Brazil: Federal Tax Debts Installment Program – The Adherence Term Is Reopened

With the conversion of provisional measure (MP) No. 627 into Law No. 12,973/2014, the adherence term of the federal installment payment programs is open again until July 31, 2014. The reopened programs are: (I)Federal Tax Recuperation Program (''Refis da Crise''), (II) program for installment debts related to the autarchies and public foundations, as well as the programs established by Law 12,865/2013, namely: (III) tax and CSL debits related to profits earned by related companied or subsidiaries abroad, (IV) PIS and COFINS payable by financial institutions and insurance firms; (V) debts of legal entities subject to litigation relating to the exclusion of the ICMS from the PIS/COFINS calculation basis;

The main benefits of each program, including the modifications to Law No. 12,973/2014, are described below:

(I) "Refis da Crise'' – Law No. 11.941/2009

Section No. 93 of Law No. 12,973 has reopened until 31 July, 2014 the deadline for adherence to the Federal Tax Recuperation Program, named ''Refis da Crise'', established by Law No. 11,491/2009.

Based on the same law, debts overdue until November 30, 2008, constituted or not, registered as collectible or not, within the scope of the Federal Revenue and the Office of Attorney-General of the National Treasury, may be paid using the following options:

In a lump sum: 100% reduction of late payment fine and ex-officio fine, 40% reduction of isolated fine, 45% reduction of default interest and 100% reduction of legal charges.

Within 30 months: 90% reduction of late payment fine and ex-officio fine, 35% reduction of isolated fine, 40% reduction of default interest and 100% reduction of legal charges.

Within 60 months: 80% reduction of late payment fine and ex-officio fine, 30% reduction of isolated fine, 35% reduction of default interest and 100% reduction of legal charges.

Within 120 months: 70% reduction of late payment fine and ex-officio fine, 25% reduction of isolated fine, 30% reduction of default interest and 100% reduction of legal charges

Within 180 months: 60% reduction of late payment fine and ex-officio fine, 20% reduction of isolated fine, 25% reduction of default interest and 100% of legal charges.

Besides that, Section 17, paragraph 7 of Law 12,865, included by Section 93 of Law 12.973, allows the conversion of amounts deposited into definitive payment, as long as there is an application of percentage reductions beforehand. Moreover, any remaining balance is going to be refunded to the taxpayer.

It should be noted that the amount related to the reduction provided in this program will not be computed in the calculation basis of income tax, contribution on profits (''CSLL''), Social Integration Program (''PIS'') or social insurance contributions (''COFINS'').

The outstanding balance of the debt arising from the previous installment programs (REFIS, PAES and PAEX) as well as ordinary installment programs may be paid in up to 180 months, offsetting the amount previously paid.

The reductions in Law No. 11,941/2009 are the following:

Debts arising from REFIS: 40% reduction of late payment fine and ex-officio fine, 40% reduction of isolated fine, 25% reduction of default interest and 100% legal charges.

Debts arising from PAES: 70% reduction of late payment fine and ex-officio fine, 40% reduction of isolated fine, 30% reduction of default interest and 100% legal charges.

Debts arising from PAEX: 80% reduction of late payment fine and ex-officio fine, 40% reduction of isolated fine, 35% reduction of default interest and 100% legal charges.

Debts arising from ordinary programs: 100% reduction of late payment fine and ex-officio fine, 40% reduction of isolated fine, 40% reduction of default interest and 100% legal charges.

(II) Debt Installment Program related to the autarchies and public foundations – Law 12,249/2010

Section 93 of Law No. 12.973/2014 has reopened until July 31, 2014, the adherence term of the Installment Payment Program created by Law No. 12,249/2010, which allows the payment in up to 180 months of the overdue debts as of November 30, 2008 related to the autarchies and public foundations.

The conditions are the same as for the program called ''Refis da Crise'', explained above.

Section 65, paragraph 6 of Law 12,249 provides that the installment must not be less than R$ 100, and the taxpayer shall calculate and pay monthly the amount of the debts subject to installments divided by the number of intended installments.

Furthermore, pursuant to §25 of Section 65, Law 12,249/10, the balance of existing deposits will be automatically converted into income of the respective autarchies and public foundations, after applying reductions on the updated value of the deposit for the payment in a lump sum or installments . In the event that the balance exceeds the value of the debt, the excess will be refunded to the taxpayer, if there is no other tax due or payable credit.

(III) IRPJ/CSLL – Profits Abroad – Law 12,685/2013

Section 93 of the Law No. 12.973/2014 provides that the deadline for payment in installments of debts of income tax / social contribution, in which the tax triggering event has occurred by 31.12.2012, and arising from the application of Article 74 of Provisional Measure 2,158-35 / 2001, which covers taxation, at the end of each year, on profits earned by foreign subsidiaries or related companies abroad.

The adherence to this program may be effected until July 31, 2014. The conditions of this program in summary are:

In a lump sum: 100% reduction of fines (late payment, ex-officio and isolated), interest and charges.

Within 180 months: 80% reduction of late payment fine and ex-officio fine, 80% reduction of isolated fine, 50% reduction of default interest and 100% legal charges. In that case, the taxpayer must pay 20% of the total debt on entry and the rest in monthly installments.

Furthermore, Law 12,973 changed the this installment program allowing the liquidation of amounts related to fines (for late payment, ex officio or isolated), the default interest and up to 30 percent of the principal amount of the tax using credits from tax losses and negative basis of social contribution, own or controlling and related companies on 31.12.2011, domiciled in Brazil, given that they remain in this condition until the date of the installment option.

The use of tax losses and negative basis of social contribution (own or incurred by the controller, subsidiary companies or companies under common, direct and indirect control) will only be admitted until December 31, 2012.

Section 93 of Law 12,973 also added subsection III in § 8 of Article 40, Law 12,865, which assures the application, for the purposes of use of credits from tax losses and negative basis of social contribution, as the concept of controlled being a company in which the controllers, directly or through other subsidiaries, own partnership rights that assure them, permanently, control over the corporate resolutions and the power to elect the majority of directors. This concept is important, since Law 12,973 extended the use of tax losses to the controllers.

It should be noted that the amount related to the reduction provided in this program will not be computed in the calculation basis of income tax, contribution on profits (''CSLL''), Social Integration Program (''PIS'') or social insurance contribution (''COFINS'').

It is worth mentioning that the rule laid down in section 74 of the Provisional Measure (MP) 2158-35, 2001 - which provides the levy of income tax (IR) and Contribution on Profits (CSL) on the results of subsidiary companies or affiliates abroad, on the balance sheet date which they were established, apply to subsidiaries located in countries considered "tax havens", but not affiliates in countries without tax haven status, as judged in ADI No. 2,588 by the Supreme Court.

Therefore, even though the program offers attractive benefits, the adherence should be subject to analysis of each case, since the Supreme Court has not defined understanding regarding the application of the rule to the non-tax haven subsidiaries and related companies located in tax havens.

(IV) PIS/COFINS - financial institutions and insurance companies - Law 12,685/2013

In addition to the changes mentioned above, Law 12.973/2014 modified the installment program provided for in Article 39 of Law 12,865, destined exclusively for payment of PIS and COFINS debts overdue up to 31/12/2012, and payable by financial institutions and insurance companies.

The adherence to this installment program was extended until 31/07/2014 and does not depend on the presentation of guarantees. The conditions for settlement of these debts are:

In a lump sum: 100% reduction of fines (late payment, ex-officio and isolated), interest and charges.

Within 60 months: 80% reduction of late payment fine and ex-officio fine, 80% reduction of isolated fine, 40% reduction of default interest and 100% legal charges. In that case, the taxpayer must pay 20% of the total debt on entry and the rest in monthly installments.

Section 39 of Law No 12.865/2013 provides that debts of PIS/COFINS owed by financial institutions and insurance companies may be included in this program, whether constituted or not, or registered as collectible or not.

In addition, contrary to what occurs in Refis da Crise and installment program debts related to the autarchies and public foundations, Article 39 establishes that existing deposits related to debts to be paid in installments will automatically become definitive payment, applying the reductions only for the remaining balance of the debts owed.

To enjoy the benefits, the taxpayer must prove the express and irrevocable renouncement of lawsuits which have as subject the PIS/COFINS now benefited. However, the renouncement may be partial, if the debt is capable of being distinguished from the other debts disputed in judicial or administrative settings.

It important to note that the amount related to the reduction provided in this program will not be computed in the calculation basis of income tax, contribution on profits (''CSLL''), Social Integration Program (''PIS'') or social insurance contribution (''COFINS'').

Although the Supreme Court has determined that PIS/COFINS is levied only on revenue, the discussion about the application of this rule for financial institutions and insurance companies remains open, and will be judged in Extraordinary Appeals 609 096 and 400 479.

(V) PIS/COFINS- ICMS inclusion in PIS/COFINS calculation basis – Law 12,685/2013

Paragraph 1, section 39, Law 12,865/13, provides that corporations may pay, in similar conditions to the program for the financial institutions and insurance companies, debts subject to litigation relating to the exclusion of ICMS from the PIS/COFINS calculation basis;

It is worth mentioning that, although the Superior Court of Justice has pacified the understanding in the sense that the amount of ICMS should be included in the calculation basis of PIS/COFINS (Precedents 68 and 94), the issue is the subject of Declaratory Action of Constitutionality No. 18, pending hearing in the Supreme Court.

The deadline for joining the program was also reopened until 31/07/2014.

Visit us at Tauil & Chequer

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."

© Copyright 2014. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.