Supplementary Law Prohibits ICMS Tax on Transfers Between Branches


On December 29, 2023, the President of the Republic sanctioned Supplementary Law No. 204/2023, which amends Supplementary Law No. 87/1996, to provide for the non-incidence of ICMS (Tax on Circulation of Goods and Services) on the transfers of goods between establishments of the same owner. This regulation came into effect on January 1, 2024.

The main changes include:

Transfer of Credits: The new law establishes the transfer of credits related to previous operations between establishments of the same taxpayer, ensuring the maintenance of these credits in interstate transfers.

Limitation of Credits: The transfer of credits to the federative unit of destination will be limited to the interstate rates in effect, applied to the value of the transfer.

Responsibility of the Origin Unit: In case of a positive balance of credits in previous operations, the federative unit of origin will be responsible for transferring these credits.

However, it is important to note that the President of the Republic vetoed the provision that would allow the taxpayer to choose whether to tax or not the transfer operations between its establishments, citing concerns with legal security and tax supervision.

Furthermore, the changes brought by the new law must be harmonized with the ICMS Agreement 178/2023, which mandates the transfer of credits resulting from previous operations in interstate shipments.

Finally, we emphasize that new motions for clarification in ADC 49 are still pending judgment, seeking to clarify the possibility for the taxpayer to choose the use of ICMS credits and the extension of the deadline for regulating the issue, at least until the financial year 2025.


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