Brazil’s Federal Government publishes tax measures aiming to increase revenue and to reduce the fiscal deficit

On January 12, 2023, an extra edition of the Federal Official Gazette was published which included tax measures seeking to reduce Brazil’s fiscal deficit though the increase of the federal revenue.

Among the changes foreseen in the published measures, we highlight: (i) the reestablishment of the casting vote – tiebreaker in favor of the National Treasury – in the Brazilian Administrative Council of Tax Appeals (Conselho Administrativo de Recursos Fiscais – "CARF"); (ii) the amendment of Laws No. 10,637/2002 and 10,833/2003 to exclude ICMS from the levy and calculation basis of PIS and COFINS credits, pursuant to the decision issued by the Brazilian Federal Supreme Court (“STF”) in RE 574,706 (Theme No. 69 with general repercussion); and (iii) exclusion of late payment fines and ex-officio fines to stimulate the payment of debts subject to tax proceedings, provided that the confession is made by April, 30, 2023.

The Federal Government also announced a Fiscal Litigation Reduction Program (“PRLF”), which establishes the conditions for exceptional Tax Settlement Agreements in different modalities related to the collection of taxes subject to tax proceedings. The enrollment in the PRLF must be made between February 1, 2023 and March 31, 2023, and involve the following benefits:

a) Settlement of tax credits with appeal pending judgment in the DRJ or CARF with a portion of the outstanding balance paid in cash and the remainder using credits arising from tax loss and CSLL negative calculation base, calculated up to December 31, 2021;

b) Negotiation of tax credits with an appeal pending judgment in the DRJ or CARF, with a down payment of an amount equivalent to 4% of the consolidated value of the credits, and the remainder paid with a reduction up to 100% of the amount of interest and fines; and

c) Negotiation of credits with a value up to 60 minimum wages that have as taxpayer a natural person, micro-enterprise or small business, with a down payment, of an amount equivalent to 4% of the consolidated amount of credits, paid in up to four monthly and successive installments, and the remainder paid in up to two months, with a reduction of 50%, or in up to eight months, with a reduction of 40% percent.

For further information related to this Legal Update, please contact our Tax team.