PP Files Lawsuit Against Government’s Provisional Measure

Last week, as soon as the text of the Provisional Measure (MP) had arrived in Congress, lawmakers representing the most affected sectors such as agribusiness and exports were already calling for the return of the matter to the Presidency. Currently, a company pays PIS/Cofins when purchasing inputs and can deduct the amount from other taxes to ensure that there is no cumulative tax payment. What the MP does is determine that PIS/Cofins credits can only be used to offset PIS/Cofins itself. This change directly affects sectors that are exempt from Pis/Cofins, such as exports, agriculture, and pharmaceuticals.

MP on PIS/COFINS: Entities fear increase in fuel prices

What does the PP allege? The PP argued to the Supreme Court that the provisional measure does not meet the criteria set out in the Constitution that the issue must be relevant and urgent. “The case under examination has no social relevance or urgency, either because they were not alleged, or because they were not proven,” the action states. Furthermore, the PP argues that the text violates the principle of non-cumulative taxation and harms business predictability and legal certainty by abruptly introducing a new fiscal rule. “However, with the entry into force of Provisional Measure 1,227/2024, companies’ current financial planning will suffer immediate implications, compromising investments and contributing to an increase in legal and business insecurity in the country,” the party wrote.

Predicted defeat

For politicians in Brasília, the MP is the latest predicted defeat for the government in Congress. In recent weeks, measures from the Planalto Palace have been overturned in parliament. The fate of the MP on PIS/Cofins is likely to be the same.

Increase in fuel prices

In a statement sent to gas stations, Ipiranga states that “in addition to the usual dynamics of transfers, our gasoline, ethanol, and diesel prices will be adjusted due to the immediate effect of MP 1227/24, which restricted the offsetting of PIS/Cofins tax credits.”