In its decision of extraordinary appeal No. 540.829/SP (general repercussion), the Brazilian Supreme Court (“STF”) , ruled that ICMS (value-added tax) does not apply to imports of goods under the special regime of temporary admission.

As a result, the Rio de Janeiro State Attorneys Office issued the above mentioned circular expressly authorizing its Attorneys to not file appeals, defenses or objections in any legal proceedings discussing solely the applicability of ICMS to imports of goods whose ownership is not changed.

However, we clarify that the law of the State of Rio de Janeiro has not been revoked on this point, and because tax authorities have to comply with the legality principle, some tax auditors continue to assess companies that have not collected ICMS at the time of customs clearance of goods imported under the special regime of temporary admission. In this sense, some companies have chosen to file a declaratory action in order to safeguard their rights.