Brazilian Tax Review – January/February 2018

States Make Progress in Resolving the ICMS "Tax war"

Following the rules in Supplementary Law 160/2017, the states have approved an agreement (ICMS Convention 190/2017) that establishes rules for validating tax incentives granted improperly, as well as authorizing the granting of amnesty and the forgiveness of past debts.

This convention sets a deadline for the states to disclose all the tax incentives they have granted in recent years without certification by the National Council for Fiscal Policy (Conselho Nacional de Política Fazendária), or CONFAZ, as well as to register them with that body, in order to disclose them to all taxpayers.

Once this has been done, the tax incentives will have an effective term according to the nature of the activity with which they are connected (industry, commerce, etc.).

Because the convention has been approved, it is essential that taxpayers who use tax incentives that have not been properly approved verify whether their incentives have been listed among those disclosed to and recorded with CONFAZ. Taxpayers should also determine whether they can adhere to a tax benefit that reduces their ICMS tax burden, particularly if direct competitors are taking advantage of such a tax break.

Attorney General's Office for the National Treasury Can Freeze Taxpayers' Assets without a Court Order

Law 13,606/2018, which was passed recently, authorizes the Brazilian Treasury to record past-due debt certificates at agencies that record assets and rights subject to attachment or lien (for example, real estate and automobile registry offices), making these assets unavailable, before a tax execution action is filed.

In practice, the law authorizes the Attorney General's Office for the National Treasury to make the assets of debtors unavailable when those debtors have been notified that they have been placed on the list of people with past-due federal tax debts (or in other words, before the tax execution action) and have not paid the debt within five days of receiving the notice. Moreover, the law authorizes the Brazilian Treasury to notify credit bureaus regarding debts placed on the past-due federal tax list.

This controversial measure could be challenged in court because it appears to conflict with provisions of the Brazilian Constitution and National Tax Code.

The State of São Paulo Regulates the ICMS Tax on Digital Goods

In keeping with Tax on the Circulation of Merchandise and Services Convention 106/2017, the state of...