The First Section of Brazil’s Superior Court of Justice (STJ), under Justice Marco Aurélio Bellizze’s reporting, ruled on Special Appeals No. 1,976,608 and 1,995,220, both from Rio de Janeiro State, affecting Repetitive Theme No. 1247. The controversy centered on the interpretation of Article 11 of Law No. 9,779/99 and the possibility of claiming IPI (Tax on Industrialized Products) credits in cases of taxed inputs and tax-exempt outputs — including cases of constitutional immunity.

The reporting justice began by noting that while the Court had previously deliberated on this matter in 2021, it returned to the agenda due to significant changes in the collegiate’s composition. He emphasized that this analysis is distinct from the Federal Supreme Court’s jurisprudence regarding the Manaus Free Trade Zone, as it deals with infraconstitutional matters. He then outlined the non-cumulative nature of IPI, pointing out that tax credit utilization requires specific conditions: acquisition of taxed inputs, their submission to the industrialization process, and subsequent product output — even if tax-exempt — from the industrial establishment.

According to Justice Bellizze, Article 11 must be interpreted in accordance with the Federal Constitution and does not constitute an improper extension of tax benefits. By using the term “including,” the regulation encompasses exempt outputs, those subject to zero tax rates, and immune transactions, provided the inputs underwent industrialization. This interpretation dismissed claims of violation to Article 111 of the National Tax Code (CTN), as it pertains to non-cumulative taxation rather than tax exemption.

The established thesis states: “IPI tax credits, as established in Article 11 of Law No. 9,779/99, arising from taxed purchases of raw materials, intermediate products, and packaging materials used in industrialization, encompass the output of exempt products, those subject to zero rates, and immune products.”

Based on this reasoning, the STJ granted the taxpayers’ appeals, authorizing the use of IPI credits and corresponding tax compensation, while also nullifying credits recorded in the respective administrative proceedings. This unanimous decision strengthens legal certainty for the industrial sector, which now has definitive Court support for claiming IPI credits in cases of immune outputs, ensuring greater predictability in tax calculation and compensation.

[Notes:

IPI: Federal tax on industrialized products in Brazil
STJ: Brazil’s highest court for non-constitutional matters
CTN: Brazilian National Tax Code
“Immune outputs” refers to constitutional tax immunity, a specific concept in Brazilian tax law]