Debt Settlement: Statute expands possibilities for Federal Debt renegotiation

Published on June 22, Law No. 14,375/2022 introduced changes and improvements to Law No. 13,988/2020, amending provisions related to the renegotiation of both tax and non-tax related federal debts.

The instruments for debt settlement have now been extended to include tax credits held by the Special Department of Federal Revenue that are under administrative litigation. This can be done at the request of the Department itself – whether individually or by subscription – or at the Debtors' own discretion.

New benefits include:

• The option for taxpayers to use credits from tax losses and from the negative calculation basis of the social contribution on net income - CSLL, as per income Tax (IRPJ) and CSLL calculations, up to 70% of the remaining balance after rebates;
• registered warrants (precatórios) or credit rights whose value has become final and unappealable may now be used to amortize the principal amount, fines and interest of tax-related debts;
• an increase in the limit of credits subject to renegotiation, which went from 50% to 65%;
an extended period for credit settlement, which went from 84 to 120 months;
• rebates granted upon debt settlement will not be included in the calculation basis of IRPJ, CSLL, PIS/Pasep, and Cofins.

As provided by the law, it is up to the National Treasury Attorney-General's Office (PGFN) and the Federal Revenue Service to implement the new regulations by issuing their own acts.