The Federal Constitution, in its article 150, paragraph 7, provides that "the law may attribute to a taxpayer of tax obligation the condition of being responsible for the payment of tax or contribution, whose taxable event must occur later". This is the so-called forward tax substitution.
In the ICMS due by tax substitution (ICMS-ST), a taxpayer is responsible for collecting tax levied on taxable events that will presumably occur during the trade chain.
Article 8 of Complementary Law 87/96 established four criteria for defining the ICMS-ST calculation basis:
- final price to the consumer, single or maximum, set by a competent public agency (paragraph 2) – only mandatory, if any;
- final price to the consumer suggested by the manufacturer or importer (paragraph 3);
- amount obtained by adding the value of the own operation carried out by the tax substitute, plus the amounts of insurance, freight and other charges charged and the value-added margin (MVA) related to subsequent operations (item II);
- price to the final consumer generally practiced in the market in question, also known as the final weighted average price – PMPF (paragraph 6).
If there is no price set by a competent public agency or the final price suggested by the manufacturer is not adopted, it remains for the public entity to choose to calculate the ICMS-ST based on:
- value-added margin related to subsequent operations; or
- price to the final consumer generally practiced.
Article 8,[1] paragraph 6, of LC 87/96 establishes that the price to the final consumer will be used to obtain the ICMS-ST calculation basis in substitution of the MVA. They are not, therefore, procedures that coexist. If the state opts for the price to the final consumer (PMPF), as provided for in article 8, paragraph 6, of LC 87/96, the procedure provided for in article 8, II, of LC 87/96 (value of the own operation, plus the value of insurance, freight, other charges and the value-added margin) will be set aside. One procedure, therefore, replaces the other.
However, several states that opted for the calculation of ICMS-ST based on PMPF for a certain commodity, replacing MVA, have been "resurrecting" the replaced criterion. They do this through infra-legal expedients, which impose on the taxpayer the payment of ICMS-ST based on MVA. The trigger that triggers this mechanism is triggered when the operation reaches a certain value.
For beverage operations, for example, the state of Rio de Janeiro issued Sefaz Resolution 358/18, which provides for the PMPF as the basis for calculating the ICMS-ST. However, in domestic operations in which the unit value of the product in the substitute taxpayer's own operation is equal to or greater than 90% of the PMPF in force, the taxpayer must apply MVA, disregarding the PMPF.
States such as Minas Gerais[2] and São Paulo,[3] among others, have instituted a similar procedure, also through infra-legal acts. A mechanism was created for the alternating adoption of calculation bases for the tax substitution regime in relation to the same commodity. The joint use of PMPF and MVA, which occurs when the trigger is triggered, is not provided for in complementary legislation, only in infralegal acts.
It is not just any rule, however, that can provide for the calculation basis and tax substitution of the ICMS-ST. The Federal Constitution reserves the matter to the complementary law, as expressly provided for in articles 146, III, "a", and 155, paragraph 2, XII, "b".
Considering that LC 87/96 expressly provides that the PMPF replaces the use of MVA, no lower standard could create a methodology in which PMPF and MVA coexist.
The institution of a trigger generates a tax distortion, as taxpayers who sell the same product may be required to adopt different ICMS-ST calculation basis procedures (PMPF x MVA), depending on the price practiced in their operation. This situation results in very discrepant tax values.
States sometimes adopt static MVAs, which are not updated by regular price surveys (in Rio de Janeiro, for example, the MVA used in beverage operations can reach 140% and has been the same since 1991).
That is, if a taxpayer carries out an operation that reaches a value capable of triggering the trigger (91% of the PMPF, for example), he will still have to apply MVA of 140% on the value of his operation to obtain the ICMS-ST calculation basis. A taxpayer who sold the same product, but in an amount corresponding to 89% of the PMPF, will use the PMPF value as the basis for calculating the ICMS-ST.
In our understanding, the attempt to use the trigger violates several constitutional principles, such as those of isonomy, legal certainty, ability to pay and reasonableness.
Within the scope of the National Council for Finance Policy (Confaz), ICMS Convention 52/17 was issued,[4] through which the signatory states intended to institute the trigger for the ICMS-ST.
This agreement was the subject of Direct Action of Unconstitutionality 5,866 (ADI 5,866). The STF suspended the effects of the clause that institutes the trigger, precisely due to the affront to the rule that reserves to the complementary law the power to dispose of tax matters.
ICMS Convention 52/17 was revoked by ICMS Convention 142/18, which no longer provided for the use of a trigger to calculate the ICMS-ST calculation basis. For this reason, ADI 5,866 ended up being extinguished without judgment on the merits.
Some courts of Justice have already expressed themselves on the subject, such as the Court of Justice of Tocantins:
(...) article 8 of Complementary Law No. 87/96 only allows the "choice" between one of the criteria for calculating the ICMS-ST calculation basis, and the State is not allowed to establish a "hybrid criterion", mixing the application of the Value Added Margin - MVA (article 8, II of LC 87/96) and the Weighted Average Price to the Final Consumer - PMPF (article 8, §6 of Complementary Law No. 87/96), due to the specificities of the operation carried out.[5]
The merits of the matter will certainly still be appreciated by the higher courts. In our understanding, there is a good chance that the trigger will be considered illegitimate.
[1] Article 8 - The calculation basis, for tax substitution purposes, shall be:
(...)
II – in relation to subsequent operations or services, obtained by the sum of the following installments:
a) the value of the operation or own provision performed by the tax substitute or by the intermediary substitute;
b) the amount of insurance, freight and other charges charged or transferable to the purchasers or service takers;
c) the margin of added value, including profit, related to subsequent operations or services.
(...)
- 6 In substitution of the provisions of item II of the caput, the basis of calculation in relation to subsequent operations or services may be the price to the final consumer usually practiced in the market in question, in relation to the service, merchandise or its similar, under conditions of free competition, adopting for its calculation the rules established in § 4 of this article. (Text given by Lcp 114, of 12.16.2002)
[2] The state of Minas Gerais, in its ICMS Regulation (Annex VII, art. 59), provides, as a rule, for the use of PMPF. However, if the own operation is practiced in an amount greater than 86% of the PMPF, the taxpayer must disregard the PMPF and apply the MVA on the value of the own operation.
[3] SER Ordinance 38/2024, art. 2, III.
[4] Clause eleven. In the absence of the amount referred to in clause ten, the tax calculation basis for tax substitution purposes in relation to subsequent operations shall correspond, as defined by the legislation of the federated unit of destination, to:
(...)
I - Weighted Average Price to Final Consumer (PMPF);
II - final price to the consumer suggested by the manufacturer or importer;
III - price charged by the sender plus the amounts corresponding to freight, insurance, taxes, contributions and other charges transferable or charged to the recipient, even if by third parties, added to the portion resulting from the application of the percentage of Value Added Margin (MVA) established in the federated unit of destination or provided for in an agreement and protocol, on the referred amount. for goods subject to the tax substitution regime, subject to the provisions of paragraphs 1 and 2.
(...)
Paragraph 4 - In domestic and interstate transactions, the federated units are authorized to establish as the basis for calculation the one provided for in item III of the caput of this clause when the value of the own operation practiced by the sender is equal to or greater than the percentage established by the internal legislation of the federated unit of destination of the value of the PMPF or suggested price for the good and merchandise.
[5] TJTO, Appeal/Necessary Referral 5001257-31.2008.8.27.2729, rel. Maysa Vendramini Rosal, judged on September 02, 2020, DJe September 14, 2020
