On August 8, 2017, the Complementary Law 160/2017 ("LC 160/2017") was published, authorizing the waiver of tax credits and the reestablishment of exemptions, incentives, tax benefits or tax-financial benefits.
In summary, LC 160/2017 allows the states, through an agreement to be reached within the framework of CONFAZ (National Council of Fiscal Policy), to grant amnesty for tax debts arising from existing tax benefits granted without previous CONFAZ authorization and to maintain such existing benefits still in force, though limiting its enjoyment period to terms that vary from 1 year to 15 years, depending on the economic segment and purpose of the benefit.
The aforementioned CONFAZ agreement must be passed by the states within 180 days from the date of publication of LC 160/2017, by means of votes representing two-thirds of all Brazilian states and one-third of the states located in each of the five regions of the country. If the agreement is not executed within this term, the provisions of LC 160/2017will lose their effectiveness.
In accordance with LC 160/2017, the agreement must provide for, at least, the following conditions: (i) the states must publish in their official gazette a list of all normative acts related to the tax exemptions, incentives, and fiscal or financial benefits they intend to regulate based on this new Law; and (ii) register and deposit at the Executive Office of CONFAZ all the relevant documents regarding the acts that have granted the benefits, which will be published on the National Portal of Tax Transparency, to be set up by CONFAZ on its website.
Once the abovementioned requirements are met, the states will be authorized to legally grant or extend the same benefits, based on the terms of the act in force on the date of publication of the CONFAZ agreement. However, the deadlines for enjoyment of these benefits will be limited in time, in accordance with the economic activities or segment, as follows:
|Deadline for Term of Enjoyment||Applicable to:|
|December 31 of the fifteenth year following the date on which the CONFAZ Agreement is effective.||Benefits intended for the promotion of agricultural and industrial activities (including agroindustrial), as well as investments in road, water, rail, port, airport and urban transport infrastructure.|
|December 31 of the eighth year following the date on which the CONFAZ Agreement is effective.||Benefits intended for the maintenance or increase of port and airport activities related to international trade, including the transaction performed by the importing taxpayer subsequent to the import.|
|December 31 of the fifth year following the date on which the CONFAZ Agreement is effective.||Benefits intended for the maintenance or increase of commercial activities, provided that the beneficiary is the real remitter of the products.|
|December 31 of the third year following the date on which the CONFAZ Agreement is effective.||Benefits applicable to interstate transactions related to agricultural products and vegetable extracts in natura.|
|December 31 of the first year following the date on which the CONFAZ Agreement is effective.||Other benefits.|
LC 160/2017 also allows the states to extend existing tax benefits to other taxpayers in their territories, under the same terms, conditions and time limits, and to adhere to tax benefits granted or extended by other states while those are in force.
Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.
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