Brazil: New Calculation Basis and Submission Method for PIS/COFINS

­­­­Exclusion of ICMS tax when calculating PIS/COFINS

In the past, the calculation basis for the PIS/COFINS taxes consisted of the actual product or service costs plus the respective ICMS taxes. De facto, this created a constitutionally illegal double-taxation because the calculation basis was increased by adding the ICMS tax.

The finical damage this procedure created for companies equals 250 Billion Reais for the last 10 years, according to the PGFN (Procuradoria Geral da Fazenda Nacional). Consequently, numerous legal cases were initiated which have often been decided in favor of the companies.

The solution for the problem should be the exclusion of ICMS, called EIBC (Exclusao do ICMS da Base de Calculo do PIS/COFINS). However, it remains unclear when this exclusion will become effective (retroactively).

Moreover, PIS/COFINS should be replaced in 2020 by a new tax, the CSRI (Contribuicao Social sobre a Receita e Importacoes), in order to optimize the taxation system.

 

New Submission Method starting in 2019

Furthermore, as part of the EFD-Contribuicoes Report, the PIS/COFINS information can be submitted in two ways starting January 2019:

  • Via Direct debit payment (debito-credito), as defined by the RFB (Receita Federal Brasileira)
  • Via ICMS destacado as part of the NF-e, as decided by the STJ (Superior Tribunal de Justica)