STF drops higher ICMS charge on electricity and communication services in Maranhão

The STF declared the charging of higher ICMS on electricity and communication services in Maranhão unconstitutional. The decision took place this Monday (19).

The PGR questioned the 27% rate on the sectors. The rapporteur, Nunes Marques, considered that the charge violates the Constitution as they are essential services.

The majority defined that the decision will take effect from 2024. The court also validated the increase in the general state ICMS rate to 22%.

The Federal Supreme Court (STF) declared unconstitutional the charging of higher rates of the Tax on Circulation of Goods and Services (ICMS) on electricity and communication services in Maranhão. The decision was made in a virtual trial that ended on Monday (19).

With this understanding, the state will not be able to apply a higher rate to these services than that charged for other operations. The decision takes effect from 2024, preserving, as a rule, charges made previously.

The discussion began after the Attorney General's Office (PGR) questioned a state law that provided for the charging of 27% ICMS on communication services and on residential electricity consumption exceeding 500 kilowatt-hours (kWh) per month.

The percentage was higher than the general tax rate in Maranhão, which went from 20% to 22% in 2023 and reached 23% in 2024.

The case's rapporteur, minister Nunes Marques, considered that the differentiated charge violates the Federal Constitution.

According to the minister, the high consumption of electricity does not justify the application of a higher rate, as energy supply is considered an essential service.

The same understanding applies to communication services, which also cannot be subject to higher taxation than that applied to operations in general.

The ministers unanimously followed the rapporteur's vote on the unconstitutionality of the charge.

Despite the unanimity on the irregular charge, the ministers differed regarding the period of application of the decision.

Nunes Marques argued that it would not be necessary to limit the effects of the judgment, as Maranhão had increased the general ICMS rate in recent years, compensating for possible revenue losses.

Minister Dias Toffoli presented a different understanding. He defended the adoption of the same criteria applied by the STF in similar judgments involving other states.

According to the proposal, the decision will take effect from 2024, with reservations for legal actions presented until February 5, 2021.

Most ministers followed Toffoli. In practice, this means that charges prior to 2024 are, as a rule, preserved.

Minister Flávio Dino did not participate in the trial because he was prevented from attending.

In the same judgment, the Supreme Court also analyzed an action presented by the Solidariedade party against the state law that raised the general ICMS rate in Maranhão from 20% to 22%, in 2023.

The party argued that the legislation violated constitutional rules and questioned the speed of processing of the proposal, which was presented, approved and sanctioned on the same day.

Unanimously, the ministers decided to maintain the validity of the law.

According to Nunes Marques, states have autonomy to establish the general ICMS rate. The rapporteur also highlighted that the Constitution does not determine a minimum period for the processing of bills in legislative assemblies, as long as constitutional norms are respected.