Claro, Oi, TIM and Vivo will be forced to reduce prices of direct charges made to consumers. The reduction of plans and tariffs is expected to occur thanks to a decision by the Federal Supreme Court (STF) to reduce the ICMS rate on electricity and telecommunications services. The court judged a law from Santa Catarina, but it applies to other states. According to lawyers, in addition to operators, the measure should mainly benefit large retailers.
On Tuesday (23), the STF decided to reduce ICMS charges on the telecommunications and electricity sectors. The court responded to a request by Americanas SA, made in 2012, contesting the rate charged in the state of Santa Catarina. However, the lawsuit did not go to trial on the court’s virtual floor until nearly a decade later.
Although the decision is under the law of a specific state, it serves as a national legal guideline to be followed by other entities of the federation. In the state of Santa Catarina, the average ICMS rate is 17%, while for the telecommunications and electricity sectors, this rate is 25%.
In Brazil, the average ICMS rate on telecom and energy is 18%. In some states, such as Rio de Janeiro, this value can exceed the average by up to 10%, also depending on the taxpayer’s expenses.
For the customer, Claro, Oi, Vivo and TIM bills should decrease
But the effects of the STF decision should have an immediate impact on consumers’ pockets. This is what Fabio Florentino, a partner in the area of Tax Law at BMA, says in an interview with the newspaper Or Balloon:
“As energy and telecommunications are regulated sectors, a tax reduction has to be passed on directly to the consumer. For the states, it will have a complex effect, because the ICMS makes a minimum of cash and there are negative balances.”
The middle class is the one who most should feel the relief in light and cell phone bills, since, for low-income classes, the value of tax rates on the charge is lower.
The greatest impact of the STF decision, however, should be felt by large retailers and industries. These companies are among the biggest consumers of energy, in addition to generating a huge amount of data, when it comes to telecommunications. In the assessment of Carlos Amorim, a lawyer specializing in the tax area and partner at Martinelli Advogados, in addition to retail, supermarket chains and shopping malls are among the biggest beneficiaries.
ICMS: states could lose R$26 billion in tax revenues
If, on the one hand, large companies and the average consumer should benefit from the reduction of ICMS on telecom and electricity, on the other hand, the cut in the tax rate means a loss of revenue for the states.
André Horta, director of the National Committee of State Secretaries of Finance (Comsefaz), confirmed that states must file a request for modulation in the STF. The measure would make the court’s decision not to have a retroactive character, valid only from the effective date.
Horta assesses that the ICMS cut should be gradual, so that the states do not lose investments that would be used in vaccination posts or schools, for example.
According to a survey by Comzefaz, the reduction in ICMS would represent a drop of 5.6% — or R$ 26 billion — in tax collection. States consider that the cut in the rate is impossible to be considered for 2022, the first year of resumption of some face-to-face activities in the post-pandemic period.
Amorim, on the other hand, emphasizes that the STF ruling must be followed by all states. It is also up to each federative unit to send its own proposal to reduce the ICMS:
“We are facing a legal thesis with general repercussion, which marks the orientation of national jurisprudence. For this reason, the legislation will have to be adapted, so that the state executives will have to promote amendment projects and forward them to the respective legislative assemblies to consider the collection of the tax.”
Operators association celebrates STF decision
In a statement, Conexis Brasil Digital, formerly SindiTeleBrasil, which represents Claro, Oi, Vivo and TIM, said it sees the Supreme Court’s decision as a hit, and reinforced that the telecommunications sector is “one of the most taxed in the country, with taxation similar to that charged for items such as tobacco and beverages”.
“The judgment reinforced that telecommunications services are essential, a fact that was even more evident with the coronavirus pandemic”, adds the association. “The decision strengthens the need for a comprehensive tax reform that places the sector’s taxation in Brazil in line with the international experience.”
At the Supreme Court, the prevailing thesis was that of former minister Marco Aurélio Mello, rapporteur of the court action. The former minister, who left the STF in July, voted in favor of the action filed by Americanas SA In his vote, he affirms that the ICMS rate on telecommunications and electric energy services “differs from the constitutional framework”, as both are considered essential goods for the population.
Minister José Antonio Dias Toffoli proposed a modulation to ease the effects of the ICMS reduction for states. He was accompanied in a vote in the electronic plenary by Minister Kassio Nunes Marques. The trial had been suspended so that the votes of the other ministers could be registered, but it was resumed this Wednesday afternoon (24).