The National Treasury will allow small debts to be paid in installments.

The Attorney General's Office for the National Treasury (PGFN) today published a notice for the installment payment of small-value debts – up to 60 minimum wages – that are being disputed in court. This new phase of the tax transaction project will include micro and small businesses and individuals who have been registered as delinquent taxpayers for more than a year.

This is the first public notice involving litigation and debts that are not classified as unrecoverable. A similar notice involving major debtors is also expected, but there is no date set for its publication.

Other calls for proposals have already been launched. The tax transaction, which authorizes direct negotiation between the Treasury and taxpayers, emerged at the end of 2019 with Provisional Measure No. 899, the MP of the Legal Taxpayer, converted into Law No. 13,988. Two ordinances issued in April (No. 9,917 and No. 9,924) brought rules for the agreements - individual or by adhesion.

The first one established general rules, stipulating the participation only of taxpayers whose registration status indicated the irrecoverability of outstanding debts or whose CNPJ (Brazilian taxpayer identification number) had been cancelled. Ordinance No. 9,924 established the conditions for extraordinary transactions due to the pandemic.

By July, the PGFN (Brazilian Federal Attorney General's Office) had negotiated 204,000 debts with approximately 55,000 taxpayers, totaling R$ 18.8 billion. As of yesterday, R$ 484 million had been recovered through settlement agreements, of which R$ 158 million was recovered in July alone. The agency expects that participation in settlement agreements will increase considerably starting this month, with the inclusion of companies under the Simples Nacional tax regime – authorized by Complementary Law No. 174.

The published notice establishes payment in up to 60 installments, with discounts of up to 50% on interest and fines. The granting of discounts is inversely proportional to the payment term.

“The transaction is extremely beneficial for taxpayers and the government,” says Maria Rita Ferragut, partner in tax litigation at Trench Rossi Watanabe and vice-president of the Tax Litigation Committee of the São Paulo section of the Brazilian Bar Association (OAB-SP). According to the lawyer, the amounts transacted show that it is a tax compliance program that is working.

“We waited almost 50 years to have a tax transaction law. From the taxpayer's perspective, there are points that can still be explored, but it has to start somewhere,” says Daniella Zagari, partner at the Machado Meyer law firm.

For taxpayers with a good tax standing, he adds, it would only be worthwhile to negotiate an installment plan for their debt, even without a discount. They could also discuss the guarantee to be provided.

“It’s a measure to bring the Treasury closer to the taxpayer in order to negotiate,” says Daniella. “Now it should be more accepted. Everything that is new is viewed with more caution,” she adds, emphasizing that the information the taxpayer provides will not be used against them if the negotiation does not succeed.

Source: Economic Value