The National Tax Code (CTN) is established by Law No. 5.172/66 , which compiles and systematizes the types of taxes in the country. Knowledge of it is essential, since individuals and legal entities are subject to taxation daily. Therefore, understanding the National Tax Code provides significant security for proper tax planning, avoiding risks and maximizing financial gains.
Tax in the National Tax Code: what is it?
The concept of tax is the starting point and foundation of the National Tax Code. The basic elements of the National Tax Code stem from it, and its legal description in Brazilian law is found in Article 3 of the Code :
"A tax is any compulsory monetary payment, in currency or whose value can be expressed in currency, that does not constitute a sanction for an illegal act, established by law and collected through fully bound administrative activity."
Having clarified the concept of tax, we now move on to the types of taxes defined in the National Tax Code and legal doctrine.
Read also: The Tax Reform and Its Impacts on the Brazilian Tax System
What are the 5 tributary species?
Tax species are species of the genus Tribute. There are doctrinal divergences in their classification, with bipartite, tripartite, quadripartite, and quindipartite theories. So, let's now unravel these infamous tax species.
Firstly, Article 5 of the National Tax Code and Article 145 of the Federal Constitution established three types of taxes: "taxes are duties, fees, and betterment contributions." This is the tripartite theory adopted at the time the National Tax Code was drafted.
However, based on article 217 of the National Tax Code itself and articles 148 and 149 of the Federal Constitution, many have considered compulsory loans and social contributions as also a type of tax, forming the quindipartite or pentapartite theory. Among its defenders is the Supreme Federal Court.
The Brazilian Supreme Court (STF), in a position already confirmed on other occasions, defends the existence of five types of taxes: taxes, fees, betterment levies, social contributions, and compulsory loans. See, for example, the opinion of Justice Carlos Velloso in RE 138.284/CE :
The various types of taxes, determined by the taxable event or the generating event of the respective obligation (CTN, art. 4), are as follows: a) taxes (CF, art. 145, I, arts. 153, 154, 155 and 156); b) fees (CF, art. 145, II); c) contributions, which can be classified as follows: c.1. betterment contributions (CF, art. 145, III); c.2. parafiscal contributions (CF, art. 149), which are: c.2.1. social contributions, c.2.1.1. social security contributions (CF, art. 195, I, II, III), c.2.1.2. other social security contributions (CF, art. 195, paragraph 4), c.2.1.3. general social (the FGTS, the education salary, CF, art. 212, paragraph 5, contributions to SESI, SENAI, SENAC, CF, art. 240); c.3. special: c.3.1. intervention in the economic domain (CF, art. 149) and c.3.2. corporate (CF, art. 149). Compulsory loans (CF, art. 148)[44] also constitute a type of tax.
Now, let's look at each of the tax species within the genus Tributa:
- Taxes: as stated in article 16 of the National Tax Code, a tax is a "tribute whose obligation arises from a situation independent of any specific state activity." Therefore, it is emphasized that this type of tax is independent of any specific counter-performance by the State;
- Fees: their generating event is the regular exercise of police power, or the effective or potential use of a specific and divisible public service, provided to the taxpayer or made available to them. Therefore, it should be noted that this type of tax is related to a specific state activity, a counter-performance (art. 145, II, of the CF and art. 77 and 79 of the CTN);
- Improvement contributions: these types of taxes are triggered by the increase in the value of the taxpayer's property due to public works (such as the installation of an electrical grid, flood control works, for example). Thus, the direct beneficiaries of the work bear its cost, in whole or in part (Article 145, III, of the Federal Constitution and Articles 81 and 82 of the National Tax Code).
- Social contributions (parastatal or special): the nature of these types of taxes is a matter of heated doctrinal controversy. Here, we will discuss the concept that contributions constitute taxes constitutionally qualified by their purposes (CARRAZZA, Roque, p. 598). Their establishment is authorized to function as an instrument of action by the Union, being linked to the pursuit of one of the constitutionally stipulated purposes, such as the right to social security, for example. According to article 149 of the Constitution: "it is the exclusive competence of the Union to establish social contributions, contributions for intervention in the economic domain and contributions in the interest of professional or economic categories, as an instrument of its action in the respective areas";
- Compulsory loans: The Union (only the Union), through a supplementary law, may institute compulsory loans to meet extraordinary expenses arising from public calamity, external war or its imminence, and for urgent public investment of relevant national interest (Article 148 of the Federal Constitution).
Going even further, we will now consolidate the topic with the taxes foreseen in the National Tax System.
What taxes are included in the National Tax System?
The taxes in the National Tax System are: federal taxes, state taxes, municipal taxes, simplified national tax regime, and social security contributions.
Federal taxes
Federal taxes include import tax (II), export tax (IE), income tax (IR), tax on industrialized products (IPI), tax on financial operations (IOF), rural land tax (ITR), and wealth tax;
State taxes
State taxes include inheritance and gift tax (ITCMD), tax on the circulation of goods and services (ICMS), and tax on the ownership of motor vehicles (IPVA);
Municipal taxes
Municipal taxes include urban property tax (IPTU), service tax (ISS), and real estate transfer tax (ITBI);
Simple national
The Simples Nacional, according to the Federal Constitution, especially in articles 146 and 170, established the obligation of differentiated treatment for micro-enterprises (ME) and small-sized enterprises (EPP). The Simples Nacional is a unified special tax assessment regime that favors the collection of taxes and contributions with the aim of reducing the tax burden on ME and EPP;
Social contributions:
Social contributions include contributions for intervention in the economic domain (CIDE), contributions of interest to professional and economic categories, contributions for the financing of social security, contributions on the lottery, general social contributions, social contribution on profit (CSLL), and public lighting contribution (CIP);
What is the structure of the National Tax Code?
The National Tax Code was conceived in two distinct parts: firstly, the CTN dealt with regulating the tax system and, in the second part, the regulations governing that system are specified.
Although the National Tax Code is still valid, the law naturally undergoes changes. Therefore, the entire general section of the National Tax Code, articles 1 to 95, has changed over time. Articles 42 to 52, relating to ICM (Tax on Circulation of Goods) and ISS (Tax on Services), were amended by Decree No. 406 and Decree No. 834.
Regarding the section on principles and rules (articles 96 to 182), the wording of the National Tax Code remained practically unchanged, with minimal modifications.
On the other hand, the parts of the National Tax Code related to tax administration (articles 183 to 218) underwent important changes (this part of the National Tax Code does not specifically deal with taxation, but with public administration and collection systems).
Therefore, for some lawyers, since the National Tax Code has survived many legal orders, including one systematized during the height of the anti-democratic military dictatorship, reform would be essential.
Key points you need to know about the National Tax Code.
To learn more about how the rules of the National Tax Code are applied in practice, here are some key points.
Interpretation of tax regulations
According to article 111 of the National Tax Code, tax legislation that addresses the following must be interpreted literally: "suspension or exclusion of tax credits; granting of exemptions; and waiver of compliance with ancillary tax obligations".
While tax regulations that define infractions or impose penalties are interpreted differently, in a manner more favorable to the accused, in cases of doubt regarding: "the legal classification of the act; its nature or material circumstances, or the nature or extent of its effects; authorship, imputability, or punishability; the nature of the applicable penalty, or its gradation."
Suspension of tax credits
Another very important provision of the National Tax Code is article 151. It offers possibilities for the suspension of tax credits.
According to this article, these possibilities are: moratorium; deposit of the total amount; claims and appeals filed under the law; granting of preliminary injunctions or provisional relief; and payment in installments.
Extinction of tax credits
In the National Tax Code, tax credit is extinguished when the Public Treasury fails to establish it after 5 years (art. 173, CTN).
In addition to this fact, the statute of limitations for collecting tax debt is also five years, counted from the date of its definitive establishment (art. 174, CTN).
Immunities
It is a constitutionally qualified hypothesis of non-incidence, that is, the Constitution prohibits the National Tax Code from including certain facts in tax collection, imposing negative rules of competence:
- Principle of reciprocal or intergovernmental immunity: the Union, the Member States, the Federal District and the Municipalities are prohibited from levying taxes on the assets, income or services of one another, as well as on the autonomous entities and foundations maintained by the Public Power (art. 150, VI, a, of the CF, and arts. 9, 11 et seq. of the CTN);
- Tax exemption for temples of any religion: no tax can be levied on real estate used for religious activities. It is important to highlight here that this applies only to taxes (article 150, VI, b, of the Federal Constitution).
- Immunity for political parties and their foundations, labor unions (including central labor unions), and non-profit educational or social assistance institutions, provided that the requirements established by law are met;
- Tax exemption for books, newspapers, periodicals and the paper intended for their printing;
- Tax exemption for musical phonograms and videograms produced in Brazil and authored or performed by Brazilian artists;
- Specific immunities: if you are interested in all specific ones, below is a quick summary to easily explain this topic.
"Manufactured products destined for export are not subject to IPI (Tax on Industrialized Products); § 4 The ITR (Rural Land Tax) does not apply to small rural properties – art." Article 2 of Law No. 9.393/96 – when exploited by the owner who does not own another property – it is no longer required that the exploitation be carried out directly by the owner or with his family, a requirement that ultimately restricted job creation; art. 155, X, a, b, ced – ICMS does not apply to: 1. 1. Operations that send goods or services abroad, ensuring the maintenance and use of the tax charged in previous operations and services; 2. Interstate transactions that send electricity, petroleum (including lubricants), and liquid and gaseous fuels derived from it to other states. For LC no. 87, the immunity applies to goods intended for industrialization or commercialization, but not to transactions directed at final consumers. Furthermore, regarding fuels and lubricants, the exemption is not absolute, since, in cases where the ICMS (Tax on Circulation of Goods and Services) on their sale is levied only once, the tax may be required, as provided for in article [article number]. 155, § 2, XII, h, of the Federal Constitution; 3. Gold is defined by law as a financial asset or exchange instrument; 4. in the provision of free-to-air radio and television communication services; 5. art. 155, § 2, XI, of the Federal Constitution: the value of the IPI (Tax on Industrialized Products) is not included in the calculation basis of the ICMS (Tax on Circulation of Goods and Services), provided that it is an operation in which both taxes apply, the recipient of the goods is a taxpayer of the ICMS, and the goods are intended for commercialization or industrialization); 6. Transactions involving gold, defined by law as a financial asset or exchange instrument, are subject only to IOF (Tax on Financial Operations). According to art. 156, § 2o, I, ITBI does not apply to the transfer of assets or rights incorporated into the assets of a legal entity as a capital contribution, nor to the transfer of assets and rights resulting from the merger, incorporation, spin-off or dissolution of a legal entity, unless, in these cases, the predominant operating revenue of the acquirer is derived from the purchase and sale of these assets or rights, rental of real estate or financial leasing. Art. Article 184, § 5, establishes that operations involving the transfer of expropriated properties for agrarian reform purposes are not subject to federal, state, or municipal taxes (this is immunity, not exemption, since the negative rule of competence has a constitutional basis); and article... Article 195, § 7, of the Federal Constitution exempts charitable social assistance entities that meet the requirements established by law from paying the employer's contribution to social security. Finally, regarding specific immunities, it should be remembered that, according to art. Article 195, II, of the Federal Constitution states that social security contributions are not levied on retirement or pension benefits granted by the general social security system referred to in article 195. Article 201 of the Federal Constitution. Similarly, article... Article 40, § 18, of the Brazilian Constitution states that social security contributions are not levied on retirement and pension payments made as a result of public service, up to the limit of the general social security ceiling. (CHIMENTI, Cunha, p. 53)
Given the above, it is clear that knowledge of Tax Law is essential, since individuals and legal entities are subject to taxation on a daily basis, and therefore, knowing the National Tax Code gives lawyers a great deal of security to make effective tax plans that reduce risks and maximize gains.
