PIS and COFINS. The reasoning was that the ICMS is not part of the taxpayer’s assets, neither its revenue (taxable basis of the social contributions).

In this context, other similar discussions emerged, such as (i) exclusion of the Tax on Services (“ISS”) from the taxable basis of PIS and COFINS; and (ii) exclusion of the ICMS from the taxable basis of the Social Security Contribution on Gross Revenue (“CPRB”). Taxpayers sustain the same reasoning that both the ISS (item (i)), and the ICMS (item (ii)) are not incorporated into the taxpayer’s assets, neither is part of its revenue.

Last month, STF initiated the judgment on the exclusion of ISS from the PIS and COFINS’s tax calculation base. So far, it has a favorable vote to taxpayers by the reporting Minister Celso de Mello. There is a request for examination of records, and the trial has yet to be finalized. Regarding the exclusion of the ICMS from the CPRB’s tax calculation base, STF will start the judgment on today.

Based on the above, , before a final decision by the STF, we recommend the filing of a lawsuit requiring immediate suspension, as well as the refund of PIS and COFINS and CPRB unduly paid with the inclusion of ISS and ICMS, respectively, in last 5 years and updated by the SELIC interest rate, and thus avoiding the risk of possible modulation of effects (time restrain on the legal effects of the decisions).

We remain at your disposal for clarifications.

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