The inclusion of the ICMS in the tax basis of the PIS and COFINS is unconstitutional
In two sessions, on March 9, 2017 and on March 15, 2017, the full session of Federal Supreme Court judged the Extraordinary Appeal nº 574.706.
After the votes were cast by the ten (10) justices that comprise the Court until such date, the Justice Carmen Lúcia (Chief Justice) rendered the result of the judgment in favor of the taxpayers – the inclusion of the ICMS in the tax basis of the PIS and COFINS is unconstitutional -, by a majority of votes (6 to 4), in accordance with the table below:
It is also pending the judgment of modulation of the effects of the judgment, which should be required by Attorney of National Treasury through the motions for clarification. After this judgment and the certification of the final and non-appealable judgment, all Courts and the Judges of the lower courts shall apply said construal in such a manner as to put an end to the individuals proceedings pending before the Judiciary.
Considering that the possible modulation of the judgment and the statute of limitation in Brazil is of 5 (five) years and that the PIS and COFINS are taxes levied in a monthly-basis, it is advisable that the Company, that has not started any court action to discuss the case, files such lawsuit as soon as possible because every time that a new month begins, it will be losing a portion of its potential tax credit. Please note that the filing of this lawsuit does not bring any adverse tax impact for the company.