On January 12, 2023, the Minister of Finance, Fernando Haddad, announced new economic measures that will be adopted by the Federal Government for fiscal recovery, with the intention of balancing the budget forecast for the year 2023, considering the current deficit in public accounts of approximately R$231 billion, according to data from the Ministry of Finance. To this end, the new Government intends to change the panorama of administrative tax litigation, establish programs that reduce tax litigation and measures that promote increased revenue.
Among these measures, Provisional Measure (“MP”) No. 1,160/2023, published on January 12, 2023, changed the organization and procedural landscape of the Administrative Council of Tax Appeals (“CARF”). In terms of judgment, the aforementioned MP revoked the tie rule in favor of the taxpayer in CARF. As a result, the casting vote was restored, which determined that in the event of a tie in the judgment of an administrative proceeding, the National Treasury counselor would be responsible for breaking the tie.
Another measure instituted by the MP was to determine that communication to the taxpayer to resolve discrepancies or inconsistencies carried out before the summons would not constitute the beginning of the tax procedure.
Furthermore, with the aim of reducing the number of active cases, the MP introduced provisions in Law No. 13,988/2020 to establish an increase in the jurisdiction value for access to resources from CARF. In this way, tax assessments that are less than one thousand minimum wages (approximately R$13 million) will be definitively judged by the Judgment Delegations, seeking to reduce the time to resolve the cases, which was regulated by Joint Ordinance No. 1, of January 12, 2023, of the Brazilian Federal Revenue Service (RFB) and the Attorney General's Office of the National Treasury (PGFN).
In addition to regulating low-complexity litigation, this ordinance also established the Tax Litigation Reduction Program (“zero litigation”), establishing tax settlement modalities for the settlement of debts pending administrative judgment. The settlement modalities provide for discounts of 40% to 50% on the total amount of the debt for individuals, micro and small companies, or 100% of interest and fines for debts greater than sixty minimum wages that are considered difficult to recover. IRPJ tax losses and negative CSLL calculation basis may also be used to settle the debt, a procedure that was already being adopted by the Federal Revenue Service and the PGFN for the tax regularization of companies. The deadline to join the program starts on February 1 and ends on March 31, 2023.
Finally, we also highlight that Provisional Measure No. 1,159/2023 was instituted, which complies with the STF ruling that excluded ICMS from the PIS and COFINS calculation basis. Although the rule provides that ICMS does not apply to these contributions, Laws No. 10,637/2002 and 10,833/2003 were amended to prevent the ICMS amount levied on the transaction from generating PIS and COFINS credits. This amendment represented a defeat for taxpayers, since the Federal Revenue Service had already regulated the use of ICMS credits in Normative Instruction No. 2,121/2022.
Thus, despite the indications regarding the proposal to reduce litigation, even if there is an increase in revenue, we believe that some of the measures announced represent the loss of important advances that had been granted to taxpayers, such as the end of the casting vote and the impossibility of using ICMS credits. However, given that the changes were made through a Provisional Measure, the National Congress may still reject the legal text or approve it, which will determine the definitive validity of the decisions adopted by the Federal Government.
