On November 12, Brazil’s Superior Court of Justice (STJ) unanimously ruled that the differential ICMS rate (DIFAL) should not be included in the tax base for PIS and COFINS contributions. This decision aligns with the precedent set by the Supreme Federal Court (STF) in Topic 69 (RE 574706), which determined that ICMS should be excluded from the calculation base of these contributions, as the tax does not constitute revenue for the taxpayer but is instead a sum earmarked for public coffers.
DIFAL represents the difference between ICMS rates applied across states and is typically charged in interstate transactions involving end consumers located in different states. Its classification as an “inflow” (and not revenue) underpinned the STJ’s decision, drawing parallels with the STF’s previous ruling on ICMS.
For a time, there was a jurisdictional dispute between the STF and STJ over which court should decide on the inclusion of ICMS DIFAL in the PIS and COFINS tax bases. While the STF argued that it was a matter of infraconstitutional legislation, the STJ emphasized the constitutional relevance of the issue. This disagreement led to what many referred to as a “legal limbo,” with conflicting rulings issued by the two courts.
In her decision, Justice Regina Helena Costa highlighted the “derivative thesis” nature of the ICMS DIFAL case relative to Topic 69, noting that as an issue not previously addressed by the STJ, it deserved special attention. With this ruling, the STJ reinforced the understanding that ICMS DIFAL, like ICMS itself, should be excluded from the PIS and COFINS tax bases.