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In a new opinion, the Federal Tax Authority reduces PIS and COFINS credits due to the exclusion of ICMS from the tax bases. Learn more by accessing the bulleting produced by our Tax Law team.

The Federal Tax Authority reduces PIS and COFINS credits due to the exclusion of ICMS from the tax bases

Published on September 14, 2021

The Brazilian Federal Tax Authority issued COSIT Opinion No. 10/2021, with the understanding that the calculation of PIS and COFINS credits must consider the purchase value of the goods, deducted from the ICMS due in the operation, considering that said state tax is no longer part of the total purchase price of the product supported by the purchaser.

This understanding materializes the fear of a new judicial discussion on the subject, to the extent that the Federal Tax Authority tries to limit the financial impacts resulting from the decision rendered by the Federal Supreme Court in the Extraordinary Appeal No. 574.706/PR, by means of which it established the understanding that ICMS due by taxpayers must be excluded from the PIS and COFINS tax bases, as it does not fit the concept of revenue.

The COSIT Opinion concluded that “in the calculation of Cofins credits to be offset, the ICMS amount highlighted in the Invoice should be excluded from the calculation basis”, based on the following grounds:

a. The ICMS did not make up the price of the product, for STF decided that said tax would not integrate the revenue earned by the legal entity, and, consequently, the product price;
b. Offense to the principle of cumulativity, considering that the calculation basis for the purpose of calculating the PIS and COFINS due has to be the same used for crediting purposes;
c. Offense to item II, paragraph 2, of article 3 of Law No. 10833/2003, which determines that the value of the acquisition of goods or services not subject to the payment of the contribution will not be entitled to credit; and, finally;
d. Offense to the principle of reasonableness.

According to these grounds, the application of the 9.25% rate, for the purposes of calculating the credits, should be on the values of the goods purchased for resale and for use as inputs, minus the ICMS highlighted in the purchase Invoice.

Despite the grounds brought by the tax authority, there are solid arguments to safeguard the right of taxpayers to credit themselves PIS and COFINS at the rate of 9.25%, applied to the total amount of the Invoice for the acquisition of these products without excluding the ICMS from its calculation basis, since the understanding expressed does not find a legal basis to support such limitation to the taxpayers’ credit right, considering the wording given to the provisions of items I and II of article 3 of Laws 10,637/2002 and 10,833/2003.

This was also the understanding already expressed by the Federal Court of the 3rd Region in judgments related to proceedings in which taxpayers sought in advance the recognition of their right to credit based on the calculation of the purchase price of the products, without having the judgment made by STF in relation to the concept of billing, or gross revenue, unduly impact the concepts related to the use of PIS and COFINS credits on the products purchased.

In this sense, there shall only be an impact on the calculation basis of credits to be used by taxpayers if their suppliers reduce the price due to the gains resulting from the exclusion of ICMS from the calculation basis of PIS and COFINS, as a way to be more competitive in the market. However, if they maintain prices and expand their margins, the credit to be taken cannot be reduced, as it must be calculated on the price of the goods or inputs purchased and ICMS integrates the value of these products.

Finally, it should be noted that item II, of §2, of article 3, of Law No. 10,833/2003 is not applicable, for the operation is taxed by PIS and COFINS, while said provision applies only when “the acquisition of goods or services not subject to the payment of the contribution”, that is, when resold or used as inputs in products or services subject to a rate of zero, exempt or not encompassed by the contribution.

Considering the broadly exposed context and the guidance given to tax auditors by the understanding formalized by COSIT, taxpayers who do not exclude ICMS in the calculation of PIS and COFINS credits may be notified, unless they are under the protection of a judicial authorization.

Our firm, BRZ Advogados, is at your disposal to clarify any doubts about the matter.