ICMS excluded from PIS/Cofins credits as of May 1

Taxpayers must adjust the PIS/Cofins tax base in compliance with the rules in force

At the end of April, the Federal Revenue Service published a note stating that taxpayers should exclude the ICMS tax from the credit base of the contributions for Social Integration (PIS/Pasep) and Social Security Financing (Cofins).

The announcement takes into account Provisional Presidential Decree No. 1,159/2023, which changed the way taxpayers can use ICMS tax credits from May 1 onwards.

The note points out that "no credits are due on account of the ICMS tax collected on purchase transactions". In view of the above, the Federal Revenue Service advised taxpayers to adjust the PIS/Cofins credit base on the EFD Contribuções Digital Tax Bookkeeping System by individually excluding the ICMS levied on the transaction in each of the entries to which the tax documents refer, according to the following table:

The Brazilian Revenue Service also remarked that:

• there is no specific field in the EFD Contribuiçoes for tax base exclusions (unconditional discount, ICMS on acquisition). Hence, said exclusions must be made directly in the field dedicated to the tax base.
• for entries exceptionally used on a subsidiary basis, for documents that should not be informed in the other entries of the bookkeeping and where the ICMS is indicated:
• with regards to records “F120 - Assets added to PP&E - Credit-Generating Transactions based on Depreciation and Amortization Charges” and “F130 - Assets added to PP&E - Credit-Generating Transactions based on Acquisition/Contribution Value”, any values that should be excluded from the credit base must be informed, respectively, under fields "07 - PARC_OPER_NAO_BC_CRED - Portion of the Value of Depreciation/Amortization Charge to be excluded from the credit base" or "08 - PARC_OPER_NAO_BC_CRED - Portion of the Acquisition Value to be excluded from the credit base".

Attention points

By prohibiting the use of PIS/Cofins credits on the ICMS levied on purchases, businesses operating under the Actual Profit method will be impacted with an increased tax burden. Thus, strategic and focused actions should be taken by these companies.

Tax Consultancy

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