Supreme Court rules 6-5 that ISS is excluded from the PIS

In brief

The Supreme Court removed ISS from the PIS and Cofins base by 6-5.

Effect timing is still undefined.

Verified fact · material
The Supreme Court ruled on October 21, 2026, in the Theme 118 case, that ISS is excluded from the PIS and Cofins tax base.
Federal government loss.
Sources[01][02]
Verified fact · material
The vote was 6 in favor of taxpayers and 5 in favor of the federal government.
Narrow vote.
Sources[01][02]
Verified fact
According to Correio Braziliense, the government estimated in its budget guidelines additional losses of up to R$ 35.4 billion, depending on effect timing.
Fiscal cost.
Sources[02]
Verified fact
According to the court, the timing of the ruling's effects was not decided in the session.
Pending.
Sources[01]

Transmission to assets

The actual impact depends on effect timing, which may limit it to future periods.

Juros futurosnegative

Revenue loss worsens fiscal outlook.

Future-only effect.

What would change the view: Broad retroactivity.

rates25% confidence

Direction is an explanatory hypothesis, not a forecast or recommendation.

Next signals

Limits of the reporting

The loss estimate is the government's and depends on effect timing not yet decided.