Put Mariana Martins – 08/06/2020

In news published in the press today, the PGFN announced the brief publication of a new Ordinance expanding the extraordinary transaction recently instituted to settle debts registered in active debt during the Covid 19 pandemic.

Unlike the first extraordinary transaction, whose deadline for joining ends on 06/30/2020, the new modality will allow the payment of a reduced down payment, with an increase in the payment of the down payment of 1% of the debt from 3 to 12 installments, maintaining the limits of 84 (for legal entities in general) or 145 installments (for individuals, micro-enterprises and small businesses), in both cases already including the 12 initial installments, and reduction of fines and interest, which could reach 100%.

The new extraordinary transaction, However, it can only be used by taxpayers who have been demonstrably affected by the crisis, which will be verified by comparing the gross revenue earned in 2019 and 2020., and by taxpayers who owe debts classified as irrecoverable, including those owed by companies undergoing judicial recovery, judicial liquidation, extrajudicial liquidation or bankruptcy. By presenting a comparison between the total revenues earned this year and last year, the PGFN will assess the taxpayer's payment capacity and apply the respective discounts, which may vary according to each case, at its discretion.

There will be the possibility of migrating previous transactions to this modality, if it proves more favorable, and, just like the first modality, the new extraordinary transaction may only be perfected by adherence to the conditions and criteria of the Attorney General's Office, without any room for negotiation or possibility of the debtor presenting a counterproposal.

Fines of a criminal nature, FGTS debts and those determined under Simples Nacional would remain excluded from the new extraordinary transaction, in accordance with the prohibitions expressly contained in Law No. 13,988/2020.

Although the conditions of the new extraordinary transaction seem quite attractive, the lack of broad and unrestricted application will certainly bother taxpayers, who will eventually prefer to wait for the institution of special installment payments for evaluation and possible adhesion.

There are currently three Bills[1] that seek to establish installment plans with special conditions for the pandemic period, the so-called PERT COVID, which may offer, in addition to amnesty for fines and interest, other benefits such as the possibility of using credits arising from final and binding legal actions, the possibility of delaying a significant number of installments without exclusion, the non-configuration of default for delays that do not exceed 30 days from the original due date of the installment, among others.

The conditions listed in each of the Bills will be further explored by our tax team in a series of articles and newsletters.

We remain at the disposal of all our clients and partners to assess the conditions of each regularization program, to identify the one that best suits you or your company.

[1] PL 2735/2020, PL 2341/2020 and PLC 152/2020.