Source: DCI - SP - LEGISLATION - 10/08/2009

SÃO PAULO - The Federal Supreme Court (STF) suspended the effects of injunctions against the application of the tax substitution regime in the electronics sector. The President of the Court, Minister Gilmar Mendes, decided in favor of the request made by the Attorney General of the State of São Paulo (PGE), which contested the additional period of 90 days requested by the companies, by judicial means, to adapt to the system of collection of the Tax on Operations related to the Circulation of Goods and Provision of Services (ICMS), which transfers to the industry the responsibility of collecting the tax charged around retail operations.

According to the Secretariat of Finance, from this decision, which takes immediate effect, the companies Dell Computadores do Brasil Ltda, Hewlett-Packard Brasil Ltda, Sun Microsystems do Brasil e Comércio Ltda, Epson do Brasil Indústria e Comércio Ltda., Claro SA, and those represented by Alberto de Orleans and Bragança, Paulo Sigaud Cardozo and Ciro César Soriano de Oliveira will have to follow the tax regime established for the sector in the State of São Paulo.

In order to revoke the injunctions, the Supreme Court based the legitimacy of the collection by the tax substitution system, ensured by the Federal Constitution, and by the legal provision that determines the granting of periods only in cases of increased taxes. This condition does not apply to the tax substitution regime, which does not raise the ICMS rate or the tax calculation base.

In addition to these sectors, the São Paulo State Court of Justice (TJ-SP) also decided on the constitutionality of the tax substitution regime and denied a writ of mandamus filed by Canson Brasil Indústria de Papel Especiais Ltda., Which challenged the legality of the tax regime .

Understand

The expansion of the tax substitution regime in the State of São Paulo put businessmen and class entities on a war footing with the government of José Serra (PSDB). Since last year, 23 new sectors have been incorporated into the system, which already charged ICMS on the production of other segments, such as beverages, cigarettes, fuels and vehicles. Tax substitution consists of shifting the responsibility for collecting ICMS from the entire marketing chain to a single taxpayer (generally the industry), from the product leaving the factory to the final consumer.

For this, the tax is calculated based on a presumed base of final price and how much each company in the production chain would have added to the value of the goods. These figures are projected by the tax authorities based on market research.