The state of S\u00e3o Paulo has revoked regulations that expedited and simplified the processes for recovering ICMS (Value-Added Tax) amounts withheld through Tax Substitution (ICMS-ST) and accumulated credits. These measures were adopted following Operation \u00cdcaro, which is investigating allegations of misconduct and misappropriation of credits in the state. The issue is being closely monitored by taxpayers, who fear a further tightening of the rules.<\/p>\n\n\n\n
The S\u00e3o Paulo State Finance and Planning Secretariat (Sefaz\/SP) revoked, in August, changes made in 2022 regarding the possibility of transferring credits to third parties and settling tax debts. The issue was addressed in Ordinance CAT 42\/2018, which deals with procedures for supplementing and reimbursing ICMS-ST, or ICMS paid in advance.<\/p>\n\n\n\n
Since 2022, the transfer of reimbursement credits to any establishment registered as an active substitute taxpayer in the state was permitted (article 20, item II, Ordinance CAT 42\/2018). Now, with the new ordinance (Ordinance SRE 45\/25), transfers are only allowed to the substitute supplier or to another establishment of the same owner.<\/p>\n\n\n\n
The rule also stipulates that reimbursement amounts may only be used to settle debts of the establishment itself or another establishment belonging to the same owner. Offsetting debts of third parties is prohibited.<\/p>\n\n\n\n
Impact on the compliance program<\/strong><\/p>\n\n\n\n Another revoked regulation was Decree 67.853\/2023, which provided for "accelerated appropriation" procedures for taxpayers in the top categories of the S\u00e3o Paulo compliance program Nos Conformes. For example, the possibility for taxpayers classified in categories A+, A, and B of the program to appropriate accumulated ICMS credits using simplified procedures was eliminated.<\/p>\n\n\n\n The decree regulated the counterpart measures foreseen in article 16 of LC 1.320\/18. Now, the appropriation of accumulated credits will depend on a tax analysis by the State Finance Department.<\/p>\n\n\n\n According to tax consultant and lawyer Jos\u00e9 Eduardo de Paula Saran, the action represents a setback for the Nos Conformes program, which, even before the revocation, "already suffered from delays in the regulation of incentives for taxpayers classified as 'A+' and 'A' in the tax compliance ranking, which is measured by the S\u00e3o Paulo tax authorities themselves.".<\/p>\n\n\n\n Saran says that historically, tax compliance programs are a crucial advancement in the relationship between tax authorities and taxpayers, "moving from the 'paradigm of crime' to the 'paradigm of cooperation,' having been recommended by the OECD since 2013." He recalls that the S\u00e3o Paulo tax authorities were pioneers in Brazil with the institution of the "Nos Conformes" program in 2018.<\/p>\n\n\n\n The lawyer also draws attention to the fact that the complaints pointed to irregularities regarding the reimbursement of ICMS (a Brazilian state tax) collected in advance through tax substitution, but the revocations end up affecting requests for accumulated credit as well.<\/p>\n\n\n\n \u201cBoth are legitimate rights of taxpayers, and it is unfair that taxpayers sometimes have to wait years for audits to be completed, which occurs without expedited appropriation. Given the regression and disproportionate nature of the measures, it is hoped that the S\u00e3o Paulo State Finance Department (Sefaz-SP) will recognize that thousands of good taxpayers cannot be penalized for the misconduct of a few,\u201d he states.<\/p>\n\n\n\n Tax lawyer Helena Vicentini, a partner at VPBG Advogados, shares this view. According to her, "the revocation should only apply to taxpayers who would actually lose the benefits of the counterpart agreement, and not affect everyone, including taxpayers classified in categories A+, A, and B of the program, who were prevented from appropriating accumulated ICMS credits through simplified procedures.".<\/p>\n\n\n\n Critical points<\/strong><\/p>\n\n\n\n According to the expert, the restrictions can be challenged as illegal or unconstitutional on a number of grounds, including the violation of the right to credit. "The ICMS-ST (Tax on the Circulation of Goods and Services - Tax Substitution), when collected in excess, must be refunded to the final taxpayer, as decided by the STF (Supreme Federal Court). The restriction on the transfer or offsetting of these amounts can be interpreted as an undue limitation on the right to restitution," she states.<\/p>\n\n\n\n There are also issues of violation of the principle of tax legality, legal certainty, as well as misuse of power and administrative regression. The limitation on the use of tax credits, says the lawyer, must be provided for in formal law, and not just in a decree. "The jurisprudence of the Supreme Federal Court (STF) and the Superior Court of Justice (STJ) is clear in requiring that restrictions on the use of credits be made by law in the strict sense."\u201c<\/p>\n\n\n\n According to Vicentini, the abrupt revocation of a simplified regime, without a transition period, "may affect the legitimate expectations of taxpayers who organized their operations based on the previous rules." "The 'Nos Conformes' regime was established by Supplementary Law 1.320\/18 with the objective of encouraging tax compliance. The revocation of the benefits can be seen as contrary to the spirit of the supplementary law, especially if there is no clear technical justification," he states.<\/p>\n\n\n\n