FEDERAL GOVERNMENT REDUCES FUEL TAX BURDEN AND RAISES FINANCIAL SECTOR TAX BURDEN
The Federal Government, through Decree no. 10,638/2021 and Provisional Measure ("MP") no. 1,034/2021, published on 03/01/2021, instituted tax changes relevant to the current Brazilian scenario, among which we highlight the following:
- ZERO ALIQUOT FOR PIS AND COFINS ON DIESEL AND GLP (COOKING GAS)
Decree No. 10,638/2021 eliminated the rates of the Social Integration and Civil Servants' Investment Program ("PIS") and the Social Security Financing Contribution ("COFINS") levied on the import and sale of Diesel fuel and LPG, or "cooking gas", for domestic use and in containers of up to 13 kg.
- INCREASE IN THE CSLL RATE OF THE FINANCIAL SECTOR
As a counterpart to the decrease in the collection of PIS and COFINS described above, MP no. 1034/2021 increased the rates of the Social Contribution on Net Income ("CSLL") of the financial sector. This change is only effective as of July 1, 2021.
The CSLL rate payable by banks, which is currently 15%, will be 25% from July 1, 2021 to December 31, 2021; and 20% as of January 1, 2022. For legal entities engaged in the following financial activities: (i) private insurance; (ii) capitalization (iii) distribution of securities; (iv) exchange and securities brokers; (v) financial - credit, financing and investment companies; (vi) real estate credit companies; (vii) credit card companies; (viii) leasing companies; (ix) savings and loan associations; and (x) credit cooperatives, the CSLL rate will increase from 15% to 20% from July 1, 2021 to December 31, 2021; and will return to 15% as from January 1, 2022.
REPEAL OF THE SPECIAL SCHEME FOR THE CHEMICAL INDUSTRY - REIQ
E OF DIFFERENTIATED RATES OF PIS AND COFINS ON IMPORTS AND SALES IN THE DOMESTIC MARKET OF PETROCHEMICALS
Another measure adopted by the Federal Government in said MP no. 1034/2021 was the revocation of the special taxation with PIS and COFINS reduction for Naphta and other products intended to petrochemical plants, object of the Special Regime of the Chemical Industry ("REIQ"), instituted by Law no. 12,859/2013. The revocation will be effective as of July 1, 2021.
Thus, the differentiated rates of PIS and COFINS on the import of the following petrochemical products were revoked:
(i) ethane, propane and butane, when destined to the production of ethylene and propylene;
(ii) petrochemical naphtha and condensate, when destined to petrochemical plants; and
(iii) ethane, propene, butene, butadiene, orthoxylene, benzene, toluene, isoprene and paraxylene, when the import is made by chemical industries.
The differentiated PIS and COFINS rates on the domestic sale of the following petrochemical products were also revoked:
(iv) petrochemical naphtha, arising from the sale of this product by the producer or importer to petrochemical plants;
(v) ethane, propane, butane, refinery condensate and gas streams - HLR - light refinery hydrocarbons, resulting from the sale of this product by the producer or importer to the petrochemical plants to be used as input for the production of ethene, propene, butene, butadiene, orthoxylene, benzene, toluene, isoprene and paraxylene; and
(vi) ethylene, propene, butene, butadiene, orthoxylene, benzene, toluene, isoprene and paraxylene, arising from the sale of this product by the producer or to chemical industries to be used as production input.
In addition, articles 57 and 57-A of Law No. 11/196/2005, which provided for the possibility of computing PIS and COFINS credits by petrochemical plants upon acquisition or import of petrochemical products, and article 57-B, which provided for the deemed credit relating to acquisition of ethanol used in polyethylene production, were repealed.
PRESUMED CREDIT OF PIS AND COFINS ON INPUTS USED IN THE PRODUCTION OF ARTICLES FOR USE IN HOSPITALS, CLINICS, MEDICAL OFFICES AND VACCINATION CAMPAIGNS
In order that the revocation of the REIQ - Special Regime for the Chemical Industry, mentioned above, does not affect the fight against Covid-19 in the country (since it may burden petrochemical industry products used as inputs in pharmaceutical and hospital products, such as masks, alcohol gels, disinfectants, sanitizers, etc.), MP 1034/2021 also instituted a presumed PIS and COFINS credit for products containing inputs originating from petrochemical industries or imported in their composition, provided that such inputs are those correlated in the REIQ revoked at the time. This measure will be effective from July 1, 2021 to December 31, 2025.
NEW REQUIREMENTS FOR PURCHASE OF VEHICLES EXEMPT FROM IPI BY PEOPLE WITH DISABILITIES - PCD
MP no. 1034/2021 also brought other compensation measures for the reduction of PIS and COFINS of the fuel sector, one of them being the change in the requirements to enjoy the IPI exemption benefit in the acquisition of automobiles by PCD (people with disabilities) dealt with in Law no. 8989/1995. From March 1 through December 31, 2021, the exemption will only be granted for the purchase of new vehicles not exceeding R$70,000.00 (seventy thousand reais). In addition, the exemption benefit may only be used every 4 years, replacing the previous rule of 2 years.
This change, which is effective immediately, has been interpreted as a violation of the principle of nonagesimal anteriority, since the stipulation of immediate compliance with the new requirements by dealers and manufacturers would necessarily imply that requests for acquisition of vehicles in amounts over R$70,000.00 and made less than 4 years between the previous purchase and the new purchase may be questioned by the Tax Authorities.
POSSIBILITY OF RENEGOTIATING DEBTS WITH THE UNION, INCLUDING FOR COMPANIES UNDER JUDICIAL REORGANIZATION
On March 1, 2001, Ordinance PGFN No. 2381/2021 was published, whereby the Attorney General Office of the National Treasury ("PGFN") reopened the Tax Rebate Program to encourage taxpayers' tax compliance in connection with the taxes owed to the Federal Government by negotiating, through installment payments, the debts entered in the federal past-due liability roster and the possibility of taxpayers entering into tax transactions. There are several types of transactions provided for in the Ordinance.
On the same day, the PGFN also published Ordinance No. 2382/2021, which regulates the innovations introduced by Law No. 112/2020 (Judicial Reorganization and Bankruptcy Law), regulating the negotiation of debts owed to the Federal Government by taxpayers under judicial reorganization. Companies in this stage may adhere to the tax transaction or even install their debts in 120 up to 145 monthly installments.
EXCLUSION OF ICMS FROM PIS AND COFINS TAX BASES: IS YOUR COMPANY PREPARED TO PROVE THE CREDITS?
The Federal Supreme Court ("STF") decided that the ICMS included in the price of services or goods should not integrate the tax bases of the PIS and COFINS. The Court is yet to decide which ICMS should escape the reach of these contributions, whether the one stated in the invoices or the amount payable, ascertained on a monthly basis - which will serve to define, therefore, the credit amount applicable to the taxpayer that has unduly paid the taxes with the respective inflated bases.
In this sense, the RFB decided to set up audit teams that will analyze the companies' credit amounts, examine the offsetting carried out and even report to the Federal Public Prosecution Office facts that, in theory, constitute crimes. Therefore, it is recommended that the companies ensure the existence of proper and sufficient documentation to support such PIS and COFINS credits.
STF DECIDES FOR MAINTENANCE OF SECRECY ON INFORMATION OF TAXPAYERS THAT ADHERED TO THE SPECIAL REGIME FOR EXCHANGE AND TAX REGULARIZATION - RERCT
On Friday evening, the Justices of the STF decided, by majority vote, in plenary session, that the provisions (§§ 1 and 2 of Art. 7 of Law No. 13,254/2016) that ensure the confidentiality of the data of those who joined the repatriation program, the Special Regime for Foreign Exchange and Tax Regularization ("RERCT"), are constitutional.
Through this repatriation program, Brazilians who held undeclared assets and money held abroad could regularize their situation, provided that the origin was lawful and there was collection of tax and fine on undeclared amounts, so they would not be liable for crimes of money laundering, tax evasion and currency evasion.
ITCMD ON DONATION AND INHERITANCE ABROAD
STF DECIDES AGAINST THE COLLECTION OF THE TAX BY THE STATES AND MODULATES THE EFFECTS OF THE DECISION
The STF decided, by majority vote, that the states cannot institute ITCMD on donations and inheritances from abroad, in view of the lack of regulation by Supplementary Law (article 155, paragraph 1, III of the Federal Constitution/1988).
The STF decision rendered in Extraordinary Appeal No. 851108 impacts all the states of the federation, since the matter was discussed in general repercussion, and had its effects modulated on Monday, 03/01/2021. It will become effective as of the publication, and may only retroact to reach lawsuits pending conclusion that discuss the validity of the collection of ITCMD by the States on donations and inheritances abroad and to which federative entity such tax would be due.
THE INCLUSION OF ICMS IN THE CALCULATION BASIS OF CPRB IS CONSTITUTIONAL
The Justices of the STF decided that the ICMS should integrate the concept of gross revenue for purposes of determining the Social Security Contribution on Gross Revenue ("CPRB"). The decision was rendered in Extraordinary Appeal No. 1187264, with recognized general repercussion, in which the constitutionality or not of including the ICMS in the tax basis of said contribution was discussed.
The CPRB is commonly characterized as "payroll exemption", since, in theory, it tends to be less burdensome than the social security contribution that is calculated on the payroll ("INSS-Company").
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