STF decisions: firm as a nail in sand?

The year has just begun, and taxpayers are already anxious about the cases pending judgment by the Brazilian Supreme Court (STF). And the curious thing is that the views of taxpayers who turn to the Supreme Court are being monitored by the Finance Ministry, since many of these lawsuits can have significant impacts on the country’s financial health.

How will be the “power” or “interference” of STF’s decision in tax matters in 2020? These decisions will directly influence the Union’s budget.

A long-awaited decision is one that discusses the possibility of levying PIS/COFINS tax (tax on revenue) on the revenues of financial institutions that result from its corporate purpose (operating revenues), which are dissociated from the simple “sale of goods and rendering of services” .

After so many comings and goings in relation to the definition of basis of the PIS / COFINS calculation during the last twenty years, at the end of 2019, CARF (Brazil’s administrative fiscal court) demanded the inclusion of operating revenues in the concept of the turnover of financial institutions.

It turns out that, contrary to what was included in CARF’s decision, this issue has not yet had a final position from the STF. It is expected that the matter will be ruled this year as a general repercussion decision, especially in relation to these operating revenues of financial institutions (i.e., judgment of RE No. 609,096).

CARF’s decision represents yet another uncertainty for the taxpayer. Could CARF assume this position that has not yet been defined by the STF?

It is necessary to wait for the STF’s judgment to have something concrete as to whether financial revenues include the basis calculation of the PIS / COFINS due by financial institutions.

Also, there is a huge expectation as to the temporal definition that can be brought in this judgment. Will the decision be used only in cases before 2014 or also include future situations? 2020 promises more doubts. We must wait!

By Maria Paula Carvalho Molinar, lawyer at Candido Martins Advogados