Brazil: Special Value-added Tax (ICMS) Amnesty Program ("PEP do ICMS") – State Of São Paulo – Decree No. 61,625/2015

Last Updated: 25 November 2015
Article by Celso Grisi and Diana Castro

As authorized by ICMS Convention No. 117/2015, the State of São Paulo passed Decree No. 61,625/2015, published in the Official Gazette on November 14, 2015, enacting the Special ICMS Installment Payment Program ("PEP do ICMS"). The related Amnesty Program reduces penalties and interest relating to ICMS debts, irrespective of whether there has been an assessment notice or whether the tax has been recorded as readily enforceable, including taxes that are subject to legal proceedings, in each case whose tax events occurred until December 31, 2014.

In the same sense of Convention No. 117/2015, the following reductions were established:

Number of Installments Penalty Reduction Interest Reduction
Lump Sum 75% 60%
Up to 120 Installments 50% 40%

As already determined by Convention No. 117/2015, each installment must be higher than R$ 500,00 (five hundred Brazilian Reais).

The monthly installments will be subject to a financial compensation of (i) 1% per month, in case of payment in up to 24 installments; (ii) 1.40% per month, in case of payment between 25 and 60 installments; and (iii) 1.80% per month, in case of payment between 61 and 120 installments.

In addition, through this Decree it was included the possibility of applying the Amnesty Program also to debts enforced through a Tax Assessment Notice and Penalty Charge ("AIIM") not enrolled as outstanding debts, the reductions provided are applied on a cumulative basis with the following discounts on the amount of the penalty plus adjustment for inflation:

  1. 70%, in case of payment in a lump sum, within up to 15 days of the notice of the AIIM;
  2. 60%, in case of payment in a lump sum, within 16-30 days of the notice of the AIIM; and
  3. 45%, in other cases of ICM/ICMS debts enforced through AIIM.

The period for accession to the program is from November 16, 2015 to December 15, 2015.

Tax debts arising from transactions or payments of a taxpayer whose registration information with the tax authorities is irregular may only be settled in a lump sum, unless the debt is enrolled and the tax enforcement action is filed, in which case the taxpayer whose registration information with the tax authorities is irregular will be able to accede to the program in up to 120 installments.

The following may also be included in the program:

  1. debts voluntarily reported to the tax authorities, arising from infractions related to taxable events that occurred until December 31, 2014;
  2. debts deriving exclusively from monetary penalties for noncompliance with ancillary obligations;
  3. balance of installment payment agreements in connection with the ICMS Installment Incentive Plan ("PPI"), created by State Decree No. 51,960/07;
  4. balance of installment payment agreements in connection with the Special ICMS Installment Program ("PEP do ICMS") created by State Decrees No. 58,811/2012 and No. 60,444/2014;
  5. balance of a regular installment payment program, pursuant to Sections 570 to 583 of the ICMS Regulations of the State of São Paulo (Decree No. 45,490/2000) and
  6. certain taxpayer debts that are subject to the rules of the Federal Simplified Tax System for Small Businesses ("Simples Nacional").

It is important to emphasize that accession to the program results in (i) irrevocable and irreversible admission of the tax debt, as well as (ii) express waiver of any defense or administrative or judicial appeal, including those already filed.

The accession to the installment payment program will be deemed completed upon payment of the first installment on the scheduled date. The program will be deemed breached in the following events:

  1. failure to comply with any of the conditions set out in the Decree found at any time;
  2. failure to pay 4 or more successive or not installments, , except for the first one;
  3. failure to pay at least 3 installments, except for the first one, after 90 days of the due date of the last installment of the agreement;
  4. failure to prove the waiver and collection of any costs and charges relating to legal proceedings;
  5. incorrect statement, on the date of accession, of the adjusted amount of deposit in court for debt discounts, or of a deposit that does not have any relation with the debts included in the installment payment program; and
  6. failure to comply with other conditions to be set in a joint resolution of the Treasury Office and the State Attorneys Office.

It is worth emphasizing that a breach of the instalment payment program will cause the tax debt balance to be enrolled as outstanding debt – without the discounts that had been given – with the consequential filing of the tax enforcement proceedings or immediate enforcement (in case the debt were already enrolled and under judicial collection).

The requirements for using ICMS accrued credits and amounts of ICMS-ST to be reimbursed will be later regulated by the Treasury Office and the State Attorneys Office.

Originally published 19 November 2015

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© Copyright 2015. 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.

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