Still in the wake of efforts to try to contain the rise in fuel prices, Complementary Law 194 was enacted, which amends provisions of the National Tax Code (CTN) and Complementary Law No. 87/1996 (Kandir Law).
The main change brought about by LC 194/2022 was the recognition of the essential and indispensable nature of electricity, communication services, fuels, natural gas, and public transport.
A direct consequence of this is that states and the Federal District will no longer be able to apply rates that exceed those normally applied to transactions in general. In other words, transactions involving the aforementioned goods and services will no longer be subject to rates above 17% or 18%.
LC 194/2022 comes into effect immediately, unlike what happened with the decision handed down by the Federal Supreme Court in the trial that found it unconstitutional to set the ICMS rate at a percentage higher than that applied to transactions in general, due to the essential nature of the goods and services, which, due to modulation, will only produce effects in the 2024 financial year.
As this is a fully effective rule, States and the Federal District must adjust their respective laws to reduce the tax burden, and taxpayers must seek legal assistance against maintaining the tax burden at levels that are no longer authorized by the supplementary law.
