Federal Revenue Department regulates the tax settlement procedure for debts under discussion at the administrative level

In brief

On August 12 2022, the Federal Revenue Department published Ordinance No. 208/2022, which regulates the tax settlement procedures set forth by Law No. 14,375/2022, that amends Law No. 13,988/2020.

More details In accordance with the provisions of the Ordinance 6.757/2022, issued by the Office of General Attorney’s, the Federal Revenue Department also set forth rules towards the regulation of the procedure to the tax settlement agreement.

Please find below the main points of the mentioned Ordinance:

• Adhesion term: currently there is no set term, unless a Public Notice is published in the future establishing a deadline for such purposes.
• Target public: natural person and legal entity (including inapt company, in a judicial/extrajudicial receivership, or bankrupt company)
• Categories of settlement:

(i) Standard tax settlement proposed by the Federal Revenue Department, mandatory for taxpayers whose tax debts sum BRL 10MM or less;
(ii) Individual tax settlement proposed either by the Federal Revenue Department or by taxpayers whose tax debts sum BRL 10MM or more (in this case, the taxpayer is not obliged to settle all of his debit).

• ​Benefits:

(i) Possible discounts up to 65% on the total amount of the debt (meaning the sum of interest, fines and charges, excluded the principal amount), that it will depending on the level of recoverability of the credit,
(ii) Payment the debts in installments;
(iii) Deferral payment;
(iv) Moratorium of the debt;
(v) Replacement and disposal of assets given in guarantee;
(vi) Possibility to settle the debts with court orders of payment (in Portuguese = precatórios), even if it was not issued
(vii) Possibility to pay up to 70% of the tax debt remaining amount (considering the applied discounts) with net operating loss (NOLs).

In addition to the possibility given to taxpayers to use tax losses and negative basis of social contribution of controlled and related companies, the taxpayers may also use the credits resulting from tax losses and negative basis of social contributions of the joint taxpayer of the tax debt settled.

Please let us know should you need any further clarification.