ICMS tax benefits granted to the wholesale sector in 2020 in Rio de Janeiro were approved by the highest court of the State Court (TJ-RJ). Law No. 9025 established 7% of ICMS for the basic food basket and 12% for other products covered by the incentive. The standard internal tax rate is 18% in the State of Rio.<\/p>\n\n\n\n
In practice, the Special Body's ruling, according to lawyers, is important because it provides greater legal certainty for wholesalers to use these tax benefits. The law had been questioned by the Rio de Janeiro Public Prosecutor's Office, which claimed that the technical studies used to draft the law were incorrect. The agency also argued that the incentive could impact tax revenue.<\/p>\n\n\n\n
The decision by the TJ-RJ was unanimous. The judges understood that the law that granted the benefits is constitutional (case number 0011485-60.2021.8.19.0000). The trial took place on Monday, but the decision has not yet been published.<\/p>\n\n\n\n
According to experts, this is the first time that the court has analyzed a measure called \u201cregional glue\u201d, provided for in paragraph 8 of article 3 of Complementary Law No. 160 of 2017. According to this article, \u201cthe federated units [States and Federal District] may adhere to exemptions, incentives and tax or financial-tax benefits granted or extended by another federated unit in the same region\u201d.<\/p>\n\n\n\n
In this case, the Rio law practically repeats the benefits granted by the government of the State of Esp\u00edrito Santo.<\/p>\n\n\n\n
The state government and the Rio de Janeiro State Legislative Assembly presented a study on the economic and financial impact on the state. They also claimed that the procedures of Complementary Law No. 160 and ICMS Agreement No. 190\/17 had been complied with. The Rio de Janeiro State Attorney General's Office (PGE-RJ) said in a statement that it \u201chighlighted the importance of the law for the recovery of the competitiveness of the wholesale sector and the possibility of generating new jobs in the state.\u201d<\/p>\n\n\n\n
Lawyer Olavo Leite, partner at LL Advogados, who acted as \u201camicus curiae\u201d (interested party) in favor of the Association of Wholesalers and Distributors of the State of Rio de Janeiro (Aderj) in the process, states that the representation of unconstitutionality, filed by the Public Prosecutor's Office, does not allow discussion about the quality of the studies presented.<\/p>\n\n\n\n
Furthermore, it states that data was presented by the Attorney General's Office of the Legislative Assembly, in the trial, which proves an increase of 18% in the sector's revenue from October 2020 to October 2021, even with the pandemic and the tax incentive. A total of R$ 7.3 billion was collected in 2021 (ICMS and ICMS-ST) and in 2020, R$ 6 billion.<\/p>\n\n\n\n
According to the lawyer, the processing of the bill, authored by the Executive Branch itself, was transparent, precisely because the Public Prosecutor's Office had already questioned other benefits granted by the State.<\/p>\n\n\n\n
In 2016, the Rio de Janeiro State Public Prosecutor's Office filed a public civil action to question tax benefits and financial incentives granted by the state government to more than three thousand companies. However, upon analyzing the action, the 17th Civil Chamber of the Rio de Janeiro State Court of Justice decided to maintain them.<\/p>\n\n\n\n
For Leite, this new trial, held on Monday, \u201csets an important precedent for how these benefits can be granted, in addition to bringing legal certainty and improving the business environment.\u201d According to the lawyer, \u201cthe sector was working with the risk of having its incentives overturned, even more so in this complicated period of pandemic,\u201d he says.<\/p>\n\n\n\n
The trial would also be important for demystifying the \u201cstigma that had been placed on tax benefits,\u201d according to lawyer Maur\u00edcio Faro, from BMA Advogados. For him, it was clear that the procedure for creating the benefit followed all legal standards \u201cand, above all, provides legal certainty for taxpayers.\u201d<\/p>\n\n\n\n
When contacted by Valor, the press office of the Rio Public Prosecutor's Office informed, through a note, that it is awaiting the publication of the ruling to analyze any possible appeal.<\/p>\n\n\n\n