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STF resumes trial on the possibility of excluding ISS from the PIS/COFINS tax calculation basis

The Federal Supreme Court (“STF”) is expected to rule on Extraordinary Appeal No. 592,616/RS (Topic 118 of General Repercussion) on August 28, which discusses the non-inclusion of amounts collected as Tax on Services (“ISS”) in the tax calculation basis for PIS/COFINS contributions.

The discussion is similar to that decided by the STF in the trial of Extraordinary Appeal No. 574,706/PR (Topic 69 of General Repercussion), in which it ruled in favor of taxpayers to authorize the non-inclusion of the Tax on the Circulation of Goods and Services (“ICMS”) in the PIS/COFINS tax calculation basis (“the so-called thesis of the century”). The trial began in August 2021 and was tied with 4 votes in favor of taxpayers and 4 votes against. The trial was suspended due to a request for a hearing by Minister Luiz Fux and will now be held in person. As a result, the score was zeroed.

However, we emphasize that the votes of the already retired Ministers (Ministers Celso de Mello, Rosa Weber and Ricardo Lewandowski) should be maintained, which would lead to a 3-0 score for taxpayers. The other Ministers will be able to vote freely, including changing their previous understanding.

From an economic standpoint, according to what is indicated in the Budget Guidelines Bill for 2025, the Federal Government itself estimates an impact of R$35.4 billion in the event of a decision favorable to taxpayers. The amount to be recovered will depend on the collection regime and the amount of ISS collected.

In this scenario, we recommend that service providers file a lawsuit to protect their right not to include ISS in the PIS/COFINS tax calculation base in the future, as well as to be able to refund or offset amounts unduly paid in the last 5 years updated by SELIC, especially due to the risk of modulating the effects of the STF decision, in the event of a favorable decision, which would prevent the recovery of amounts unduly paid to those who file a lawsuit after the date of the STF judgment.

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