Source: Folha de S. Paulo, 15/01/2008

Tax substitution is an instrument that anticipates in the industry the collection of tax from all links in the commercial chain. The system helps to curb tax evasion because it limits enforcement to manufacturers. In commerce, the sale is much more widespread, which makes it difficult for the tax authorities to act.

The Finance Secretariat, in order to anticipate the payment of ICMS, estimated the sale price to the final consumer and stipulated value-added margins on the products. They represent the difference between the price of the industry until the last end of the trade.

Margins are added to the ICMS prepayment price. This form of collection has been used in São Paulo for decades, but was limited to certain items, such as cars and beer.

For Ives Gandra Martins, a tax lawyer, professor emeritus at Mackenzie University, the law is constitutional and “saves the number of inspected officers”. The problem is that the merchandise can be sold at a price lower than that estimated by the Farm or even at a loss. The fact of not being sure of the price at which the product will be sold may generate a distortion between the real price and the basis on which it was taxed.

The Supreme Federal Court has already ruled that the amounts overpaid in the tax substitution should not be reimbursed by the States, even when the sale to the final consumer occurs at a price lower than estimated. The STF determined that what was overpaid should be returned only when the merchandise is not sold. “The onus is on the final seller. Who sets the price is not the government or the factory. It is the final seller, ”says Martins.

“The hope is that the STF, now with a new composition, will rethink the issue. The principle of legality is being hurt. In São Paulo, the rate will not be more than 18% or 15%. It will be about 18%, or about 15%. The State will have as a principle of legality a rate of “more or less.”

"The law has to provide for the return of taxes paid in advance, in case the sale is made for a lower amount", says tax attorney José Ruben Marone. "The State cannot keep the money raised that does not belong to it."