Ministers formed a majority against the so-called “isolated fine”; estimated impact on the Union is BRL 3.7 billion in losses
The STF (Federal Supreme Court) formed a majority this Thursday (16.Mar.2023) to invalidate the 50% fine on denials of homologation of tax compensation by the Federal Revenue Service. The estimated impact on the Union, with the decision, is a loss of BRL 3.7 billion, according to the LDO (Budget Guidelines Law) of 2023.
The so-called isolated fine, now considered unconstitutional by the ministers of the Court, appears in the Law 9,430 of 1996. With the norm, the tax payer was subject to a fine of half the value of the claim if his request for reimbursement or compensation was denied.
The tax payer can request compensation in credits when he understands that he paid taxes unduly. While the refund request is analyzed by the Tax Authorities, the credits are made available for tax settlement. Negative analysis resulted in a fine of 50% on credits and a 20% fine for late payment.
Minister Edson Fachin, rapporteur of the case, adopts the following thesis in the trial: “the isolated fine provided for by law to be levied on the mere refusal of approval of tax compensation is unconstitutional because it does not consist of an unlawful act with the ability to provide automatic pecuniary penalty”. Here’s the full (98 KB) of the vote.
Renato Silveira, partner in the areas of tax litigation and social security taxation at Machado Associados, explains that now, “The decision must be applied by the CARF [Conselho de Administração de Recursos Fiscais] and by the Judiciary to cancel the charges in progress and, if the taxpayer has already made the payment, it will also be possible to claim the refund”.
Fachin has been accompanied, so far, by ministers Gilmar Mendes, Cármen Lúcia, André Mendonça, Dias Toffoli and Roberto Barroso. Minister Alexandre de Moraes followed the vote with reservations (here’s the full – 132 KB- of the vote). Minister Celso de Mello’s vote also appears in the judgment, accompanying the rapporteur.
The magistrate’s position continues in the trial, as the case was removed from the agenda by a highlight on Minister Luiz Fux in May 2020, when Celso de Mello had already voted. The trial takes place in a virtual plenary session and will end at 00:00 on Friday (17.Mar).
The score is 8-0 to invalidate the fine.
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