The Superior Court of Justice (STJ) has ruled that the ICMS Rate Differential (Difal) does not form part of the calculation basis of PIS and Cofins. The Court applied the same understanding established in Topic 69 of the Supreme Federal Court (STF) general repercussion, which also held that the “standard” ICMS should be excluded from the basis of these contributions.
See below what you need to know to apply this reduction in your company.
1.What is ICMS-Difal?
The ICMS-Difal (ICMS Rate Differential) is the difference between the internal rate of the destination state and the interstate rate applied to a sale. Each Brazilian state sets its own ICMS rate. In sales between different states, an interstate rate applies (which is usually lower).
The Difal ensures that the state where the final consumer is located receives its share of the tax, balancing revenue collection among the states. Thus, when a product is sold by a company in Rio Grande do Sul to a customer located in Ceará, where the internal ICMS rate is 20%, the company pays the 7% interstate ICMS (highlighted on the invoice) and the 13% ICMS-Difal.
2. What is the practical effect of this decision?
In practice, companies that pay ICMS-Difal on sales of goods subject to PIS and Cofins will also be able to exclude this expense from the calculation basis of the contributions. This will result in a reduction of the tax burden for companies.
3. Since when is this exclusion valid?
The Court applied the same modulation established by the Supreme Court, with effects valid from March 15, 2017, the date of the merits ruling at the STF. Accordingly, the exclusion can be applied from now on, and it is also possible to recover the amounts overpaid in the last five (5) years.
4. How to recover these amounts?
To recover the PIS and Cofins amounts paid in excess, the EFD-Contributions filings must be rectified for the periods in which Difal was paid. This will reduce the PIS and Cofins debts, and a claim for refund of the amounts overpaid can be filed.
If your company regularly pays ICMS-Difal, it is essential to carry out this review so that such amounts are excluded from the PIS and Cofins calculation basis, thereby reducing the tax burden on the operation.
