Opportunity: Unconstitutionality of the restriction on the taking of PIS and COFINS credits under the non-cumulative regime

The Federal Supreme Court will soon define the scope of the concept of non-cumulative assessment of PIS and COFINS contributions (matter No. 756), settling once and for all whether Laws 10637/02 and 10833/03 are unconstitutional in that they limit the use of certain credits that are considered costs and expenses in the ascertainment of taxable income.

The disputes over the qualification of inputs that should generate the right to the credit of the Contributions are not new in the judiciary: the STJ has already defined, in 2018, under the system of repetitive appeals, that, for PIS and COFINS crediting purposes, "the concept of input should be assessed in light of the criteria of essentiality or relevance, that is, considering the indispensability or importance of a given item - good or service - for the development of the economic activity performed by the taxpayer" (REsp 1,221,170).

However, the issue to be judged by the STF is broader and may allow taxpayers to use credits on all costs and expenses deducted in the ascertainment of the taxable income, such as labor costs/expenses (payroll), cleaning, advertising, among others.

Considering the risk of modulation of the effects of the decision, it is very important that companies file a lawsuit to guarantee their right to recover what was unduly paid in the last 5 (five) years.

For further information, please contact the Tax Litigation team at our office([email protected]).