Through the ICMS Agreement No. 70, of July 29th, 2014, from the National Council of Financial Policy (CONFAZ), a group of 21 States agreed to adopt measures to eliminate benefits and incentives, fiscal or financial, granted without approval from CONFAZ, representing an important step to stop the ICMS fiscal war.

The approved measures include: (i) remission and amnesty of tax debts arising from the use of benefits and incentives that have been judicially canceled; and (ii) setting of deadlines for the enjoyment of the existing benefits and incentives (1 to 15 years, depending on the type of benefit).

The production of effects of the Agreement is still subject to the issuance of normative acts providing on: (i) gradual reduction of interstate rates, until the minimum of 4% in 2021; (ii) differential rate for interstate operations to non-taxpayers end consumers; (iii) federal funds to compensate losses in revenue resulting from the aforementioned changes; and (iv) criteria for monetary restatement and setting of interest in refinancing contracts between members of the Federation.

The Agreement No. 70 was not signed by all the States, as required by the Supplementary Law No. 24 of 1975, and as consequence does not have normative force. Such requirement of approval by all States can be overcome and replaced by a quorum of 3/5 of the States, if approved the Legislative Bill No. 130, currently in the Committee on Economic Affairs (CAE).

The subject addressed is extremely important, especially due to the exposure of several companies that joined the ICMS benefits and incentives which were later declared unconstitutional, since not supported by an agreement. The unconstitutionality of such benefits is actually object of the Proposal of Binding Precedent No. 69, from the Supreme Court, with unquestionable economic repercussions, given the billions assessments already issued by the States that do not recognize the benefits.

The lawyers of Fraga, Bekierman & Cristiano Advogados make themselves available to provide any further clarification on the subject.