The Superior Court of Appeals (STJ) decided, in 2018, Repetitive Appeal (REsp) 1.221.170/PR, which dealt with appropriation of PIS and Cofins credits based on the concept of inputs. At the time, the STJ gave the legal interpretation to the provisions of article 3, subsection II, of laws 10,637/02 (PIS) and 10,833/03 (Cofins), which ruled out the restrictive interpretation advocated at that time by the Federal Revenue Service.
At that time, the STJ tied the concept of input material to the criteria of essentiality or relevance, that is, considering the indispensability or importance of a given item (good or service) for the development of the economic activity performed by the taxpayer.
With the covid-19 pandemic, the analysis of the concepts of essentiality and relevance gained new developments. This is because, among the measures imposed during the state of calamity, companies were required to incur expenses with protective equipment designed to prevent contamination with and spread of the virus.
Since February of 2020, for example, the use of personal protective masks has been mandatory for circulation in public and private spaces accessible to the community, on public roads, and on public transport. It is also mandatory to adopt measures for sterilization of places of public access, including vehicles, and the provision of sanitizing products to users during the validity of the measures to address the public health emergency resulting from the covid-19 pandemic (Law 13,979/20).
Thus, masks, gloves, and hand sanitizer have become not only essential and relevant items in the fight against the pandemic, but also determinant for a company’s operation, to the exact extent of the interpretation fixed by the STJ in article 3, subsection II, of Laws 10,637/02 (PIS) and 10,833/03 (Cofins).
In the midst of the chaotic public health scenario, questions began to arise as to the possibility of appropriation of PIS and Cofins credits referring to these items. In the judicial sphere, the few decisions already rendered on the matter were unfavorable to taxpayers (cases 5003996-98.2020.4.03.6110 and 5012198-94.2020.4.03.6100, both from the TRF3).
Nevertheless, on September 27 of this year, taxpayers received more encouraging news on the topic. Almost two years after the beginning of the pandemic, the Federal Revenue Service published Cosit Advisory Opinion 164 recognizing the possibility of taking PIS/Cofins credits on expenses incurred with sanitizer, masks, and gloves used in protection against covid-19, as it considers that these items fit within the concept of an input.
The RFB found that gloves and sanitizer may be considered an input, as they fit within the concept of PPE (Personal Protection Equipment), for which credits had already been expressly recognized by the STJ's own repetitive decision (REsp 1.221.170/PR) and by Cosit Normative Opinion 05/18.
As for protective masks, the RFB argued that Joint Ordinance 20/2020, promulgated by the Special Secretary of Labor Welfare of the Ministry of Economy and the Ministry of Health, expressly excluded this item from the concept of PPE. Therefore, its utilization as a credit could not be based on these grounds. Nevertheless, the RFB found that the masks are mandatory items by legal requirement, recognizing their use as giving rise to a credit on this other basis, which is also supported by Cosit Normative Opinion 05/18.
It is worth noting that the appropriation of PIS/Cofins credits for protective masks, gloves, and sanitizer was recognized only for workers allocated to the activities of production of goods and/or service providers, but not those allocated to administrative or commercial activities.
This position is in line with the majority case law that has been forming in the administrative sphere, in which a certain resistance to recognizing PIS/Cofins credits for commercial companies or any activity not directly connected to the provision of services or production or manufacture of goods is identified, per the literal meaning of article 3, subsection II, of laws 10,637/02 (PIS) and 10,833/03 (Cofins).
However, there are good arguments to challenge this tax interpretation that does not recognize the PIS/Cofins credit for commercial companies (retailers, wholesalers, etc.), especially due to the equal protection of companies, regardless of the area in which they operate, and the very principle of non-cumulativeness of the PIS/Cofins.
Specifically in the case of equipment intended to prevent the spread of coronavirus, it is possible to argue for its mandatory use even for the very operation of the commercial company, given the rules instituted by the public authorities.
The RFB's position is a first step in the recognition of the right to the PIS/Cofins credit for protection items against the dissemination of covid-19. It should be applied to all companies to keep in line with the concepts of essentiality and relevance defined by the STJ. The decision serves as an indication of the direction this discussion may take in the administrative and judicial spheres.
It is important to conduct a detailed analysis of this issue, observing the specificities of each company's activity and its classification within the concepts established by the STJ, considering the greater or lesser risks of being assessed.