CPOM - Declaration of Unconstitutionality
I was recently asked by a client, established outside the city of São Paulo, if CPOM was still mandatory.
For years, the City of São Paulo required service providers from other municipalities to carry out the Registry of Companies from Outside the Municipality, the so-called "CPOM", established by article 9-A, caput and § 2 of Local Law No. 13.701/ 2003, with the wording established by Law No. 14,042/2005.
Likewise, several other municipalities have instituted the same CPOM obligation, such as Niterói/RJ, whose registration is called the Declaration of Services Received (DSR), and in Feira de Santana/BA, which is called Auxiliary Invoice Registry of Service (RANFS).
Municipalities justified the requirement of registration as a way to monitor tax evasion, as surrounding municipalities apply reduced rates and/or calculation basis.
If the registration was not carried out, the borrower of the services of a provider established in another municipality was required to retain the corresponding to the rate established by their municipality, i.e., with this, the provider paid the municipal tax (ISS) at the place of its headquarters and, at the same time, he suffered retention in the other municipality in which he was working.
However, in practice, it was not without double taxation!
However, the Federal Constitution provides in its article 146, item I, that matters related to conflict of jurisdiction, whose matter is taxation, will be regulated by a Complementary Law, that is, the municipality of São Paulo does not have jurisdiction to do so.
Higher Instance
The discussion reached the higher court – Federal Superior Court (STF), whose understanding is that there is a defect in its initiative and a violation in the competence to legislate.
The issue was judged by means of a vote, which has the quality of general repercussion, as it goes beyond the subjective interest of the parties, proving to be relevant to society as a whole and from an economic, political and legal point of view.
Thus, Article 9-A, caput, and § 2, of Local Law No. 13.701/2003, with the wording established by Law No. 14.042/2005, was declared unconstitutional by the STF, by majority of votes, having its final and unappealable decision on 06/07/2021, under the allegation that mandatory registration is incompatible with the Federal Constitution.
On appeal (Declaration Embargoes), the municipality requested the modulation of the effects of the judgment that declared the unconstitutionality, under the argument that such declaration will impact the public coffer, whose negative value may exceed R$ 1 billion reais.
Thus, the Minister-Rapporteur decided that the effect of this judgment will be ex nunc, that is, it will not be retroactive! It will only take effect from the date of publication of the judgment minutes of the decision to declare unconstitutionality.
It is concluded that any Municipal Law that requires the CPOM is no longer valid in our legal system and, therefore, it should not take effect since the declaration of unconstitutionality.
Its Effects
However, the municipality of São Paulo alleges that such decision has effects only on the Judiciary Branch, that is, only for those who file with the competent judicial measure. From this perspective, the City of São Paulo maintains the CPOM requirement up to the present day (https://www.prefeitura.sp.gov.br/cidade/secretarias/fazenda/servicos/cpom/).
Therefore, while registration is mandatory, the taxpayer will have no alternative but to resort to the Judiciary.
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