March 24, 2023

19:03

Eduardo Figueiredo – Amazon Agency

MANAUS – The Federal Supreme Court (STF) declared unconstitutional, by majority vote, a provision of the National Council of Finance Policy (Confaz) that withdrew comparative advantage of the Manaus Free Trade Zone (MFTZ) in the sale of ethanol and biodiesel.

In a virtual session on February 28, the majority of the justices of the Supreme Court recognized that the sale of these fuels to distributors located in the MFTz is immune from ICMS (Value-Added Tax on Sales and Services).

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According to the STF, the vote of Justice Dias Toffoli prevailed in the trial, for whom the rule of the Confaz agreement reduces the tax benefits for the ZFM. According to him, Decree-Law 288/1967 expressly established that, for tax purposes, the export of goods of domestic origin to the Free Trade Zone or their re-export abroad is equivalent to export to foreign countries.

The majority of the Justices ruled that the sale of ethanol and biodiesel in the MFTz is comparable to an export. For this reason, it is covered by article 155, paragraph 2, X, item “a” of the Federal Constitution, which defines that transactions destining goods abroad are immune from ICMS.

Jurisprudence

The Minister Dias Toffoli considered that this immunity, according to the Supreme Court case law, does not reach companies located in other regions, because the constitutional protection provided in Article 40 of the Act of Transitional Constitutional Provisions (ADCT) relates only to the ZFM.

The STF decision was made in the trial of Direct Unconstitutionality Action (ADI) 7036, filed by the Democratic Labor Party (PDT) questioning the constitutionality of Clause 21 of ICMS Agreement 110/2007.

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ADI

The agreement provides for the postponement of payment (deferral) of the ICMS due on the purchase of anhydrous fuel ethanol (EAC) and pure biodiesel (B100) by distributors until the moment when the C gasoline (a blend of A gasoline, extracted directly from petroleum, and EAC) or B diesel oil (a blend of A diesel oil and B100) is dispatched.

However, the same agreement provided that the deferral ended at the exempt or non-taxed exit of ethanol or biodiesel, including for distributors located in the ZFM and other free trade areas. In this case, the distributor would have to pay the tax to the state unit that sent the EAC or B100.

Now, with the STF’s decision, collection will occur in the form of the general rule, i.e. at the exit of C gasoline or B diesel fuel.

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