The retail sector is one of the main drivers of the Brazilian economy. In 2021, even during the pandemic, this segment accounted for about 22.9% of the national GDP (approximately R$ 1.99 trillion). Given its significant economic contribution, it is not surprising that there are specific tax controversies concerning this segment. One of them has gained momentum in recent months: the incidence of PIS and COFINS on bonuses and commercial discounts granted by suppliers to retailers.

Before delving into the merits of this discussion, we need to establish some basic – but necessary – premises about retail commercial activity.

In general terms, retail trade consists of selling goods to final consumers. Most often, these products are manufactured by third parties, so the retailer purchases them for resale. Two good examples of retail companies are supermarket chains and convenience stores.

Since most products are purchased from third parties for resale, it is common in commercial practice for manufacturers to grant retailers discounts or bonuses to promote the volume of transactions for their branded products.

For example, suppose a supermarket chain purchases 1,000 units of soft drinks and, due to the large quantity of the order, the product manufacturer grants a 10% discount on this purchase.

In practice, the supermarket chain will have reduced costs in acquiring these goods (it will receive 1,000 units but will only pay for the value corresponding to 900 units). On the other hand, the supplier will secure its customer – the supermarket company – and benefit from the greater exposure and circulation of its products.

With this scenario in mind, the central discussion revolves around the following question: can the value of the 100 units that were “not paid for” be included in the calculation basis of the PIS and COFINS contributions required from the retailer (the acquirer of the products)?

The Federal Revenue Service believes so. According to the understanding expressed in COSIT Consultation Solution No. 542/2017, this discount received from suppliers would represent a “revenue” for the retail company, subject to the incidence of PIS and COFINS.

However, this reasoning does not seem so simple, requiring a more in-depth study on the subject, especially regarding the concept of “revenue” defined by the higher courts over the past few years.

According to the jurisprudence of the Federal Supreme Court, only financial inflows that: have a causal relationship with the economic activities carried out by the taxpayer; constitute new and positive elements; and are permanently or definitively incorporated into the assets without reservations or conditions will be taxable by social contributions.

In the example analyzed here, the retail company – which purchased 1,000 units of soft drinks with a discount – will only obtain “revenue” when reselling the said products to final consumers.

Before the resale operation, there is no talk of obtaining revenue, since paying with a discount does not reveal the inflow of new wealth that is positively and definitively integrated into the retailer’s assets.

It is also important to note that, as the acquirer of the discounted product (and not as the supplier of the product), the classification of the discount as “conditional” or “unconditional” is irrelevant for determining the taxation of the retail company.

Under the legislation governing PIS and COFINS, revenues related to canceled sales and unconditional discounts granted are not included in the contribution’s calculation basis (art. 1, § 3, V, “a,” of Laws 10.637/2002 and 10.833/2003). In other words, the classification of discounts as “conditional” or “unconditional” is only relevant for the product supplier, the taxpayer who promotes the sale and grants the discount in the operation in question.

Since retailers incur expenses when purchasing products for resale, the discounts received represent mere cost reducers, which is why they should not be included in the calculation basis of PIS and COFINS.

Another argument defended by the Tax Authorities would be classifying commercial discounts as a type of “remuneration” for services provided by retail companies to their suppliers.

This position also does not seem the most appropriate to the issue for the simple fact that the retailer is not a service provider but a commercial company (dedicated to buying and selling goods).

Purchase and sale contracts involve two obligations: (i) the seller (supplier) is obliged to deliver the item; (ii) the buyer (retailer) is only obliged to pay the agreed price.

The legal transaction between the parties ends with the fulfillment of the above-described obligations, with no obligation to do – or provide a service – on the part of the buyer (retailer).

In the administrative sphere, the CARF has already ruled out the incidence of PIS and COFINS on commercial discounts received by retailers. In Decision No. 9303-013.338, the understanding of Counselor Tatiana Midori Migiyama prevailed, stating that “the cost reduction does not confer the constitution of revenue, since the goods received as bonuses do not also imply a greater amount of credits in the non-cumulative regime. Thus, the goods received as bonuses do not integrate the calculation basis of PIS and COFINS.”

In the judiciary, jurisprudence on this issue is still oscillating. The 1st Panel of the STJ, when judging REsp No. 1.836.082/SE (04/11/2023), established the understanding that “the discounts granted by the supplier to the retailer, even when conditioned on counter-performances related to the purchase and sale operation, do not constitute items that allow the incidence of the PIS and COFINS contributions to be charged to the acquirer.”

The prevailing understanding was that of the Reporting Justice, Minister Regina Helena Costa, whose vote asserts that the acquirer of the merchandise (retailer) incurs a cost, never revenue. The Minister also ruled out equating the discounts to remuneration for a service provided, “under penalty of modifying the essence of the agreed legal transaction” (purchase and sale).

On the other hand, the 2nd Panel of the STJ, when judging Special Appeal No. 2090134/RS, diverged from the 1st Panel, ruling in favor of the incidence of social contributions.

In this latter case, the understanding expressed by Minister Francisco Falcão prevailed, stating that “discounts and bonuses are the consideration due to retailers by suppliers, due to measures aimed at increasing sales of their products (advertising and promotions, for example), positioning and privileged treatment on shelves and establishments (space rental and funds for sales promoters, for example).”

The divergence in the judiciary continues to cause legal uncertainty for the segment. Since the positions of the STJ Panels remain conflicting, it is expected that the matter will be scheduled for judgment by the First Section of the Court, responsible for standardizing tax controversies.

The Tax Law Department of Marins Bertoldi Advogados is closely monitoring the developments of this issue and is fully available to clarify any doubts and delve into it within each business reality.

By Augusto Chimborski e João Vitor Oliveira Marques