We inform you that on 12 January 2023, Provisional Measures (MPs), Decrees and Ordinances were published with the purpose of reducing the Federal Government’s budget deficit, as mentioned below.
Tax Recovery Measures that affect taxpayers:
- Joint Ordinance PGFN/RFB No. 1/2023: Creates the Program for the Reduction of Tax Litigiousness – PRLF;
- Provisional Measure No. 1,160: (i) Possibility of Voluntary Disclosure of federal taxes, without fine, until 04/30/2023 and (ii) return of the existence of a casting vote, by the President Councilor of the Class (Tax Authorities Representative), in case of a tie judgment in the CARF (Administrative Court);
- Provisional Measure No. 1.159: Excludes ICMS from the incidence and calculation basis of PIS and Cofins credits, to be valid as from 1 May 2023;
- Future Expectations: (i) Reoneration of PIS/COFINS and CIDE on fuels, still to be aligned with Petrobrás and (ii) Clarify if the 90 days anteriority will be applied to the effects of Decree 11.374/2023, which increased the rates of PIS/COFINS on financial revenues and is already recognized by some preliminary injunctions at judicial level;
Other administrative measures of the Federal Government:
- Provisional Measure n. 1.158, Decree n. 11.379/2023 and Decree n. 11.380/2023: They create administrative rules about (i) the National Monetary Council, (ii) the Financial Activities Control Council, (iii) the Judicial Fiscal Risks Follow-up and Monitoring Council, (iv) the maintenance of unprocessed receivables/payables (RAPs).
Tax Recovery Measures that affect taxpayers
PGFN/RFB Joint Ordinance No. 1/2023: Establishes the Tax Litigation Reduction Program – PRLF
For individuals, micro and small enterprises:
- 40% to 50% discount on the total amount of the debt (tax, interest, and fine).
- Up to 12 months to pay.
- Up to 60 minimum wages.
- Regardless of debt classification or capacity to pay.
Legal entities, with fines of more than 60 minimum wages:
- Discount of up to 100% on the value of interest and fines (irrecoverable credits that are difficult to recover).
- New: the possibility of using tax losses and negative tax base to settle between 52% and 70% of the debt.
- Up to 12 months to pay.
- The deadline to join the program starts on 1 February and ends on 31 March.
- The adhesion can be done through the e-CAC portal of the Federal Revenue Service.
Provisional Measure No. 1,160: Possibility of Voluntary Disclosure of Federal Taxes:
- Possibility of self-settlement, without late payment or ex-officio fine, only with SELIC interest.
- Including for taxpayers with inspection already started until 12 January 2023.
- The deadline for effectiveness (declaration and payment) is 30 April 2023.
Provisional Measure No. 1,160 and Ordinance to be published: Changes in the Administrative Council of Tax Appeals – CARF:
- Return of the validity of the casting vote rule, by the Chairman of the Panel (Taxpayers’ Representative), in case of a tie decision in the CARF (§ 9 of art. 25 of Decree 70235/1972).
- Revocation of article 19-E of Law 10,522/2002, which determined that in case of a tie in the judgment of the administrative proceeding for determining and enforcing the tax credit, the casting vote referred to in paragraph 9 of article 25 of Decree 70,235/1972 does not apply, resolving in favor of the taxpayer.
- Determines that debts of up to one thousand minimum wages will have a definitive administrative decision in the first instance (Regional Judgment Office – DRJ).
- It was announced that an Ordinance will be published to amend the Internal Regulations of the CARF to increase the limitation period for ex-officio appeals to BRL 15 million. In other words, for cases with a lower value, the first instance decision (DRJ) that cancels the debt will be final.
Provisional Measure No. 1,159: Excludes ICMS from the incidence and calculation basis of PIS and Cofins credits:
- In 2017, the Federal Supreme Court (STF) had excluded ICMS from the PIS/Cofins tax base, but defined the scope of the measure only at the end of 2021. However, a controversy persisted over whether the calculation of PIS/Cofins tax credits should include or remove the ICMS.
- Tax credits represent overpaid taxes along the production chain that can be returned to the companies or used to offset the payment of other taxes. The MP defined that the PIS/Cofins credits will not be calculated on the ICMS, only on the calculation basis determined by the STF. This will result in more revenue for the Federal Government.
- Reoneration of PIS/COFINS and CIDE on fuels, still to be aligned with Petrobras.
- Clarify if the 90 days anteriority will be applied to the effects of Decree no. 11,374/2023, which increased the PIS/COFINS rates on financial revenues. No legal, infralegal or interpretative act has been published on the matter yet. Some companies have already obtained court injunctions recognizing their right to the application of the nonagesimal anteriority.
Other administrative measures of the Federal Government Provisional Measure n. 1.158, Decree n. 11.379/2023 and Decree n. 11.380/2023: They create administrative rules about:
- The National Monetary Council.
- The Council for Financial Activities Control.
- The Council for Follow-up and Monitoring of Judicial Fiscal Risks.
- The maintenance of unprocessed payables (RAPs).
It was also announced the intention to reduce BRL 50 billion in expenses (review of contracts and programs and authorization to spend below the budget law).
The announced measures aim to reduce, or even end, the primary deficit (expenses greater than revenues, not counting interest) of BRL 231.5 billion in the Federal Government’s accounts this year, 2023.
This e-alert is a general review of the issues addressed and does not constitute a legal opinion or consult.
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