Special tax settlement for outstanding federal debts

18/06/2020

Due to the economic crisis triggered by the outbreak of Covid-19, the Office of the Attorney-General of the National Treasury enacted Ordinance No. 14,402/2020, in effect since 17th of June 2020, setting forth the special tax settlement for outstanding federal debts. The period for enrolling to the program is from the 1st of July 2020 to the 29th of December 2020.

Please find below the requirements for enrolling to the special tax settlement:

– Analysis if the taxpayer is able to pay the federal outstanding debts within five years without considering the tax abatement, and possible impact on the company’s result due to COVID-19;
– Evidence that the company’s gross revenues decreased since the virus outbreak (March/2020) to the month of the enrolment. The National Treasury may compare the numbers with the gross revenue from 2019;
– The updated amount of the outstanding federal debts indicated shall be equal or lower than BRL 150 Million;
– The federal outstanding debts indicated by the company shall be those classified by the National Treasury under categories C (unlike to recover) and/or D (considered unrecoverable);
– The company must withdraw any lawsuit related to the debt and waive its right to it, showing the underlying evidence to the National Treasury within 90 days.

The method for classifying the debts under the categories mentioned above will be based on the rules set forth by Ordinance No. 293/2017, which takes into account some particularities of the taxpayer, such as the payment records of federal taxes, types of guarantees placed, among other aspects.

To those companies admitted to the special tax settlement program, the following benefits will apply and based on the National Treasury analysis of the specific situation of the company:

– Upfront payment of a monthly amount corresponding to 0,334% of the total amount enrolled in the settlement, during 12 months;
– Payment of the remaining balance under the following options and conditions:
    (i) 36 installment, as long as complying with the ceiling of up to 50% of the total amount each debt;
    (ii) 48 installment, as long as complying with the ceiling of up to 45% of the total amount each debt;
(iii) 60 installment, as long as complying with the ceiling of up to 40% of the total amount each debt;
    (iv) 72 installment, as long as complying with the ceiling of up to 35% of the total amount each debt.
Regarding the social contributions set forth by Section 195, I, “a”, and II, of the Brazilian Constitution, the remaining balance shall be paid in 48 installment.

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