By Guilherme Martins and João Pedro Riccioppo Cerqueira Gimenes, with the collaboration of Pedro Antônio GM Buzas

On July 7, 2023, amid the heated legislative session held in the Plenary of the Chamber of Deputies, debated and scheduled after the vote on the Consumption Tax Reform, Bill (“PL”) No. 2384/2023 was approved, the aforementioned bill of the Administrative Council of Tax Appeals (“CARF”).

The text was deliberated after some changes, but what is certain is that the outcome of the aforementioned PL is seen as yet another victory for the Tax Authorities, especially the Ministry of Finance, which has been seeking ways to make the Government's tax collection efforts effective.

The main subject matter conveyed by Bill No. 2384/2023 deals with the return of the so-called “Quality Vote” – now it can be instituted by Law, and not improperly by Provisional Measure 1,160/2023 –, a tie-breaking method in favor of the Tax Authorities in the scope of judgments held at CARF, while such a vote of
Minerva is given to the president of the trial panel, a seat always occupied by a representative of the Tax Authorities.

In the event of a judgment resolved by this tie-breaking vote, the Bill stipulates the cancellation of fines charged to the taxpayer on the main credit, in addition to the cancellation of any tax representations for criminal purposes, observing certain rules to achieve compliance with the IRS.

Furthermore, even in these cases, taxpayers are allowed to pay the amount minus interest, provided that it is done within 90 days, if they do not take the matters to the Judiciary for consideration, when they may settle the debt in up to 12 installments, being able to benefit from tax loss and CSLL credits.

Another important change concerns the limit on the official fine, which will be 100%, lower than the 150% currently applied. However, the penalty may reach 150% in the event of a repeat offense.

There were also several changes made to the original text, both prior to the vote by the rapporteur himself, deputy Beto Pereira (PSDB-MS), and by the Plenary, while the topic was being considered.

Aiming at the approval of the project, the rapporteur added the possibility for the taxpayer who is compliant and pays well to negotiate the value of the guarantees, as well as to prevent their execution prior to the end of the legal process.

Furthermore, CARF was given the role of mediating adverse interpretations between the IRS and determinations issued by regulatory bodies, when the taxpayer claims support in these determinations for the structuring of a given transaction, while the matter must be analyzed by the Federal Public Administration Mediation and Conciliation Chamber (“CCAF”), a component of CARF.

In the plenary session, the so-called “spontaneous reporting” was removed from the agenda, which would allow taxpayers to avoid fines and interest arising from eventual default by voluntarily presenting the amounts owed to the Tax Authorities and paying them in the original amount. The idea of the parties is that this will be discussed at a later date.

Furthermore, the Plenary decided to prohibit taxpayers who lost their cases in the CARF between January and June from re-discussing their cases, as MP No. 1,160/2023 was in force at the time. That is, such taxpayers will not be able to seek a review of the decisions issued during that period. However, they will still have the opportunity to receive the benefits if the project is approved, which are basically: exemption from fines and interest if they decide not to appeal the CARF decision to the Court.

Finally, the section that allowed the Federal Revenue Service to negotiate debts that had not yet been registered was removed from the Bill, which caused some internal tension within the Government, as this responsibility is restricted to the Office of the Attorney General of the National Treasury (“PGFN”), which must regulate acts of negotiation and their
conditions.

Now, the text will be forwarded to the Federal Senate, where further changes are likely to occur.

Our team is available to provide any clarifications on the subject.