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Tax Alert | Ordinance of the Ministry of Economy No. 247/2020 and Ordinance of the Attorney General’s Office of the National Treasury (“PGFN”) No. 14,402/2020 28 jun 2023

Tax Alert | Ordinance of the Ministry of Economy No. 247/2020 and Ordinance of the Attorney General’s Office of the National Treasury (“PGFN”) No. 14,402/2020

In view of Law No. 13,988/2020, which provided for the settlement of disputes related to charges by the Public Treasury, of a tax debts or other debts, on June 17, 2020, the following were published:

a) Ordinance of the Ministry of Economy No. 247/2020, referring to the adhesion transaction in the tax litigation of relevant and widespread legal controversy; and

b) Ordinance of the Attorney General’s Office of the National Treasury (“PGFN”) No. 14,402/2020, regarding the exceptional transaction due to the COVID-19 pandemic.

Ordinance No. 247/2020

This Ordinance came to regulate the criteria and procedures for the elaboration of a proposal and execution of an adhesion transaction in the tax litigation of relevant and widespread legal controversy and small value debts.

The Ordinance brought the principles by which such transactions will be governed, their objectives, as well as obligations of the adhering taxpayers and the Tax Administration.

The proposal for the adhesion transaction will be carried out by means of the publication of a notice by the Attorney General of the National Treasury or by the Special Secretariat of the Brazilian Federal Revenue, as the case may be, defining the factual and legal assumptions, the requirements to be met, as well as any reductions or concessions, terms and payment methods, in addition to the necessary guarantees. It is even possible to limit the proposal according to the stage of the tax process or the period of competence.

The notice may provide for the granting of discounts, including on the principal amount, of up to 50% of the total amount of the credit, as well as a payment period of up to 84 months, in the relevant and controversial tax dispute and 60 months, in the litigation. small value tax. It should be noted that in small claims, the maximum discount can only be attributed if the settlement period is equal to or less than 12 months.

The submission of the application for transaction suspends the processing of the tax administrative proceedings related to the tax credits involved, while their assessment lasts, and does not suspend the enforceability of said tax credits, without prejudice to the possibility, within the term foreseen for adhering to the notice, of the suspension of collection acts, at the discretion of the Special Secretariat of the Brazilian Federal Revenue or the Attorney General’ Office of the National Treasury, as the case may be.

The transactions may not involve (i) tax credit already transacted, (ii) reduction of penal fines; (iii) granting of discounts related to Simples Nacional, while the authorizing complementary law has not been enacted, and FGTS, while not authorized by its Board of Trustees; (iv) regular debtor, as defined in a specific law; (v) controversy defined by res judicata; (vi) prospective effect that results, directly or indirectly, in a special, differentiated or individual tax regime; and (vii) accumulation of the reductions offered by the notice with any others ensured in the legislation in relation to the credits covered by the transaction proposal.

PGFN Ordinance No. 14,402 / 2020

This Ordinance regulates the procedures, requirements and conditions necessary to carry out the exceptional transaction in the collection of the overdue federal debts, which registration and administration is the responsibility of PGFN, due to the effects of the pandemic caused by the coronavirus (COVID-19) in the perspective of receipt such enrolled credits.

This exceptional transaction seeks (i) to make it possible to overcome a crisis due to the pandemic; (ii) allow the maintenance of the source of production, employment and income of workers; (iii) ensure that the collection of credits recorded in overdue federal debts is carried out in such a way as to adjust the expectation of receipt to the ability to generate results from corporate debtors; and (iv) ensure that the collection of credits recorded in overdue federal debts is carried out less severely for individual debtors.

The Ordinance also determines the criteria for assessing the degree of recoverability of credits recorded in the Union’s active debt, based on the verification of the economic situation and the payment capacity of the registered debtors, as well as for measuring the payment capacity of taxable persons. The credits will then be classified according to the prospect of recovery.

With respect to the exceptional transaction itself, credits managed by PGFN are liable for the collection of overdue federal debts by the Federal Government, even in the process of judicial foreclosure or the object of a previous installment terminated, suspended or not, which updated value to be object of the negotiation is equal to or less than R $ 150,000,000.00.

The exceptional transaction will involve the possibility of payment in up to 60 months and the offering of discounts to credits considered irrecoverable or difficult to recover by PGFN.

For amounts higher than R$ 150,000,000.00, there must be an individual proposal, under the terms of Ordinance PGFN No. 9,917 / 2020, respecting the limits and conditions provided for in this new Ordinance.

For legal entities which credits are considered to be unrecoverable or difficult to recover, the proposal may reach an initial payment equivalent to 0.334% of the consolidated value of the transacted credits, for 12 months, and the remainder paid with reduction up to 100% of the amount of interest, fines and legal charges, subject to the limit of up to 50% of the total value of each credit subject to negotiation, in up to 36 successive monthly installments, each installment being determined by the highest amount between 1% of the gross revenue of the immediately previous month, calculated in the form of Section 12 of Decree-Law no. 1,598/1977, and the amount corresponding to the division of the consolidated amount by the number of installments requested. It is possible to increase the number of installments, reducing the applicable discount.

The terms and discounts vary depending on the taxpayer, if they are individuals, individual entrepreneurs, micro companies, among others.

In the case of social contributions provided for in item “a” of item I and item II of the caput of Section 195 of the Constitution, the installment period referred to in the caput, after the settlement of the entry, will be up to 48 months.

The value of the installments provided for in the caput will not be less than R$ 100.00, in the case of individuals, individual entrepreneurs, micro-companies or small businesses; or R$ 500.00, in other cases.

The exceptional transaction in the collection of the overdue federal debts will be carried out exclusively by adhering to the PGFN proposal, through access to the REGULARIZE portal available on the world wide web (www.regularize.pgfn.gov.br), upon prior information provided by interested.

In the period from July 1 to December 29, 2020, the adherent party must provide the necessary information for the consolidation of the proposed transaction by adhesion formulated by PGFN, exclusively through the REGULARIZE portal.

Adherence to the exceptional transaction proposed by the Attorney General of the National Treasury implies automatic maintenance of encumbrances resulting from the listing of assets, fiscal precautionary measures and guarantees provided administratively or in tax enforcement actions or in any other legal action.

Alex Moreira Jorge
Partner
alex.jorge@cmalaw.com

Humberto Lucas Marini
Partner
humberto.marini@cmalaw.com

Leonardo Rzezinski
Partner
leonardo@cmalaw.com

Renato Lopes da Rocha
Partner
rlopes@cmalaw.com

Rosana Gonzaga Jayme
Partner
rosana.jayme@cmalaw.com

Guilherme Cezaroti
Associate
guilherme.cezaroti@cmalaw.com

Victor Kampel
Associate
victor.kampel@cmalaw.com

Marcelo Gustavo Silva Siqueira
Associate
marcelo.siqueira@cmalaw.com

Paulo Alexandre de Moraes Takafuji
Associate
paulo.takafuji@cmalaw.com

Thiago Giglio Abrantes da Silva
Associate
thiago.giglio@cmalaw.com

Rodrigo Pinheiro B. de Carvalho Vianna
Associate
rodrigo.vianna@cmalaw.com

Gabriel Mynssen da Fonseca Cardoso
Associate
gabriel.cardoso@cmalaw.com