MP 899 - Renegotiation of tax debts with the Federal Government

The Provisional Measure (MP) 899, published on Oct-17-2019, establishes requirements and conditions for the Union and the debtors, or the adverse parties, perform termination of litigation transaction, pursuant to Article 171, of the Law 5172/66 (National Tax Code - CTN).

The tax transaction would be a tax agreement between the tax authorities and the debtor through mutual concessions to settle a dispute and extinguish the debt.

According to the MP, the negotiation will follow requirements whose main points are the following.

a) Debts entered in Active Debt

Coverage:

1. Non-judicial tax credits under the administration of the Brazilian Federal Revenue (RFB);

2. Active Debt and Union taxes, whose registration, collection or representation is the responsibility of the Attorney General's Office of the National Treasury (PGFN); and

3. Where applicable, the active debt of the municipalities and federal public foundations, the registration, collection and representation of which is incumbent upon the Federal Attorney General's Office (PGF) and the credits whose collection is the responsibility of the Federal Attorney General's Office (PGU), pursuant to act of the Attorney General of the Union and without prejudice to the provisions of Law 9469/1997;

Discounts: Up to 50%, up to 70% for individuals and micro or small businesses. Reductions occur on charges, not reaching the principal amount.

Payment: Up to 84 months, and may reach 100 months for individuals and micro or small business.

1. Individual proposal or by joining to the collection of active debt;

2. Joining to other cases of judicial or administrative tax litigation; and

3. Joining to low value tax administrative litigation.  

b) Joining to Tax Litigation

Scope: Taxpayers will be offered a settlement of tax or customs disputes concerning relevant and widespread legal controversy, based on a statement from PGFN and RFB. The proposed transaction and possible joining may not be relied upon as a legal basis or as a predictor of the success of the argument supported by either party, and will be understood solely as an advantageous measure in the face of reciprocal concessions.

Discounts: This item will be defined, each case, according to the concessions between the tax authorities and the debtors. The proposed transaction for joining will be published in the official press and at the websites of the respective agencies, by means of a public notice, which will established the requirements to be met, the reductions or concessions offered, the terms and forms of payment accepted.

Requirements:

1. To waive any current or future allegations of law on which lawsuits, including class actions, or claims relating to the credits included in the transaction are merged, by requesting the termination of the respective merit resolution proceedings, pursuant to terms of item “c” of III of the caput of Article 487 of Law 13105/2015;

2. Request the judicial approval of the agreement for the purposes of the provisions of items II and III of the caput of Article 515 of Law 13105/2015; and

3. Withdraw from the objections or administrative appeals related to the credits included in the transaction and waive any claims of law on which those objections or appeals are based.

It is noteworthy that MP 899 will be regulated by PGFN, in cases of Active Debt transaction, and by the Minister of Economy, regarding tax litigation. In addition, the National Congress shall convert the MP into law within 60 days, renewable for the same period, and it is possible to change the rules analyzed above during this process.