* By Saul Tourinho Leal
The Supreme Federal Court ended the historic judgment that found the ICMS levy on software services to be unconstitutional. The tax due is ISS and the story that illustrates this decision needs to be told.
The 19th century was the century of empires. The twentieth, that of nations. We are in the century of cities. The advent of Industry 4.0, added to the great urbanization and the consolidation of a robust service sector, made the ISS stop being a utopia and start to mean financial emancipation of the municipalities. It is the realization of the preview of the 1988 Constitution, in art. 156, III, according to which it is incumbent on the Municipalities to impose taxes on “services of any nature, not included in art. 155, II, defined in a complementary law ”.
The technology sector is made up of a global logic: hardware and software. The first, physical, tangible, corporeal, which changes ownership, merchandise itself. The software, on the other hand, constitutes the formatting of ideas, the strength of data driven by human inventiveness, the fluid, intangible, incorporeal portion, which does not change ownership, but provides experiences that gain new uses, a service, in fact.
Brazilian constitutionalism delivers the tax competence of hardware to the States, with the ICMS, and, of the software, to the municipalities, through ISS. This, expressly governed by Complementary Law no. 116/2003, which has its own items (1.04 and 1.05) for computer programs, whatever the modality. With the imminent 5G auction and the arrival of the Internet of Things (IoT), everything will have the potential to become hardware. A refrigerator, a stove, a car, a clock ..., everyone will be able to integrate this vast digital economy. The ICMS tax base will not be lacking.
When the waters rise, all boats rise. Why, in defiance of the Constitution, constitute an artificial concept that would throw this very dynamic sector into the marshy terrain of the ICMS fiscal war, with all its parish disputes deeply hostile to innovation? Therefore, it is fair to understand the decision of the STF as being one of the most important decisions taken in tax matters in recent times.
The Supreme Court, after almost two decades, concluded the judgment of the direct action of unconstitutionality n. 1945 (Rel. Min. Cármen Lúcia) and the direct action of unconstitutionality n. 5659 (Min. Dias Toffoli report).
In ADI 1945, the declaration of unconstitutionality of Law No. 7,098 / 1998 was requested, in particular, of item VI of art. 2nd, which makes the ICMS tax on “operations with a computer program - software - even if performed by electronic data transfer” and also of § 6 of art. 6, which points out as the basis for calculation “any other portion charged to the recipient, including computer support, regardless of its name.
Similarly, ADI 5659, filed by the National Confederation of Services, claimed the unconstitutionality of State Decree No. 46,877 / 2015-MG, and interpretation according to art. 5 of Law No. 6,763 / 75; of art. 1, I and II, of Decree 43.080 / 2002, both from Minas Gerais; as well as art. 2 of LC 87/96, in order to exclude transactions with software .
According to a majority of 7 votes to 4, the tax due is ISS. However, there is a proposal to adopt the modulation of the effects of the decision, in order to “(…) endow it with effectiveness from the date of publication of the minutes of judgment”.
The failure or success of nations is defined by the capacity they have to build an environment that encourages people to be sure of the right, a right that does not need to be immutable, but must be, at least, predictable. That's what it exists for.
Nowadays, the 1988 Constitution calls for an undeniable commitment to legal certainty in tax matters, to the point that Section II, of Chapter I (Of the National Tax System) of Title VI (Of Taxation and of the Budget) dedicates itself exclusively to “ Limitations on the Power to Tax ”. Limiting this power is the Constituent's way of saying: the power to tax does not mean or involve the power to destroy, as noted in the USA, Justice Oliver Wendell Holmes, Jr, always quoted by Minister Celso de Mello.
Item I of art. 150, for example, prohibits the Union, the States, the Federal District and the Municipalities to “demand or increase a lawless tax that establishes it”. And it's not just that.
Items “a”, “b” and “c” of item III of art. 150 replicate such prohibitions “to taxable events that occurred before the beginning of the law that instituted or increased them”; "In the same financial year in which the law that instituted or increased them was published"; and "before ninety days have elapsed from the date on which the law that instituted or increased them was published, subject to the provisions of paragraph b".
These commands are considered, by the STF, implicit stone clauses, and whose purpose is to rule out any state incursions on the taxpayers' assets when guided by the north of surprise. The wisdom of predictability is a vital input in Tax Law.
* Saul Tourinho Leal, Doctor of Constitutional Law, partner of Ayres Britto Legal Advice and Advocacy and legal advisor at ABES
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