Provisional Presidential Decree (MP) No. 1.227/2024 limited the use of PIS/COFINS credits (“MP of PIS/COFINS”), with a view to compensating for the tax break that the federal government had with the payroll exemption for 17 economy sectors and municipalities.
Since the enactment of Law 10637/2002, PIS/COFINS credits under the noncumulative regime can be used to settle debts from other federal taxes, such as IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Income). This is called “cross-offsetting.”
With the MP, as of June 04, 2024, PIS/COFINS credits could only be offset against PIS/COFINS debts. Thus, the only alternative for the taxpayer would be the reimbursement in cash of the credits of these contributions, which was typically time-consuming.
The situation would worsen for those taxpayers who accumulate presumptive credits, owing to the absence of debts to be offset, as well as the impossibility of requesting reimbursement or offset for accumulated presumptive credits (credit balance) with other taxes administered by the Federal Revenue Office.
Ultimately, this restriction on offset to the detriment of the broad utilization of credits would imply an indirect and immediate increase in the tax burden, thus defying the principle of 90-day priority, which establishes that the increase in these contributions is only valid after 90 days (Article 195, Paragraph 6, of the Federal Constitution).
Another questionable point is the lack of urgency and relevance, indispensable requirements for the issuance of any and all provisional presidential decrees, especially if we take into consideration the fact that the payroll exemption has existed in the Brazilian tax system since 2011.
Taxpayers cannot be subjected to an increase in tax burden without any predictability.
Fortunately, accepting the thesis of breach of the principle of 90-day priority, on June 11, 2024, the president of the Federal Senate returned part of the “MP of PIS/COFINS MP” to the Presidency of the Republic, specifically the part that limited PIS/COFINS credits, through Declaratory Act No. 36/2024.
This means the denial of partial processing of the wording of the MP in the National Congress, thus marking the termination of the validity and effectiveness of the rejected part, from the date of its issuance.
Before that, on June 10, 2024, the National Board of Partido Progressistas political party filed ADI (Direct Action for Unconstitutionality) No. 7671 before STF (Federal Supreme Court), in order to question the validity of MP No. 1227/2024, requesting the suspension of the decree. Besides that, an injunction had already been granted by the Judiciary, ordering compliance with the principle of 90-day priority art by the presidential decree.
As the denial was partial, some other points established by MP No. 1.227/2024 were upheld, such as additional conditions for tax benefits and regulation of the litigation of ITR – Rural Territorial Tax.
We will await the next developments of the federal government’s tax revenue agenda, which seems to be willing to compensate at all costs for the effects of maintaining the payroll exemption.
Available in: https://www.migalhas.com.br/depeso/410525/fim-da-limitacao-de-creditos-de-pis-cofins-imposta-pela-mp-1-227
Flávia Santanna Benites e Sandro Miguel Júnior
Autor: Flávia Sant'Anna Benites • email: flavia@ernestoborges.com.br • Tel.: +55 67 99984 1406
