The Non-cumulativeness of IPI, ICMS, PIS and Cofins

Abstract

The purpose of this article is to analyse a one of the most tormenting issues in consumption taxes is undoubtedly the conflict over the interpretation and scope of the non-cumulative tax rule. This is because doctrine and jurisprudence use different interpretative forces for this rule, depending on the tax, in a different way to countries that adopt a system similar to that prescribed in our tax legislation. Non-cumulative taxation is a legal and economic phenomenon whose aim is to “eliminate” the economic impact on the final price of the product, giving the productive sector mechanisms to recover the tax levied at each of the stages prior to the circulation of goods or services, up to the final consumer. This measure, therefore, aims to promote neutrality in the production chain, giving greater taxation to those who actually consume more products, goods or services, in a clear approach to the principle of contributory capacity. As we will discuss in the following lines, and having seen the relevant aspects of non-cumulativity, it is important for us to discuss non-cumulativity and its recovery effect on ICMS, IPI and PIS/Cofins, outlining their constitutional and infra-legal bases, as well as the difference in the treatment of this rule in each of the taxes mentioned. This differentiated treatment promoted by the most diverse interpreters has strongly influenced the concept of non-cumulative taxation in Brazilian law, implying distortions to tax neutrality. The concern about this issue is justified insofar as taxpayers have been discussing the non-cumulative nature of ICMS, IPI, PIS and Cofins in administrative and judicial courts for years, often due to measures restricting this instrument, which is so expensive for achieving tax neutrality.