Brazilian IRS Program Incentivizes Disclosure of Certain Tax Liabilities

On April 3, 2024, the Brazilian Internal Revenue Service (“Brazilian IRS”) published Normative Instruction RFB No. 2,184 (“IN/RFB No. 2,184/2024“), regulating a special program to incentivize the voluntary disclosure of federal tax liabilities ascertained through exclusions not in compliance with Article 30 of Law No. 12,973, of May 13, 2014 (“Law No. 12,973/2014”), as long as these liabilities have not been subject to assessment.

Pursuant to IN/RFB No. 2,184/2024, the following debts can be settled:

i. Corporate Income Tax (“IRPJ”) and Social Contribution on Net Profit (“CSLL”) relating to (a) the calculation periods ending up to December 31, 2022, whose exclusions were incorrectly made in the Digital Tax Bookkeeping (“ECF”), original or amended, submitted by December 29, 2023; and (b) the quarterly calculation periods for the year 2023, whose unduly carried-out exclusions impact the debts reported in the Federal Tax Debts and Credits Statements (“DCTF”), original or amended, submitted by December 29, 2023; and

ii. Federal taxes subject to the Brazilian IRS that have been unduly offset with credits from negative balance of IRPJ or CSLL, or with undue or overpayments of IRPJ or CSLL due to the exclusion of investment subsidies made in non-compliance with Article 30 of Law No. 12,973 2014, through Refund or Reimbursement Requests or Offset Requests (“PER/DCOMP”) submitted by December 29, 2023.

IN/RFB No. 2,184/2024 provides for the following settlement method and benefits:

i. payment of the consolidated debt on the date of request—reduced by 80%—in up to 12 successive monthly installments; or

ii. payment of at least 5% of the value of the consolidated debt—without reduction—in up to five successive monthly installments and the remaining amount paid:

a. in up to 60 monthly and successive installments, reduced by 50%; or

b. in up to 84 monthly and successive installments—with a reduction of 35%—except in the case of social security contributions foreseen in paragraph A of items I and II of Article 195 of the Brazilian Federal Constitution.

For this purpose, the taxpayer must ascertain and recognize the tax debts to be included in the program through the submission (i) by May 31, 2024, the rectifying ECF and DCTF, for debts relating to calculation periods up to December 31, 2022; and (ii) by July 31, 2024, of the rectifying DCTF, for the quarterly calculation periods in 2023; noting that failure to comply will result in immediate exclusion from the aforementioned re gime. The same deadlines must be observed for rectification or cancellation of PER/DCOMPs in the case of undue compensation.

Finally, this request must be electronically submitted in e-CAC within the following terms:

i. Between April 10 to 30, 2024, in relation to the calculation periods occurring until December 31, 2022;

ii. Between April 10 to July 31, 2024, in relation to the calculation periods for the year 2023.