{"id":6155,"date":"2024-09-04T15:27:59","date_gmt":"2024-09-04T15:27:59","guid":{"rendered":"https:\/\/lataxnet.net\/es\/?p=6155"},"modified":"2024-09-04T15:31:33","modified_gmt":"2024-09-04T15:31:33","slug":"brazil-brazilian-states-embroiled-in-controversy-over-movement-of-goods-between-branches","status":"publish","type":"post","link":"https:\/\/lataxnet.net\/es\/brazil-brazilian-states-embroiled-in-controversy-over-movement-of-goods-between-branches\/","title":{"rendered":"Brazil: Brazilian states embroiled in controversy over movement of goods between branches"},"content":{"rendered":"<p><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;margin-bottom: 0px;margin-top: 0px;border-width: 0px 0px 0px 0px;border-color:#e2e2e2;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"margin-top:0px;margin-bottom:20px;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\"><\/style><div class=\"fusion-title title fusion-title-1 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:10px;margin-bottom:15px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\">Brazil: Brazilian states embroiled in controversy over movement of goods between branches<\/h3><\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;padding-top:0px;padding-right:0px;padding-bottom:0px;padding-left:0px;margin-bottom: 0px;margin-top: 0px;border-width: 0px 0px 0px 0px;border-color:#e2e2e2;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\" style=\"margin-top:0px;margin-bottom:20px;\"><div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><div class=\"fusion-text fusion-text-1\"><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\">\n<div class=\"fusion-builder-row fusion-row\">\n<div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\">\n<div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\">\n<div class=\"fusion-title title fusion-title-1 fusion-sep-none fusion-title-text fusion-title-size-three fusion-border-below-title\">\n<h3 class=\"title-heading-left\"><strong style=\"font-size: 16px;\">Gabriel Caldiron Rezende of Machado Associados explains the contrasting viewpoints and legislative developments regarding the taxation of goods moved between branches of the same company<\/strong><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 hundred-percent-fullwidth non-hundred-percent-height-scrolling\">\n<div class=\"fusion-builder-row fusion-row\">\n<div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-one-full fusion-column-first fusion-column-last\">\n<div class=\"fusion-column-wrapper fusion-flex-column-wrapper-legacy\">\n<div class=\"fusion-text fusion-text-1\">\n<p>The Brazilian state VAT (ICMS) is a tax on transactions involving goods. For decades, there have been debates concerning the triggering events for ICMS. On the one hand, states tend to argue that the tax should be levied upon simple shipments of goods (i.e., outbound from a taxpayer\u2019s establishment); on the other hand, taxpayers argue that ICMS should only be levied on commercial transactions that result in the transfer of goods ownership.<\/p>\n<p>As an example, the levy of ICMS on temporary imports of goods (i.e., when there is no transfer of ownership, as the goods are to be returned abroad) was broadly debated, until the Brazilian Federal Supreme Court (STF) decided that\u00a0<a href=\"https:\/\/www.internationaltaxreview.com\/article\/2a696xq7657gkn42jdq0w\/controversy-surrounds-non-levy-of-brazilian-state-vat-on-temporary-imports\">ICMS on imports will only be triggered if ownership of the goods is transferred to the Brazilian party.<\/a><\/p>\n<p>Another aspect of this debate \u2013 which is the topic of this article \u2013 was the levy of ICMS on a simple movement of goods between branches of a company. Taxpayers point out that the movement of goods between branches does not result in any change of ownership of the goods, as they are only circulating within a taxpayer, while the states argue that as the goods are being shipped from a taxpayer\u2019s establishment (outbound), ICMS should be levied.<\/p>\n<h3>Declaratory Action of Constitutionality 49 brings clarity \u2013 and fresh concerns<\/h3>\n<p>The above matter was discussed for years, but finally, in 2021, the STF handed down Declaratory Action of Constitutionality 49, in which it decided in favour of the taxpayers, stating that the movement of goods between a taxpayer\u2019s establishments does not trigger ICMS, even if interstate, and thus the tax will only be levied if the transaction results in a transfer of the ownership of the goods to another party.<\/p>\n<p>Although the decision brought clarification, it also prompted major concerns, especially regarding the effect on ICMS credits.<\/p>\n<p>ICMS is a non-cumulative tax, and thus the ICMS levied on a tax acquisition may be booked as a credit for offsetting against the ICMS levied on the following transactions. Non-taxed transactions do not grant credits to the receiver of the goods and, as a rule, demand the cancellation of credits booked in relation to such non-taxed goods.<\/p>\n<p>Considering this, a motion to clarify the position was filed, and the STF evaluated the matter of ICMS credits.<\/p>\n<p>The STF expressed the view that a movement of goods does not impair any credits previously booked, and that a taxpayer has the right to transfer such credits between its establishments when shipping the goods. Furthermore, the STF provided that the procedures for transferring such credits must be regulated.<\/p>\n<h3>New regulations under ICMS Agreement 178\/2023<\/h3>\n<p>Aiming to regulate the matter, the states issued ICMS Agreement 178\/2023, which, in summary, determined that in an interstate shipment of goods between establishments of the same ownership, the transfer of ICMS credit from the sender to the destination is mandatory. Such a transfer of credits is made by applying the ICMS rates on the goods\u2019 acquisition or manufacturing cost.<\/p>\n<p>In practical terms, ICMS Agreement 178\/2023 results in the same effect as the ICMS levy on the movement of goods between establishments of one company. Also, it provides that the transfer of credits is mandatory, which appears to go against the STF decision that mentions such transfers as a right of the taxpayer, and thus, in theory, it could keep the relevant credits in the shipper\u2019s establishment.<\/p>\n<h3>Supplementary Law 204\/2023 regulates transfers of credits<\/h3>\n<p>Supplementary Law 204\/2023 was subsequently enacted to legally determine that:<\/p>\n<ul>\n<li>The shipment of goods between establishments of one company is not subject to ICMS;<\/li>\n<li>ICMS credits are maintained in favour of taxpayers, and on interstate transactions they will be guaranteed by (i) the state of destination, up to the applicable interstate rate (4%, 7%, or 12%) and (ii) the state of origin, if the credit is higher than the transferred amount (e.g., in the event of an acquisition at 18% and a transfer at 12%, 6% will be maintained at the origin); and<\/li>\n<li>Alternatively to a transfer of credits, the taxpayer may choose to equalise the shipment of goods to a taxed transaction.<\/li>\n<\/ul>\n<p>Although Supplementary Law 204\/2023 is an adequate legal instrument to regulate the transfer of credits and the law does not, in any instance, determine that a transfer of credits is mandatory, the states have been demanding it, based on ICMS Agreement 178\/2023.<\/p>\n<p>Based on the states\u2019 interpretation, Supplementary Law 204\/2023 demands transfers of credits on interstate shipments of goods, and ICMS Agreement 178\/2023 only regulates the relevant procedures.<\/p>\n<p>Nevertheless, the author believes that the states\u2019 interpretation is unlawful and may be challenged, especially because of the following factors:<\/p>\n<ul>\n<li>When deciding on the matter, the STF determined that the transfer of credits is a right of the taxpayer, and not an obligation. Accordingly, it recognised that an establishment may ship goods to another establishment of the same company and not transfer the credits; instead, accumulating them.<\/li>\n<li>Supplementary Law 204\/2023 does not have any provisions expressly demanding a transfer of credits but, rather, limits the amount of credits to be transferred on interstate shipments of goods.<\/li>\n<li>Supplementary Law 204\/2023 regulates transfers of credits by allowing, according to the choice of the taxpayer, the equalisation of the shipment to a taxed transaction.<\/li>\n<\/ul>\n<h3>The future of the debate, with a silver lining<\/h3>\n<p>Considering that the discussion revolves around interpreting the extension of the STF\u2019s decision in Declaratory Action of Constitutionality 49, it is expected that the matter will continue to be widely debated in the years to come.<\/p>\n<p>The silver lining is that this will be an issue of the past once ICMS is brought to an end by the full implementation of the consumption tax reform.<\/p>\n<p>Gabriel Caldiron Rezende, Machado Associados<\/p>\n<p>Original: https:\/\/www.internationaltaxreview.com\/article\/2dp32bupq14b7vmqu641s\/sponsored\/brazilian-states-embroiled-in-controversy-over-movement-of-goods-between-branches<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div><div class=\"fusion-clearfix\"><\/div><\/div><\/div><\/div><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":5,"featured_media":6144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[93,86,6],"tags":[85],"_links":{"self":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/6155"}],"collection":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/comments?post=6155"}],"version-history":[{"count":3,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/6155\/revisions"}],"predecessor-version":[{"id":6158,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/posts\/6155\/revisions\/6158"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/media\/6144"}],"wp:attachment":[{"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/media?parent=6155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/categories?post=6155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lataxnet.net\/es\/wp-json\/wp\/v2\/tags?post=6155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}