Brazilian Supreme Court has decided on the effects of ADC 49

On 20 April, the Brazilian Supreme Court (STF) has decided on the effects of the Declaratory Action for Constitutionality N. 49 (ADC 49), which stated that ICMS should not be levied on the transfer of goods between establishments of the same taxpayer.

According to the STF, the existing ICMS credits on such operations could be maintained and the States have until the end of the year to regulate how the taxpayer could transfer such credits between its establishments.

Key takeaway

In practical terms, such decision results in the possibility of charging ICMS on transfer operations until the end of the year, except for taxpayers who had any tax process in progress until the date of the decision (29 April 2021).

Besides, until the end of 2023, taxpayers could maintain ICMS credits on such operations.