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Date: May 15, 2019
Posted by: CPDMA Team

Carf: concept of square, in the IPI legislation, it does not encompass only the municipality

In an unprecedented decision, the Higher Chamber considered that, according to the RIPI, a square can encompass more than one municipality.

The 3rd Panel of the Superior Chamber of the Administrative Council of Tax Appeals (Carf) defined, this Tuesday (14/05) that the concept of "square" is not just a municipality, but can also encompass entire metropolitan regions. In the first discussion on the concept of square for the calculation of the Minimum Taxable Amount (VTM) of the Tax on Industrialized Products (IPI) by the class, the collegiate maintained the tax collections, through the casting vote. The judges, however, did not define a single concept of square.

The case involved Procosa, the company that manufactures L'Oreal products in Brazil. The company has, in its current configuration, factories in São Paulo and Rio de Janeiro, selling all its production to an interdependent wholesaler, located in Duque de Caxias (RJ). The processes analyzed by Carf involve only the units located in the state of Rio de Janeiro.

Article 195 of the RIPI

The Attorney General's Office of the National Treasury (PGFN) questions the fact that the sale made by the industrial branch to the wholesale branch occurs, according to the assessment, at prices lower than those charged at the wholesaler's exit. For the Revenue, this would be a way to reduce the IPI calculation basis, since when the good goes to the market, at full value, there is no IPI highlight. The two processes together involve tax collections in excess of R$ 1 billion.

According to the PGFN, the company acted in the wrong way by not observing the concept of place contained in article 195 of the Tax on Industrialized Products Regulation (RIPI) to define the price charged at the exit of products to the Duque de Caxias unit, thus reducing the amount payable of IPI. The provision defines that the taxable amount, which in practice is the basis for calculating the tax, cannot be lower than “the current price in the wholesale market in the sender’s place when the product is destined for another establishment of the sender itself or for an establishment of a firm. with which it maintains a relationship of interdependence”.

In oral argument, the PGFN defended that the concept brought in the RIPI is broad, and, in this specific case, Rio de Janeiro and Duque de Caxias could be considered as belonging to the same square. When interpreting article 195 as an anti-avoidance rule, the prosecutor stated that its wording is purposefully broad, to encompass new structures. “When you sell to yourself, the concept of a square is irrelevant”, pointed out Fabrício Sarmanho de Albuquerque.

The taxpayer claimed, in Carf, that she is not obliged to observe the retail price in Duque de Caxias because the city and the municipality of Rio de Janeiro do not belong to the same market. Luís Henrique Barros de Arruda, one of the patrons, accused the PGFN of “trying to exhume a corpse that has been buried since 1979″, when the then Federal Court of Appeals (TFR) established the thesis that the square is, in fact, the municipality. .

Procosa also defended that its structure does not constitute a simulation, but is the way in which the company was best organized. “It was not planning at all, but a need for operation”, pointed out the patron of Procosa. Giancarlo Chamma Matarazzo, the other lawyer, recalled normative opinion No. 44/1981, which defined the square as a municipality, in a consultation carried out by Procosa itself.

quality vote

The rapporteur of one of the cases in Carf, counselor Rodrigo da Costa Pôssas, considered that the concept of square does not mean municipality, and may include more than one location. Pôssas, however, did not establish in his vote what the square would be. With that, he heard about the appeal and granted the cause of the Treasury.

The understanding met with resistance among the four councilors representing the taxpayers. At the end of the casting vote, the Farm emerged victorious.

In the second case on the subject analyzed by the Superior Chamber, the rapporteur, counselor Erika Costa Camargos Autran, voted to dismiss the appeal, but also ended up winning by the casting vote. With this, the cases return to the ordinary classes, where secondary issues of the assessment will be analyzed.

In a note, Procosa stated that “the analysis of the National Treasury resources was restricted to only one of the arguments of the discussion”. “The company remains confident in the prevalence of its defense arguments and in the cancellation of the infraction notices”.

Source: Guilherme Mendes via Jota.

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