16 tax cases can be analyzed by the STF in 2023

The year 2023 begins with at least 16 major cases in the tax area, involving BRL 711 billion, pending a decision at the STF (Federal Supreme Court). Of these, 9 have already begun to be analyzed by the Court.

The possibility of changing the composition of the collegiate next year, with the appointment of two new ministers by the future government, and the transfer of some topics from the virtual plenary to the physical one could change the course of some of these judgments.

Minister Ricardo Lewandowski turns 75 in May, the age at which judges must retire compulsorily. In October, it will be the turn of Rosa Weber, current president of the court.

The PIS/Cofins —the tax responsible for most federal tax litigation and the target of several reform proposals—appears in six of these cases and accounts for more than 80% of the amounts under discussion.

Another prominent topic is the dispute between governors and taxpayers over the possibility of charging the differential ICMS rate (Difal) in 2022, the same year in which a complementary law on the subject was sanctioned, without respecting the principle of precedence.

Tax lawyers also point to the importance of two theses: the validity of res judicata and the end of the casting vote in CARF (Administrative Council of Tax Appeals).

A point that has gained relevance in recent STF judgments has been the concern with the impact of decisions on public finances, which has led some members of the Court to propose modulation of effects on the most relevant ones. Supreme ministers Dias Toffoli and Alexandre de Moraes are among those who have followed this path.

Vanessa Cardoso, partner in charge of the tax area at Sfera Law, says that this is an issue that may gain strength in the face of the more restrictive tax scenario in 2023. Therefore, she assesses that the tendency is for the results of the trials to be more unfavorable to taxpayers.

“We observe a trend of extreme concern with the budget issue to the detriment of the legal issue. The thesis may be good, there is clear unconstitutionality in charging the tax, however, when you look at the issue of the impact on the Union Budget or on the states, the issue ceases to be legal and becomes financial-political”, he says.

Tatiana Del Giudice Cappa Chiaradia, partner at Candido Martins Advogados, sees great chances of a modulation, for example, in the discussions on ICMS Difal. “There are five votes in favor of taxpayers. The law was published in January, so the new tax can only be demanded in 2023. I find it difficult for the Supreme Court not to modulate. Those who filed suit are safe. Those who did not will depend on the decision.”

José Eduardo Toledo, partner in the tax area at Madrona Advogados, also highlights the uncertainty in the coming year in view of the replacement of retiring ministers and recalls that the scores in the trials have been tight in the latest decisions of the court.

“Two new people add a lot of weight. I haven’t seen 11 to zero in taxes for many years, it’s always 6 to 5 or 7 to 4. to be a vote leader”, he says.

See 16 highlighted tax topics for 2023, according to experts:

1) PIS/Cofins on financial institution revenue

• The enforceability of taxes on the financial income of these institutions is discussed
• Status: Request for a visit from Minister Dias Toffoli.
• Impact: BRL 115.2 billion

2) End of casting vote in Carf

• The STF will decide whether the rule of Law No. 13,988/2020 that extinguished the “quality vote” (vote of the chairman of the fractional body of Carf in case of a tie in the judgment) is valid. With the amendment currently in a tie situation, the case must be judged in favor of the taxpayer.
• Status: Request for review by Minister Nunes Marques.
• Impact: no estimate

3) Individual res judicata versus binding decisions of the STF

• This discussion involves taxpayers who have obtained a final and unappealable decision defining the non-payment of a tax. If, subsequently, there is a position of the Supreme in a direct action of unconstitutionality (ADI), for example, considering the constitutional charge, this may reach the final and unappealable decision of the taxpayer.
• Situation: The process was highlighted by the rapporteur, Edson Fachin. The highlight request is made to move the judgment from the virtual plenary to the face-to-face one.
• Impact: no estimate

4) Difal ICMS

• It is discussed in what year the states can start charging this tax: in 2022 or only in 2023, as defended by the taxpayer, since the law that regulated it was published on January 4 of this year
• Situation: Majority of pro-taxpayer votes in the virtual plenary. A prominent request by Minister Rosa Weber, requested by governors, which in theory zeroed the score, by transferring the discussion to face-to-face judgment.
• Impact: BRL 9.8 billion

5) PIS/Cofins-import

• Extraordinary appeal in which the requirement of a supplementary law to institute the import contribution and the possibility, or not, of retroactive application of Law nº 10.865/2004, which created a concept of specific customs value for these contributions, is discussed
• Status: Awaiting judgment.
• Impact: BRL 325 billion

6) Inclusion of ISS in the PIS/Cofins base

• “Puppet” of the thesis of the century (ICMS based on PIS/Cofins)
• Situation: Special request by Minister Luiz Fux.
• Impact: BRL 35.4 billion

7) Exclusion of PIS/Cofins from its own calculation base

• Another “offspring” of the thesis of the century (ICMS based on PIS/Cofins)
• Status: Awaiting judgment.
• Impact: BRL 65.7 billion

8) Exclusion of the presumed ICMS credit from the PIS/Cofins base

• Another “puppy” thesis. Exclusion of amounts corresponding to presumed ICMS credits arising from tax incentives granted by the states and the Federal District.
• Situation: Special request by Minister Gilmar Mendes.
• Impact: BRL 16.5 billion

9) Incidence of PIS/Cofins on revenue from lease of movable and immovable property (two trials)

• Extraordinary appeal in which the constitutionality of levying the contribution on revenues from the leasing of movable property is discussed
• Status (movable property): Awaiting judgment.
• Situation (real estate): Featured request by Minister Luiz Fux.
• Impact (total): BRL 36.2 billion

10) INSS on vacation third

• The modulation of the effects of the decision of the STF is discussed, which decided on the constitutionality of the levy of the social security contribution on amounts paid by the employer as a constitutional third of vacations taken
• Situation: Special request by Minister Luiz Fux.
• Impact: BRL 80 billion to BRL 100 billion

11) Cide remittance abroad

• The constitutionality of the contribution on remittances abroad as royalties and remuneration for technical services, administrative assistance and the like, instituted by Law 10.168/2000, is discussed.
• Status: Awaiting judgment.
• Impact: BRL 19.6 billion

12) Isolated fine for non-approval of compensation

• The legitimacy of the isolated fine of 50%, foreseen by the federal legislation, applied on the tax debt whose compensation has been rejected by the Federal Revenue Service is discussed.
• Situation: Special request by Minister Luiz Fux.
• Impact: BRL 3.7 billion

13) Reimbursement of Reintegra

• The STF will analyze whether the Executive Branch can reduce the Reintegra refund percentages.
• Situation: Special request by Minister Luiz Fux.
• Impact: BRL 4.0 billion

14) ISS versus ICMS in advertising and publicity

• Awaiting judgment of embargoes.
• Impact: no estimate

15) Inspection Fees for Mining Resource Activities

• Awaiting judgment of embargoes.
• Impact: no estimate

16) Deduction of taxes on issuance of precatories

• Awaiting judgment.
• Impact: no estimate

Sources: Survey by Madrona Advogados and Candido Martins Advogados. Values ​​on total impact calculated by the National Treasury.