By Marcelo Blecher and Camila Friaça

Ordinance No. 76/2019 of the Ministry of Economy was published in the Official Gazette of the Union on February 27, 2019, regulating Complementary Law No. 160/2017, introducing new procedures to combat the ICMS tax war. In short, the text provides how representations against incentives taxed as unconstitutional, that is, those that do not have the approval of the National Council for Tax Policy (“CONFAZ”), will be processed, under the terms of art. 152 of the Federal Constitution.

According to the new rule, the representations must be submitted by the State Governor to the Minister of Economy, and registered in the Electronic Information System (“SEI”) and forwarded to the Executive Secretariat of CONFAZ, for the initiation of the appropriate administrative proceedings. Subsequently, the Office of the Attorney General of the National Treasury (“PGFN”) will have 15 days to issue an opinion stating whether there is evidence for the admissibility of the representation, and then, the administrative proceedings together with the opinion of the PGFN will be forwarded to the Minister of Economy, who may file or admit the representation.

If the case is admitted, the case must be returned to the Confaz Secretariat and the accused State will have 30 days to respond. The case will then be returned to the PGFN for analysis of the allegations and the issuance, within 30 days, of a new conclusive opinion on the existence of an infraction. Only then will the minister issue his decision within 90 days.

Once violations are declared, the State may be subject to sanctions, including suspension of transfers, prohibition of obtaining guarantees from other entities and prohibition of loans, until the Federative Unit completes the entire regularization process. According to the new rule, if all deadlines are met, the result of the administrative process must be disclosed within 6 months.

The Mazzucco e Mello Advogados tax team is available to provide any clarification on this topic.