Keywords: judicial reorganization, tax installment plan
Law 13.043/14 was recently enacted, derived from the conversion of Provisional Measure 651/14. Among other additional modifications, the referred Law inserted Article 10-A to Law 10.522/02, which foresees the possibility of companies and shareholders under judicial reorganization being granted with a federal tax installment plan, pursuant to Articles 51, 52 and 70 of Law 11.101/05.
According to Article 10-A of Law 10.522/02, companies under judicial reorganization, are allowed to reschedule their federal tax debts in up to 84 (eighty four) monthly installments, calculated pursuant to the following percentages, and applied on the total due amount:
- from 1st to 12th installment: 0.666%;
- from the 13th to 24th installment: 1%;
- from 25th to 83rd installment: 1.333%; and
- 84th installment: remaining outstanding balance.
Tax relief foreseen in such special programs apply to all taxpayer's debts – regardless of whether they are already under collection through administrative proceedings, enrolled, or not, in the Federal Overdue Roster, even though debt merits are being disputed pursuant to tax lawsuits, previously filed by the taxpayer, or collected through tax foreclosure, by the time the taxpayer applies to be granted with the tax installment plan. However, as the abovementioned legislation restricts the possibility of taxpayers under judicial reorganization carrying out two or more tax installment plans simultaneously, the applicant taxpayer shall formally withdraw from previous tax installment plans, and request for the rescheduling of debt outstanding balance in the tax installment plan of Law 13.043/14.
In order to benefit from debt rescheduling of Law 13.043/14, the applicant taxpayer shall also attest the effective discontinuance on former tax lawsuits and administrative proceedings, related to debts to be rescheduled, irrevocably and irreversibly withdrawing from merits discussed therefrom. The approval of the tax installment plan by the tax authorities does not imply the immediate release of assets and rights formerly attached as tax debt guarantees. On the other hand, in the specific case of tax debts enrolled in the Federal Overdue Roster, the approval of tax installment plan is not restricted to the prior presentation of any kind of debt guarantee.
We stress that following situations shall imply the termination of the tax installment plan and consequent debt prosecution: (i) lack of payment of 3 (three) – consecutive or not – installments; (ii) lack of payment of 1 (one) installment, even though all the remaining installments were correctly paid; (iii) the non-ratification of the judicial reorganization plan by the judicial reorganization Court, as per foreseen in Article 58 of Law 11.101/05; and (iv) a judicial decision recognizing the taxpayer's bankruptcy.
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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."
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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.