CIAP - ICMS Operations of the permanent asset – 35408

CIAP - ICMS Operations of the permanent asset

ICMS - Operations with assets from the permanent asset

Wiliam Wagner Silva Sarandy

Complementary Law nº 87, of 09/13/1996 (Kandir Law), in its article 20, allows the ICMS credit in the acquisition of goods destined to the permanent assets, emphasizing that the operations or installments that refer to goods or services unrelated to the activity of the establishment, being presumed to be unrelated, in the case of acquisition of goods, unless there is evidence to the contrary, personal transport vehicles.

In this commentary, we present the tax procedures in force in the State of Bahia, referring to operations with permanent assets, in accordance with articles 93, item V, item "a", and §§ 12 and 17; and 339, §§ 2 and 3, of the RICMS-BA, approved by Decree No. 6,284, of 03/16/1997, in accordance with the provisions of the Kandir Law, after the new tax procedures determined by the new wording given by Complementary Law No. 102, of 07/11/2000, as explained below.

1. Calculation of ICMS Credit Value Upon Acquisition of Assets For Permanent AssetsIn accordance with the new provisions of the Kandir Law, the tax legislation of the State of Bahia provides that each establishment constitutes a tax credit, to offset the tax due in subsequent operations or installments and for purposes of calculating the tax payable, unless otherwise provided for on the contrary, the amount of the tax previously charged on operations that resulted in the real or symbolic entry, in the establishment, of goods destined for its Fixed Assets, thus understood the goods destined for the maintenance of the activities of the establishment, as well as the tax related to the respective transport services, including the tax paid by way of difference in rates.  

2. ICMS Credit Control of Permanent AssetsAccording to the Kandir Law, in operations involving the entry of goods destined for Permanent Assets, the maintenance of the tax credit depends on special control, through the "Appropriate Record" - or in another way determined by internal legislation - which was instituted with the name of "Credit Control of ICMS on Permanent Assets" (CIAP), in accordance with the models contained in SINIEF Adjustment No. 8, of 1997, observing the new wording given by SINIEF Adjustment No. 3, of 2001, and recorded, by establishment, in addition to the entry together with the other credits, for the purpose of normal tax compensation.  

3 Tax Procedures Determined by Internal Legislation, in accordance with Amendments to Complementary Law No. 102, of 07/11/2000 - ICMS Credit in the Entry of Goods to Permanent AssetsThe use of the credit related to the entries of goods destined to the Fixed Assets and the respective transport service, which occurred as of 01/1/2001, is subject to the following provisions: 

a) the appropriation will be made at the rate of 1/48 per month, and the 1st fraction must be appropriated in the month in which the entry into the establishment occurs;

b) in each tax calculation period, credit will not be accepted in relation to the proportion of outflow operations or services exempt or nottaxed on the total of outflow operations or services carried out in the same period;

c) the amount of credit to be appropriated will be that obtained by multiplying the total value of the respective credit by a factor equal to 1/48 of the ratio between the value of taxed outflows and installments and the total of outflows and installments of the period, with outflows and services destined for abroad being equivalent to those taxed;

d) the quotient of 1/48 will be proportionally increased or decreased, pro rata die, if the calculation period is longer or shorter than 1 month;e) in the event of disposal of permanent assets, before the expiry of the period of 4 years from the date of acquisition, credit will not be accepted in relation to the fraction that corresponds to the remainder of the four-year period, as of the date of disposal;

f) at the end of the 48th month from the inflow date of the good at the establishment, the remaining balance of the credit will be canceled, as a result of the credits impeded by the exempt or non-taxed outflows;  

3.1. Example of ICMS Credit Calculation We can summarize, through the following mathematic expression, the calculation of the ICMS credit by inflows of the permanent fixed asset.Credit = ICMS x 1 / 48 x ( 1 - I / TG ) 

Where:.

• 1 / 48 = quotient related to each calculation period;
• I / TG = total of goods exempted or not taxed / grand total of the operations and/or installments;
• Credit = Credit of tax in the respective month; 
• ICMS = Tax collected in the acquisition of the asset. 

As an example, consider these data in certain month:

• Operations exempted or not taxed = BRL 24,000.00;.
• Grand Total of the Operations and/or Installments = BRL 100,000.00;
• Value of Asset Purchased = BRL 32,000.00;
• Value of ICMS Collected = BRL 5,440.00 (for example, rate of 17%). 

Use of formula for the credit calculation:.

• Credit = Value of ICMS Collected x 1/48 x (1 - I/TG) = BRL 5,440.00 x 1/48 x (1 - BRL 24,000.00 / BRL 100,000.00) = BRL 86.13.