Supreme Court to rule whether companies owe R$100bn to government
Brazilian companies may end Wednesday with a multi-billion debt with the government. Federal Supreme Court (STF) justices will decide whether the Secretariat of Federal Revenue can charge amounts not paid in the past by companies who didn't account for a mandatory additional time-off payment on the calculation of the employer's social-security contribution. Under the Brazilian law, employees receive an additional payment equivalent to one third of the total monthly salary when take vacation.
This judgment takes place at a virtual plenary and, so far, the situation is not good for the companies. Of the six justices who already voted, four were in favor of the collection. Five other still have to vote for a final decision to be reached.
The STF decided in favor of the tax on the vacation additional payment in August 2020. Companies immediately included these amounts in the calculation of the employer's contribution and, since then, have been collecting it.
But what the justices are discussing now is if this collection should be retroactive. The justices are acting on motions for clarification presented by taxpayers.
Most companies did not pay tax on the vacations additional before the August decision, based on the understanding of the Superior Court of Justice (STJ), many of them supported by first and second instance decisions.
Since then, however, a large part of the companies has seen favorable decisions fall apart. The High Court judges did not wait for the judgment of motions for clarification to revert them, what has already impacted the companies' finances.
The taxpayer has up to 30 days, from the knowledge of the decision, to pay the amounts due to the tax authorities or to make a deposit in court. If the deadline is met, a fine of 20% of the debt is avoided.
Lawyer Pedro Ackel, a partner at firm WFaria, says 75% of his clients have already had their decisions reversed in regional courts. One had to pay R$2.7 million recently.
In these cases, he adds, they have filed an appeal against the decision, arguing that there is still a judgment of the motions for clarification at the STF. If justices decide their decision is not retroactive, companies that have chosen to make deposits will be able to retrieve the amounts. Otherwise, they will at least have avoided a 20% fine.
"But it is necessary to take into account that not all of them manage to remove millions of reais from their cash in 30...
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