The scope of reciprocal tax immunity in indirect taxes

Abstract

This article analyzes Federalism through a historical and doctrinal lens, demonstrating its characteristics, importance, and connection to taxation. It begins with the global context and examines the application of this form of state in the Brazilian Republic. The definition of tax immunities, which are instruments for achieving the State's objectives, is studied. The State presents itself as an organized system of public services, and the majority of its income is directly linked to the power to tax. The institute of reciprocal immunity, legally enshrined in Article 150, IV, of the 1988 Brazilian Constitution, is highlighted. This article prohibits the Union, the States, the Federal District, and the Municipalities from levying taxes on the assets, income, and services of one another, demonstrating that this immunity guarantees the independence between public legal entities, among which there is no hierarchy or subordination, thus preserving the federative principle. Finally, a study is made of the position of the Supreme Federal Court on the incidence or not of reciprocal tax immunity of federative entities on indirect taxes in cases where the Public Power appears as the actual taxpayer, concluding that, in these cases, the Honorable Court has shown itself to be unfavorable to the exemption of indirect taxes on federative entities.