Carlos Augusto Tortoro Júnior, Danilo Vicari Crastelo and Paola Andrade, partners and lawyers at Tortoro, Madureira & Ragazzi 

Three years ago, the STF held with an overall repercussion one of the most relevant tax discussions in recent times. It established the understanding that the ICMS, as a revenue of the state entity and only recordable through the taxpayer’s treasuries, shall not be included in the tax base of PIS and COFINS contributions.  

Although the case (RE No 574.706/PR – Topic 69) has not become unappealable with the examination of the motion for clarification opposed by the PGFN is still pending in order to explain a few parameters of the decision and modulate its remaining effects, it is uncontroversial that some changes in the tax burden of companies will occur and the electricity sector will also be substantially influenced as of this case. 

After being sought by several energy distributors to discuss the tax issue generated by the decision, ANEEL, through the Solicitation of Subsidies No. 005/2020, has given the companies a space to send their opinions in order to contribute to the formulation of a standardized statement of the regulatory agency, which will be based on the premises of (i) how to return to the taxpayer the credits obtained by them; (ii) what the period of completion of this return is and (iii) how to give recognition to those who have judicially filed for the benefit of the consumer. 

The impact on the electricity industry is clear because according to the legislation, the value of the energy that reaches consumers is composed of the cost of its generation and transport to the corresponding establishments, plus the burdens and taxes inherent in this operation. 

In other words, there is a clear incidence of ICMS, PIS and COFINS included in the final price of each consumer’s monthly electricity bill as this is a legal provision that ensures economic and financial balance and the conditions of the tender notice of the distribution companies, so that they can always obtain the necessary resources to cover their operating costs, as well as enabling energy consumers a continuous and quality provision.  

From the moment a portion previously computed in the tax base of contributions to PIS and COFINS is excluded (in this case, the ICMS), the final amount of taxes included is inevitably reduced in the electricity tariff and, therefore, the bill will be slightly cheaper for the final consumer, who is the de facto taxpayer of these taxes. 

At this point, it is important to show the difference between the concepts of “taxpayer by law and de–facto taxpayer” in the so-called indirect taxes, because whomsoever expressly appears in the letter of the law as a taxpayer is the so-called “taxpayer by law”, the one who calculates the amount and pays it to the Tax Authorities, i.e., it is the one who has the legitimacy to file a suit in order to discuss or demand a solution from the judiciary branch. 

The de-facto taxpayers such as electricity consumers, although not appearing as taxpayers in the standard and not being the ones who directly pay the tax to the treasury agencies, by definition are the ones who suffer the economic impact of the tax on the price of the product they consume. 

Following the STF decision to exclude the ICMS from the PIS and COFINS tax base, there is nothing more coherent and fair that the amounts previously overpaid by way of these contributions be returned to the pockets of those who effectively afforded the price of the electricity tariff inadequately increased by the unconstitutional interpretation made by the tax authority, i.e., the taxpayers. 

On the other hand, the electricity distributors who actively and diligently litigated for years before the judiciary branch in order to have the tax base for these contributions readjusted, excluding the state tax, deserve ANEEL to guarantee them a bonus or award as an incentive measure for having taken the risk to demand the issue, as recommended by the law that regulates the regime of concessions of electricity public services. 

With the Supreme Court’s decision for the taxpayer, it seems fair to clarify the gains for both sides: first, to the consumers, who will see their electricity bills reduced, and for those who are located in the concession areas of distribution companies that have filed actions of this nature, whether implemented in a safe and technical way, observing the statute of limitations, to return the undue payment calculated. For distributors, an adequate bonus to encourage them to always implement good practice policies and invest in attitudes that benefit their customers. 

There is no room for discussion regarding refund of values in relation to consumers who are served by companies that did not file a suit on the issue. However, these consumers will also later benefit from the exclusion of the ICMS from PIS and COFINS tax base, as of the decision becomes final and unappealable in the STF. 

Defending the compensation of this undue payment to the final consumer and the bonus to the diligent distribution companies is a coherent practice that should be used by ANEEL in order to safeguard the entire chain of consumption of electricity, which contributes significantly to Brazil’s economic development.