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Brazil Supreme Court rules on tax base disputes
The Brazilian Supreme Federal Court (STF) has concluded a significant ruling regarding the inclusion of municipal service taxes (ISS) in the calculation base for federal PIS and Cofins contributions. In a 6-5 decision, the court determined that ISS should be excluded from these federal bases, following the precedent previously set regarding state-level ICMS taxes. Justice Luiz Fux, providing the tie-breaking vote, noted that the portion of revenue used to pay ISS does not constitute company patrimony but is a financial flow between the client and the municipality.
Separately, the Superior Court of Justice (STJ) maintained the inclusion of ICMS in the calculation base for PIS and Cofins specifically for the fuel sector's special taxation regime. The 1st Chamber of the STJ unanimously rejected arguments from alcohol companies seeking to extend the 'century thesis'—which excludes ICMS from federal tax bases—to their specific volume-based taxation model.
In the state of São Paulo, tax authorities have issued administrative guidance stating that while IBS and CBS will not be included in the ICMS base during 2026, they are expected to be part of the calculation once they become effectively exigible. This highlights ongoing complexities in the transition toward the new tax system established by the 2023 reform.
Entities
Gurgel de Faria · Luiz Fux · Secretaria da Fazenda e Planejamento de São Paulo · Superior Tribunal de Justiça · Supremo Tribunal Federal
Claims
What the coverage asserts, and how many sources carry each claim.
- [○ 1 SOURCE] The STF ruled 6 to 5 to exclude ISS from the PIS and Cofins calculation base. oglobo.globo.com
- [○ 1 SOURCE] The São Paulo tax authority considers IBS and CBS to be part of the ICMS base once they are effectively exigible.
- [○ 1 SOURCE] The São Paulo Finance Secretariat will not include IBS and CBS in the ICMS base during 2026.
- [○ 1 SOURCE] The 2023 tax reform created a system intended to reduce legal disputes and tax cascading. oglobo.globo.com
- [○ 1 SOURCE] The STJ maintained ICMS within the PIS and Cofins calculation base for the fuel sector's special taxation regime. seucreditodigital.com.br
- [● 2 SOURCES] The STF previously established that ICMS does not compose the PIS and Cofins calculation base. seucreditodigital.com.br · oglobo.globo.com
- [○ 1 SOURCE] Tax litigation in Brazil was estimated at approximately R$ 5.7 trillion in 2020. oglobo.globo.com
- [○ 1 SOURCE] The STJ ruling on fuel taxes was unanimous. seucreditodigital.com.br