Chamber of Deputies analyzes federal installment plan for companies in crisis.

A bill creating a federal installment plan (Refis) for individuals and companies affected by the pandemic began its legislative process this week in the Chamber of Deputies. The proposed rules are even more beneficial than those established in previous programs. Taxpayers will be able to pay debts with discounts of up to 90% on fines and interest. Installments will be calculated based on revenue, and debtors will be able to use credits from final and unappealable court decisions—such as those related to ICMS, PIS/Cofins.

It is unclear whether the bill will have support in the Chamber of Deputies. The Speaker of the House, Rodrigo Maia, told Valor that he has not yet addressed the issue. The bill, authored by Representative Ricardo Guidi (PSD/SC), has not yet been presented to the party leaders. Guidi submitted the proposal after being approached by business owners from Santa Catarina, who reported economic difficulties during the pandemic.

There is no expectation of when the text might be brought to the Plenary. After being scheduled and considered in the Chamber's Plenary, the bill will still go to the Senate and will depend on presidential approval.

The proposal includes companies undergoing judicial reorganization. It allows interested parties to join the installment payment program up to 90 days after the end of the state of public calamity declared due to the Covid-19 pandemic.

Individuals will be able to pay taxes in up to 120 monthly installments — the deadline for companies is not yet defined. The minimum installment amount is R$ 300. For legal entities under the presumed profit regime, R$ 1,000. For others, R$ 2,000.

The value of each installment will be determined based on a percentage of the previous month's gross revenue, with certain limits. For the years 2021 and 2022, it cannot be less than 0.3% for companies under the presumed profit regime and 0.5% in other cases. For 2023 onwards, the minimum is 0.5% for taxation under the presumed profit regime and 1% in other cases. The value of each installment will be increased by the Selic rate plus 0.5%.

To enroll in the installment plan, you will need to pay the first installment upfront. No collateral or list of assets is required.

In his justification, the congressman states that the pandemic led to isolation and a sharp reduction in company revenue, which requires measures for the survival of businesses. According to Guidi, the extension of the payment of some taxes established by the federal government would not be sufficient.

He adds that, since we are still in crisis, it is "vital" that payments begin after this period and that all debts generated up to the end of the state of public calamity be included in the installment plan.

Even with a long road ahead, the project has encouraged tax lawyers, who see clients without revenue and without cash flow. For Alexsander Santana, partner at the Axlaw firm, the proposal is very beneficial. “The percentage [of reduction in fines and interest] is very attractive for companies. The last Refis programs weren't this beneficial,” he says.

Another attractive feature, adds the lawyer, is the payment method for the installments, which are tied to a percentage of the companies' revenue. "The project takes into account the current economic crisis," he says.

According to the lawyer, what the government is doing by postponing payments doesn't even come close to a tax amnesty program. "In three months the bill will come due, and companies will still be in a difficult situation," he states. "Clients are waiting for a tax amnesty program."

The lawyer also highlights the possibility of the debt being paid with compensation from credits from a final and unappealable court decision. This situation includes, for example, lawsuits regarding the exclusion of ICMS (a Brazilian state sales tax) from the PIS and Cofins (federal social security contributions) tax base. Taxpayers won the dispute in the Supreme Federal Court (STF) in 2017. However, appeals for clarification filed by the National Treasury are still pending.

According to Ana Paula Lui Barreto, a partner at the Mattos Filho law firm, the federal government has been opposed to adopting any form of tax amnesty program from the beginning. “But the moment is very critical. The project comes at a good time for taxpayers. We see companies, especially smaller ones, that will not be able to continue their activities and retain their employees,” she states.

The scope of debts that can be paid in installments is quite large. It even includes those generated in the month the end of the pandemic is declared. Furthermore, the project may have an impact on the criminal sphere for cases of withheld but unpaid taxes—such as Income Tax (IRRF) and social security contributions. "Including these debts [in Refis] is a novelty," says Ana Paula.

There is also the possibility, the lawyer points out, of using tax losses and negative CSLL (Social Contribution on Net Profit) bases, as well as real estate, to pay up to 30% of the debt. "Which is interesting for companies. Using assets that aren't actually money," she says.

Source: Economic Value