By Guilherme Martins and João Pedro Riccioppo Cerqueira Gimenes*

This week, Law No. 14,689/2023 was enacted, definitively repealing the tie-breaking rule in favor of the taxpayer in trials held by the Administrative Council of Tax Appeals (“CARF”). In the event of a tie, the vote of the President of the Panel, who is a representative of the Treasury, will prevail. This is certainly a provision that guarantees victory for the Tax Authorities in cases of great relevance.

However, the new Law intends to provide some compensation to the defeated taxpayer through the “Quality Vote” by offering some immediate benefits, such as the exclusion of the fine and the cancellation of the tax representation for criminal purposes.

Furthermore, it provides for the possibility of the taxpayer excluding from the debt the amount equivalent to the interest on arrears, due up to the date of the payment agreement, provided that he expresses his will to pay it within 90 days after the decision. In such cases, he will be able to make the payment within 12 months, and the use of a court order, tax loss, negative CSLL basis, both of the company itself and of others in the same economic group, is permitted for the payment.

Furthermore, in cases where there is subsequent judicial discussion of debts, it defends the possibility of the taxpayer carrying out a Tax Transaction through an agreement with the Tax Prosecutor's Office (“PGFN”), in a term with special and specific conditions. Increasing the discount limit to 65% and a maximum term of 120 months for payment. There will also be the possibility of using tax losses and negative CSLL basis in litigation transactions of relevant controversy.

Finally, also observing judicial discussions, it authorizes the waiver of guarantee, such as, for example, the judicial deposit of the disputed amount, with the taxpayer only having to prove payment capacity and regular tax history. In cases where the option is for judicial guarantee, it ensures that this will not be executed until the final judgment of the case.

From now on, as the text of the aforementioned Law has been subject to several vetoes, the points will be analyzed by the National Congress in a joint session.

Our tax team is available to provide any clarifications.

(With the collaboration of Pedro Antônio GM Buzas)