What does the new ICMS law provide for?

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The new ICMS law ( Bill No. 18/2022 ) classifies fuels, electricity, communication and public transportation as essential services and goods, making these operations eligible for the 17% ICMS limit . The measure should be applied immediately upon sanctioning of the Bill.

To compensate for the loss of revenue by the states, the same bill determines that states with losses above 5% will have their losses compensated by the federal government. In practice, the compensatory amount would be deducted from debts owed to the Union.

However, the bill maintains the autonomy of colombia mobile database the states and the Federal District to establish the ICMS tax rate, which varies in each location. However, despite having the option to choose, the states must maintain the limit of up to 17% on this tax.

If the state does not have any outstanding debts with the government, the loss will be compensated in the following year (2023), using resources from the Financial Compensation for the Exploration of Mineral Resources (CFEM). Otherwise, states will have preference in taking out loans in the same year.

Electric energy
Currently, the ICMS on electricity varies due to the autonomy of the states. São Paulo, for example, has rates between 12% and 25%, with the latter percentage being more common in companies.

The Supreme Federal Court has even debated the selectivity of ICMS by states. Since 2012, the STF panel has defended the autonomy of states and then reversed its decision, ruling in favor of companies opposed to the variation of rates based on electricity consumption.

In December 2021, Minister Dias Toffoli determined a limit of 17% on the electricity tax rate from 2024 onwards, with exceptions for cases filed with the STF up until February 5, when the judgment on the merits began.

Fuel
The new ICMS law amends LCP nº 192/2022 , which previously defined a single ICMS rate for fuels and applied to all states. With the change, the tax will be charged by volume instead of at a defined rate.

This new way of collecting the tax puts an end to the agreement of the National Council for Tax Policy (Confaz), which until then established rates for diesel.

Since the publication of Law No. 192/2022, Confaz has established a single ICMS rate of R$1.006 per liter of diesel. In theory, the amount allows for a discount according to the reality of each state.

However, the per-liter tax rate format did not reduce the amount charged at the fuel pump. This is because this format was scheduled to be used from July 1st, the date that marks the end of the ICMS freeze.

With the change proposed by Bill No. 18/2022, there are states that support increasing the price of fuel at the pumps. In addition, they say that revenue will be unequal, with fewer taxes for those who charge more and more taxes for those who charge less at the pumps.