STF injunction resumes ICMS collection on TUSD and TUST

In the midst of so many decisions in the electricity sector Brazilian this week, such as the publication of the regulation of Law 14.300 by ANEEL, One more decision will impact the consumer's bill Brazilian.

O minister of STF (Federal Court of Justice), Luiz Fux, granted this Thursday (09) a injunction that suspends the differentiated calculation in ICMS collection (Tax on Circulation of Goods and Services) on the electricity. 

Although the decision has no relation to the Resolution of the micro and minigeneration, he affects directly this segment.

This is because, with the decision, all Brazilian states can now amend its decrees to resumption of tax collection on TUST (Tariff for the Use of Electrical Transmission Systems) and the TUSD (Tariff for the Use of Electrical Distribution Systems), aiming to collection of state governments. 

The determination was made by the minister within the scope of Direct Unconstitutionality Action, filed by the governors of Pernambuco, Rio Grande do Sul, Maranhão, Paraíba, Piauí, Bahia, Mato Grosso do Sul, Sergipe, Rio Grande do Norte, Alagoas, Ceará and the Federal District. 

“Every six months, states fail to collect approximately R$16 billion, which could also have an impact on the collection of municipalities, since the Federal Constitution determines that 25% of the revenue collected from ICMS by the states must be passed on to the municipalities”, wrote Fux in his decision.

Increase in electricity bill

The incidence of tax, however, should produce a further increase in electricity bill of consumers, as explained by Thiago Bao Ribeiro, lawyer specializing in distributed generation and CEO of Bao Ribeiro Advogados.  

“We will have a very significant increase in the electricity bill, mainly because TUSD is a relevant component of the distribution tariff and was without ICMS. The expectation is for an increase approximately 10% depending on the state”, he explained.

Understand the case

As explained Bao Ribeiro, the injunction granted by minister Luiz Fux is the result of a decision taken last year, when the National Congress discussed the fact that electrical energy is considered an essential product and, therefore, not subject to a high ICMS charge.

At the time, it was agreed with the STF to reduce the tax rate for states by a level of up to 18%. After this decision was made, an agreement was made and the proposal for Complementary Law 194, where this ICMS limit was established. 

“The issue is that, at that time, the National Congress included an additional item (in Complementary Law 194) that also provided for the exclusion of ICMS on TUSD and TUST. This resulted in an unprecedented loss of revenue for the states and a movement began to interpret that the STF decision would not have allowed this withdrawal (exclusion of ICMS on TUSD and TUST)”, pointed out the lawyer.  

As a result, a group of states filed a Direct Unconstitutionality Action and managed to show Minister Fux that they would be suffering irreparable damage without being able to charge ICMS on TUSD and TUST. 

“The next step now will be to put this Direct Unconstitutionality Action to a vote in the Plenary. But until then, we still have a long way to go, with the right to defense and oral arguments from associations, until this action is taken to a vote by the 11 ministers. Until the definitive vote on this item in the STF, this injunction is effective for all states”, he concluded.