Following complaints from consumers, companies and representatives of the solar sector, the Government of Goiás announced that it will seek exemption from ICMS (Tax on the Circulation of Goods and Services) for the solar energy sector in the DG (distributed generation) segment.
Last Friday (24), the political parties MDB and União Brasil, with the of Governor Ronaldo Caiado (União Brasil), filed a direct action of unconstitutionality against the collection of the tax by the distributor Equatorial-GO.
João Felipe Prado, president of the Goiana GD Front, explains that conversations with the State Government began in the first week of December, shortly after the distributor announced that it would start charging the tax in the sector, something that had never happened before.
“Equatorial carried out a workshop on November 28, 2024, where they announced that from December 1 they would charge ICMS in the State, including retroactivity. There was a charge from December onwards, and retroactivity was also carried out for three months: September, October and November”, he explains.
According to the executive, the ICMS tax on solar energy has caused a major impact in the region by directly affecting the cost of DG, especially for productive sectors, such as agribusiness.
On his social media, Governor Ronaldo Caiado, recorded a video stating that the incidence of tax on consumers who produce their own energy is an absurd charge.
“Upon learning of this absurdity, both I, my party (União Brasil) and the MDB, filed an unconstitutionality lawsuit with the Court of Justice of Goiás,” he said.
Absence of triggering event
In an interview with Canal Solar, Bárbara Rubim, vice president of GD at ABSOLAR (Brazilian Association of Photovoltaic Solar Energy), explains that the action brought in Goiás is in line with a measure that the photovoltaic sector has long defended: the lack of a generating fact that justifies the collection of ICMS in this modality.
She explains that the collection of tax on solar DG is not something new: it began in 2012 based on a decision taken by the states during a CONFAZ (National Council for Tax Policy) meeting and can occur optionally from state to state.
At this CONFAZ meeting, it was decided by the states that: despite the DG compensation system being an exchange mechanism, there would be a triggering event for the collection of ICMS at the time when the consumer, even compensating consumption with the injection of energy into the grid, would supposedly be consuming distributed energy.
“So, the understanding of the states at that time was that the subsequent compensation of this energy consumed in the grid by the consumer does not erase the generating fact that occurs at the moment in which he pulled this energy from the grid”, he comments.
However, Bárbara emphasizes that the understanding of the solar energy sector is that this analysis has always been a mistaken interpretation, since “in fact the nature of this exchange operation does not have a commercial relationship that justifies the collection of this tax”, she explains.
To try to solve the problem brought about by this interpretation by the states in 2012, the Agreement nº 16/2015 of CONFAZ, authorizing states to grant exemption in internal operations related to the circulation of electrical energy.
Next Steps
Bárbara states that the measure adopted is in line with what has already been done in Mato Grosso, where of the PV (Green Party) filed a similar action and managed to suspend the collection of ICMS in the state.
The professional explains that the next step is for this filed action to be assessed by the Court of Justice of Goiás in two stages: first, as a preliminary injunction, and then, as a definitive injunction.
“Once the injunction is issued, there will be an immediate suspension of the ICMS charge on the electricity bill of all consumers who generate their own energy, not just on the TUSD portion of the bill,” explains the professional.
It is worth noting that, as this is a legal action, if there is an appeal against a possible favorable decision by the State Court of Justice, the action will need to be analyzed at the federal level by the STJ (Superior Court of Justice).
Questions at national level
The ICMS exemption for distributed solar generation has gained increasing appeal from political parties and consumers themselves in Brazil, with many professionals questioning in court the issue of the triggering event for the collection of ICMS.
“The courts have shown themselves to be open to accepting this thesis, whether in the first instance court or in the Court of Justice, which would be in the second instance at the state level”, emphasizes Bárbara.
The executive, however, emphasizes that even though the country is experiencing an openness to accepting this thesis, it is important to highlight that legal actions involving issues like this tend to have prolonged processing in the courts.
“Even if we obtain an injunction or a favorable ruling, what we see is a tendency for the State to always appeal these decisions. And this makes the life of these cases take much longer, as this processing, especially in higher courts, is slower,” she emphasizes.
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