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Ministers Suggest “Single Litigant” For New Taxes of Tax Reform; Specialists Heard By the Legal Consultant Warn of Risk of Legal Uncertainty.
The proposal from ministers of the Superior Court of Justice (STJ) to regulate the judicialization of the new taxes from the tax reform has raised a strong alert among tax experts. The idea, presented by ministers Regina Helena Costa and Paulo Sergio Domingues, aims to create a “single litigant policy” to centralize actions regarding the Tax on Goods and Services (IBS) and the Social Contribution on Goods and Services (CBS) within a single federative entity (Union, state, or municipality). The goal is noble: to prevent the multiplication of lawsuits which, according to the STJ itself, could even triple the procedural burden in the country.
However, the remedy may be worse than the disease. Specialists consulted by the electronic magazine Legal Consultant assess that, although the intention to avoid multiple judicialization is correct, the proposed criteria are questionable. The main concern is that the measure could implode legal security, opening gaps for the same tax to receive completely divergent decisions depending on the judging court, whether state or federal.
What Does the STJ’s ‘Single Litigant Policy’ Propose?
The proposal from the STJ ministers, detailed in an article published by Legal Consultant, arises from a working group that analyzed the judicial impacts of the tax reform. Constitutional Amendment 132/2023, which instituted the reform, did not create clear rules for resolving taxpayer disputes against the tax authority over the new taxes (IBS and CBS). The amendment only defined the competence of the STJ to judge conflicts between federative entities and the IBS Management Committee, leaving a gap regarding individual actions from businesses.
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To fill this gap, the STJ suggests that only one entity represent the tax authority in each action. The definition of who (Union, state, or municipality) would be responsible for the process would follow two main criteria. The first is the size of the taxpayer: the Union would litigate with corporations under the real profit regime (usually large companies); the domicile state would handle the presumed profit (medium-sized companies); and the domicile municipality would manage Simple National optants and individuals. The second criterion would be the amount of the tax credit, where actions of “high value” would fall to the Union and “small value” cases would be assigned to municipalities.
The Imminent Risk: Different Decisions for the Same Tax
It is precisely within this division of competence that the greatest bottleneck of the proposal lies, according to specialists consulted by Legal Consultant. The main issue is the lack of uniformity. In practice, a large company (real profit) could have a dispute regarding the IBS judged by the Federal Court (represented by the Union), while a medium-sized company (presumed profit) would have a similar dispute regarding the same IBS judged by the State Court.
“The proposal opens up the possibility of different judicial responses for the same tax coming simultaneously from federal and state courts,” assesses Marcos Meira, founding partner of M. Meira Attorneys, in an interview with the portal. Diego Diniz Ribeiro, former counselor of the Administrative Council of Fiscal Appeals (Carf), shares the same view and warns: “We could have the exact same tax fact resulting in a decision from the Federal Court in one direction and a decision from the State Court in the opposite direction.”
Doubts About Administrative Dispute and the ‘Divided Ball’
The fear of legal uncertainty does not limit itself to the Judiciary. Tax experts point out that the STJ’s proposal does not resolve, and may even complicate, the administrative dispute. Júlio M. de Oliveira, partner at Machado Associados, highlighted to Legal Consultant that “even in the administrative sphere there is a great distrust that diverse instances will remain, with a multiplicity of interpretations” regarding the tax reform.
Another critical point is the political viability of the proposal. Igor Mauler Santiago, founding partner of Mauler Attorneys, classifies the situation as a “divided ball” among federative entities. In a statement to ConJur, he questions whether the Union would accept having its credits (part of the IBS) defended by a state, or whether states and municipalities would accept a “secondary role” in collection, depending on the taxpayer’s size.
What Is the Alternative to Unify the Tax Reform Litigations?
Faced with the deadlock, the lawyers consulted by Legal Consultant seem to converge on a main solution to ensure the uniformity of decisions: centralize all litigations in the Federal Court. The reasoning is that, although the IBS is shared, the legal basis and the triggering factor will be the same as those of the CBS, which is federal.
“In my view, every case involves the Union in some way, because the IBS and CBS operate under the same law, the same rules, the same triggering factor. In other words, every case ends up having federal repercussions, so the Federal Court should judge,” defends Mary Elbe Queiroz, president of the National Center for the Prevention and Resolution of Tax Conflicts (Cenapret), to the portal. Júlio de Oliveira reinforces the need for unification, predicting that the “multiple pathway being traced will be generative of conflicts and legal uncertainty” for the tax reform.
The STJ’s proposal seeks to solve a real problem, the risk of an explosion of lawsuits from the tax reform, but the solution presented could create an even greater issue of lack of equality and predictability. The centralization in different spheres of Justice, based on the size of the company, is seen by the legal sector as the main engine for the chaos of interpretation.
Do you agree with this change? Do you think it impacts the market and your company? Share your opinion in the comments; we want to hear from those who experience this firsthand.
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