Provisional Measure No. 783/2017 (“MP 783”), published on May 31st, 2017, established a new Special Tax Regularization Program (“PERT“) to allow payment, in installments, of outstanding federal taxes and non-tax debts payable up to April 30th, 2017 to the Federal Tax Revenue (“RFB“) and to the Federal Tax Revenue Attorneys (“PGFN“) with favorable conditions and, in some cases, expressive reduction of fines and interest. This measure was enacted given that Provisional Measure 766/2017 (“MP 766“), which established the Tax Regularization Program (“PRT”), was to cease being effective on June 1st 2017.
Pursuant to the conditions laid down by MP 783, individuals and corporate entities (private corporations, as well as public entities, including those under judicial restructuring proceedings) wishing to apply to PERT must do so by August 31st 2017. In this regard, debts to be settled may: (i) arise from previous installment payment programs that were terminated or are still in effect; (ii) be under administrative or judicial discussion; or (iii) be subject to administrative assessment prior to or following the publication of MP 783.
In addition, taxpayers are permitted to liquidate a portion of their debts using their own tax credits arising from federal taxes payable to RFB, including those from corporate income tax and Social Contribution on Net Profits (“CSLL”), and with discounts on fines and interest for taxes payable to the RFB, as well as those already enrolled under Overdue Liability Certificate before the PGFN.
In this context, debts under the PERT may be settled by means of one of the following alternatives:
Just as regulated in the previous program (PRT), tax credits arising from corporate income tax and CSLL losses to be used to liquidate debts under PERT may be from taxpayers themselves, from those which the law renders responsible and liable, from their controlling companies, from those which they directly or indirectly control, or from companies that are directly or indirectly controlled by the same parent company.In the case of irregular use of tax credits for settling debts payable to RFB (including credits arising from corporate income tax and CSLL losses), the corresponding amount must be collected within 30 days so that the taxpayer is not excluded from the program.As previous settlement programs, taxpayers must not only irrevocably confess the enforceability of all debts to be settled, but also desist from all administrative and/or judicial discussions in this regard, waiving the rights on which they are based.
Exclusion from the program shall be effected in case of default of 3 consecutive or 6 alternate monthly installments, default of FGTS amounts and federal obligations payable as from April 30 2017.
| RFB (debts not enrolled as overdue tax liabilities) | PGFN (debts enrolled as overdue tax liabilities) PG FN (debts enrolled as overdue tax liabilities) |
| Down-payment in 5 successive installments from August to December 2017, of at least 20% of the total amount of the debt + payment of the balance with the use of tax credits, including those deriving from corporate income tax and CSLL losses up to 12/31/2015 and submitted to the federal tax authority by 07/29/2016 + payment of any remaining balance in up to 60 installments
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| up to 120 monthly installments, without any reduction on the amount of fines and interest, observing the minimum monthly percentages of each installment: – 1st to 12th installment: 0,4% – 13rd to 24th installment: 0,5% – 25th to 36th installment: 0,6% – as from the 37th installment: percentage corresponding to the remaining balance, in up to 84 installments. | |
| 5 successive monthly installments from August to December 2017, of at least 20% of the value of the debt (or 7.5% for debts equal to or less than 15 million reais) + payment of the balance in January 2018, with a reduction of: – 90% in interest, and – 50% of fines. OR Payment up to 145 monthly installments as from January 2018, with a reduction of: – 80% in interest, and – 40% of fines. OR Payment up to 175 monthly installments as from January 2018, with a reduction of: – 50% in interest, and – 25% of the fines.
Each installment must be: – equal to 1% of gross revenue in the preceding month of the month of payment – more than 1/175 of the total debt.
If the debt is equal to or less than 15 million reais, it is possible to use tax credits to settle such debts, including corporate income tax and CSLL losses assessed until 12/31/2015 and submitted to the federal tax authority until 07/29/2016.
| 5 successive monthly installments from August to December 2017, of at least 20% of the value of the debt (or 7.5% for debts equal to or less than 15 million reais) + payment of the balance in January 2018, with a reduction of: – 90% in interest, – 50% of fines, and – 25% of legal charges and fees. OR Payment up to 145 installments as from January 2018, with reduction of: – 80% of interest; – 40% of fines, and – 25% of legal charges and fees. OR Payment up to 175 monthly installments as from January 2018, with a reduction of: – 50% in interest – 25% of fines, and – 25% of legal charges and fees.
Each installment must be: – equal to 1% of gross revenue in the preceding month of the month of payment – more than 1/175 of the total debt.
If the debt is equal to or less than 15 million reais, taxpayers may offer real estate assets to liquidate debts enrolled as overdue tax liabilities, but only if previously authorized by the Federal Government.
The use of tax credits arising from corporate income tax and CSLL losses is not permitted for settling debts enrolled as Overdue Liability Certificate before the PGFN. |
| Just as regulated in the previous program (PRT), tax credits arising from corporate income tax and CSLL losses to be used to liquidate debts under PERT may be from taxpayers themselves, from those which the law renders responsible and liable, from their controlling companies, from those which they directly or indirectly control, or from companies that are directly or indirectly controlled by the same parent company. In the case of irregular use of tax credits for settling debts payable to RFB (including credits arising from corporate income tax and CSLL losses), the corresponding amount must be collected within 30 days so that the taxpayer is not excluded from the program. as regulated in the previous program (PRT), tax credits arising from corporate income tax and CSLL losses to be used to liquidate debts under PERT may be from taxpayers themselves, from those which the law renders responsible and liable, from their controlling companies, from those which they directly or indirectly control, or from companies that are directly or indirectly controlled by the same parent company. In the case of irregular use of tax credits for settling debts payable to RFB (including credits arising from corporate income tax and CSLL losses), the corresponding amount must be collected within 30 days so that the taxpayer is not excluded from the program. |