On December 12, 2019, Law No. 8,645/2019 was published by the State of Rio de Janeiro creating the Temporary Budgetary Fund, pursuant to ICMS Agreement No. 42/2016 and Federal Law No. 4,320/1964.
This new law revokes Law No. 7,428/2016, which created the State Fund of Fiscal Balance (FEEF), which had similar rules to the Temporary Budgetary Fund. The FEEF was declared unconstitutional by a special panel of the Rio de Janeiro State Court but remains valid until December 31, 2020.
The Temporary Budgetary Fund is a new version of FEEF and whose main aspects are the following:
- The new law states that the use of tax benefits or incentives already granted or that may be granted are subject to a deposit in the amount equivalent to 10% of the difference between the value of the tax calculated with and without the use of the benefit or the tax incentive granted to ICMS taxpayers.
- If the taxpayer fails to make the deposit for three months—consecutive or not— the benefit/incentive will be terminated.
It is worth noting that certain taxpayers that were not subject to payment to the FEEF will be subject to payment to the Temporary Budgetary Fund; this includes the taxpayers that benefited from the Special Tax Treatment of Law No. 6,979/2015 and taxpayers subject to Decree No. 36,453/2004 (Riolog).
The new law will be effective as of January 01, 2020 and in force during the Fiscal Recovery Regime (RRF). For all legal entities benefiting from the Special Tax Treatment provided by Law 6,979/2015, as per item XIV, article 14 of Law No. 7,428/2016, the new law will be effective as of 90 days from the date of its publication.
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 2019. 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.