Candido Martins Advogados was included in the new Brazil Contentious 2022 guide, by Chambers and Partners

Candido Martins Advogados was included among the leading tax litigation firms in Brazil by the new guide Brazil Contentious 2022, from the renowned Chambers and Partners publication.

Released today, the ranking also listed our partner Tatiana Del Giudice Cappa Chiaradia among the top professionals in this area in the country.

We congratulate our whole team for this result and thank our clients and partners for their trust!

New year, old discussion

The progressive collection of ISS for professional corporations in the city of São Paulo.

Like every start of the year, tax issues bring turmoil to the lives of taxpayers. Once again, 2022 was no different.

In addition to the discussion of ICMS-Difal, which we covered in our February issue of the tax newsletter, the beginning of the year stirred up São Paulo’s professional corporations that were surprised by yet another attempt by the São Paulo City Hall to increase the tax on services (ISS).

professional corporations – commonly used by law, accounting and engineering firms as well as medical, dental and physiotherapy clinics, etc. – are formed by the union of specialized professionals – lawyers, accountants, engineers, doctors, dentists, physiotherapists, etc. -, who carry out their activities.

Such companies are entitled to collect the ISS calculated on the basis of a fixed amount, multiplied by the number of qualified professionals who provide services on behalf of the company. This right is provided for in article 9, paragraph 3, of Decree-law No. 406/68, which was accepted by the 1988 Federal Constitution and ratified by Complementary Law No. 116/2003.

Since 1968, the Municipalities have tried, unconstitutionally and illegally, to modify this differentiated charge, aiming to tax the total amount received for the services provided. All were barred by the Judiciary, especially by the Federal Supreme Court (STF), which, when ruling Theme 918 of General Repercussion, stated the following: “It is unconstitutional any municipal law that establishes impediments to the submission of professional law firms to the tax regime fixed on an annual basis in the manner established by national law”.

However, the attempts continue. Since February 26, 2022, Municipal Law No. 17,719/2021 has been in force in the Municipality of São Paulo, which amended the wording of Municipal Law No. 13,701/2003, charging professional corporations the ISS using a progressive rate as per the number of qualified professional partners and according to variable ranges of monthly gross revenue.

Such a claim is not supported by the Federal Constitution, as well as not following the Federal Supreme Court ruling.

In view of this, once again, taxpayers who feel prejudiced have no alternative but to proceed with a judicial measure aimed at removing this new attempt by the Municipality of São Paulo to demand the ISS in a different way than legally authorized.