On February 10, 2021, the National Treasury Attorney's Office published Ordinance no. 1,696 setting the conditions for negotiation of outstanding federal tax debts due from March to December 2020, which have not been paid due to the economic impact of the COVID-19 pandemic. Eligible debts should be enrolled as outstanding until May 31, 2021.
The negotiation includes (i) corporate tax debts overdue in relation to March to December 2020; (ii) tax debts related to the Special Unified Tax and Contribution Collection System (Simples Nacional – small and medium companies), overdue in the period from March to December 2020; and (iii) tax debts related to the Personal Income Tax, related to the fiscal year 2020.
The verification of the economic impact resulting from the pandemic, as well as the verification of the taxpayers' ability to pay the debts, will be carried out by the National Treasury Attorneys in accordance with the patrimonial, economic and fiscal information of the Government database and additional information to be provided by the taxpayer, following the Exceptional Transaction procedure regulated by Ordinance 14.402 / 2020, which was also instituted due to the pandemic.
The negotiation may involve the installment payment of debts for a period longer than the period normally accepted and with the possibility of paying a smaller upfront payment in a longer period, as well as reduction of interest, penalties and legal charges depending on the specific case. In addition, the negotiation may also involve procedural aspects of ongoing lawsuits aiming their resolution.
In general, the installment payments observe the following structure:
– Down payment of 0.334% of the debts monthly, for 12
– Payment of the remaining amount with discounts of up to 100% of the interest, fines and legal costs, depending of the number of installments. The amount of the installments is determined by the higher between the division of the remaining debts by the number of installments and 1% of the gross revenue in the previous month (5% of gross income for individuals).
The reductions should observe the limits of each modality, which vary from 70% to 30% of the debts, depending on the claimant and the number of installments.
The discounts and the quantity of installments will be defined during the negotiation with the National Treasury Attorneys.
Negotiations may be conducted from March 1, 2021 until June 30, 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.