The Federal Revenue Service recently published a consultation solution that does not yet follow the understanding of the Federal Supreme Court (STF) on software taxation. The agency classifies off-the-shelf products, sold in retail, as merchandise, while custom-made products are considered services. This distinction impacts the Income Tax (IRPJ) and CSLL rates on the gross revenue of companies taxed under the presumed profit regime.<\/p>\n\n\n\n
The IRS's understanding in Disit Consultation Solution No. 6,022, published earlier this month by the 6th Tax Region (MG), benefits the taxpayer. If the STF's decision were followed, both products would be classified as service provision, with higher tax percentages.<\/p>\n\n\n\n
According to the agency's guidance, the IRPJ and CSLL percentages on gross revenue, in the case of off-the-shelf software, should be 8% and 12%, respectively. In the case of a custom product, a rate of 32% should be applied to both taxes.<\/p>\n\n\n\n
\u201cIf the Federal Revenue Service followed the STF\u2019s understanding, it would have to set the percentage of 32% [applicable to service providers] for calculating the IRPJ of presumed profit, not 8% [reserved for the purchase and sale of goods]. This is because, by eliminating the ICMS and applying the ISS, the STF made it clear that software licensing is characterized as a service\u201d, says Adolpho Bergamini, from the Bergamini Advogados law firm.<\/p>\n\n\n\n
Manoel Ant\u00f4nio dos Santos, legal advisor to the Brazilian Software Association (Abes), explains that the understanding applies specifically to the company that made the inquiry, but serves as guidance. \u201cThis company is comfortable because it has its own solution,\u201d he says. \u201cOther [taxpayers] can use it, but they may have problems in the future if the IRS changes its understanding.\u201d<\/p>\n\n\n\n
He states that, if the tax authorities change their position, the company that is supported by the consultation solution may have to redo the calculations and collect the difference, but without interest and fines. Other taxpayers who eventually adopt this guideline may be penalized.<\/p>\n\n\n\n
For lawyer Leonardo Castro, partner at Bueno & Castro Tax Lawyers, it is still too early to say that the Federal Revenue Service is maintaining its understanding even after the STF decision. The text does not state the date on which the consultation solution was sent by the taxpayer and this information, he says, makes all the difference.<\/p>\n\n\n\n
\u201cBecause the response is based on the time the inquiry was made. In other words, if it is prior to the STF decision, and it is very likely that it is because the Federal Revenue Service does not usually respond in less than a year, it is not possible to guarantee that there will be no change in understanding,\u201d he states.<\/p>\n\n\n\n
Tax experts are concerned that the IRS will use the STF decision to require taxpayers to follow the same criteria for collecting IRPJ. If this happens, the tax burden will increase.<\/p>\n\n\n\n
Companies that are under the presumed profit regime \u2013 those with revenues of up to R$1,500,000 per year \u2013 calculate their tax in a simplified manner. They do not need to account for all expenses incurred during the period, as is the case with real profits. They apply a percentage to gross revenues and the result is what serves as the basis for the IRPJ levy.<\/p>\n\n\n\n
This percentage that defines the profit margin to be taxed is established by law. It varies according to the sector. Hence the concern of lawyers about a possible change in the understanding of the Federal Revenue Service. Today, the agency is saying that it will remain as it has always been: 8% for commerce and 32% for service providers.<\/p>\n\n\n\n
If the Tax Authorities change this understanding \u2013 using the STF decision as a basis \u2013 those who currently use the percentage of 8% will be obliged to apply 32%, therefore expanding the IRPJ tax base.<\/p>\n\n\n\n
Lawyer Leonardo Castro says his clients are already considering filing a writ of mandamus in court to ensure that taxation remains the same. \u201cThe STF decision does not necessarily mean that any software is considered a service provision. The ministers ruled on a dispute between states and municipalities and decided that software companies must collect ISS because the municipality has this authority provided for by law,\u201d says Castro.<\/p>\n\n\n\n