Concept of "praça" defined for IPI tax calculation

On July 8, Law No. 14,395/2022 was published in an extra edition of the Federal Official Gazette, defining the concept of "praça" (“venue”) for the calculation of the tax on manufactured products (IPI). Under the new law, the term "praça" has been defined as "the Municipality where the establishment of the sender is located".

Prior to the law’s publication, the term had been the source of much confusion when performing tax calculations, since the word’s legal definition was vague, and the Upper Chamber of the Administrative Council for Tax Appeals (Carf) held that the term could encompass more than one municipality. All this resulted in profound legal uncertainty and created room for companies to manipulate the prices of products to reduce the value of transactions related to outputs from industry to retailer.

Following the definition of the term, the prices charged in the city of the sender's establishment will be used to determine the IPI tax to be levied.