The City of São Paulo had drawn up five tax assessment notices against the company, alleging the non-payment of ISS and imposing fines on the alleged tax debt of a tournament held by BSOP. In the opinion of the City Hall, the tax should be levied on the total amount of the amount that each participant paid for registration.
However, and according to the thesis defended by Stack's legal team led by lawyer Pedro de Miranda Roquim of the São Paulo office Guedes Nunes Oliveira & Roquim, as in several other markets Stack receives payments that are not part of the company's revenue. In this way, not all firm’s income accounts constitute revenues subject to payment of ISS.
The lawsuit filed by Stack was the base on which judge Thiago Baldani Gomes de Filippo's decision was made, aimed at the cancellation of undue tax collection by the municipality by demonstrating that there are values that the company receives and that are not part of its revenue.
Known in the poker community by the English term “buy-in”, registration at BSOP consists of two separate payments, duly described in the competition rules:
• Amount allocated to players' prizes at each stage of the BSOP;
• Amount allocated to BSOP's remuneration for organizing and holding events.
Stack has always offered the municipality due payment of taxes on all its revenues, but it could not pay taxes on amounts that, despite circulating through its current account, did not constitute company revenue. In the lawsuit, it was proved that only the amount allocated by the regulation to Stack is its own revenue from its services - the ISS due on these amounts having already been paid - and that the other amounts were fully transferred to the players.
In the sentence, the Judge fully accepted the allegations and acknowledged that the revenue that belongs to and was destined to Stack by the regulation can only be the basis for calculating the ISS, and ISS cannot be charged on the players' prize, as it is the revenue of third parties.
There were other precedents on the subject, such as the recent decision by the Supreme Federal Court that recognized that only part of the bet amount is revenue from a Jockey Club, but this sentence is the first judicial decision that recognizes the correct way of taxing tournaments in poker in Brazil, a point that has always been of great concern to Stack and CBTH.
To support BSOP's position, the Public Finance judge determined technical expertise on the financial transactions of the tournaments held by BSOP. During due diligence on Stack's financial statements, prize receipts and other accounting documents for the production of expert evidence, the company's regularity and legal responsibility in managing its tournaments was proven, with all records on the different natures of the two values that make up the buy-in and the full payment of all tax debts on the gross revenue of the company's remuneration for the services provided.
Stack's CEO, businessman Igor Trafane, celebrated the decision: “The opposite view would be disastrous for several markets. Travel and advertising agencies also depend on the understanding that not all income is a company's revenue. But it was only possible to win the process thanks to the seriousness with which Stack takes care of financial transactions; all with origin and destination duly accounted for and with all taxes - business and competitors - duly collected.”
"This is a decision that leads to a great maturation of our sector in Brazil, by bringing a broad legal understanding about the functioning of the ecosystem of such a new sport in our country," says Devanir Campos, technical director of BSOP.
It is a very important precedent and serves not only as a parameter for other tournaments held in the country, but also for the Legislative Branch to use in the elaboration of specific laws for the taxation of poker tournaments in Brazil.
The action may be appealed by the Municipality of São Paulo.
Source: GMB
