The Neutrality of Transitional Rules in the IBS and CBS

the Case of Capital Goods

Abstract

This article aims to examine, from a legal-dogmatic perspective, the constitutionality of articles 406 and 407 of Complementary Law No. 214, of January 16, 2025. Since these provisions establish a mechanism with the effect of reducing the tax base in capital goods transactions subject to IBS and CBS, one could allege the granting of a tax benefit in violation of article 156-A, paragraph 1, item X, of the Constitution of the Federative Republic of Brazil of 1988. However, this article aims to demonstrate that the prohibition on the granting of tax benefits does not extend to technical figures, the purpose of which is merely to outline the tax hypothesis in response to the claims of the tax system. Therefore, the aforementioned constitutional provision is not violated. On the one hand, article 406 establishes a mechanism with the effect of reducing the tax base, purging, for IBS and CBS purposes, the added value already burdened by ICMS, PIS and Cofins. On the other hand, art. 407 extends this treatment to the stage of resale of capital goods to the final consumer; otherwise, there would be a reversal of the mechanism of art. 406 due to the so-called recovery effect. Therefore, in light of legal certainty during the transition period, such articles adopt technical mechanisms in order to prevent harmful effects of the coexistence, albeit temporary, of two legal regimes.