Resenha Tributária/Brazil Tax Round-Up - January 2020

LEGISLATIVE DEVELOPMENTS

First notice of federal tax transaction agreement released

On December 4, 2019, the National Treasury Attorney's Office published the notice of Transaction Agreement No. 01/2019, which states the conditions for the transaction of federal tax or social security debts enrolled as overdue liability of up to BRL 15 million. The notice covers the following debts:

Federal debts enrolled as overdue liability of legal entities written off, marked as irregular or suspended in the CNPJ register and that are not being addressed with the installment payment option, are not considered guaranteed or have had their enforceability suspended by a court. Federal debts enrolled as overdue liability for more than 15 years and that are not being addressed with the installment payment option, are not considered guaranteed or have had their enforceability suspended by a court for more than 10 years. Federal debts enrolled as overdue liability on behalf of individuals whose registration status in the CPF register is "deceased holder." Payments can be made in cash with a discount of up to 50% or in installments in up to 84 months. If the debtor is an individual, micro or small company, payment can be made in cash with a discount of up to 70% or in installments within 100 months. Regarding social security debts, the maximum term for payment in installments is 60 months due to constitutional restrictions.

FECP rule changes by Rio de Janeiro State

On December 5, 2019, Law No. 8,643/2019 was published, which amends provisions of Laws No. 4,056/2002 and 4,962/2002 related to the Fund for Combating Poverty and Social Inequalities ("FECP").

A few changes worth noting:

FECP is now authorized to be in force until December 31, 2023, by means of the amendment of the main section of article 1 of Law No. 4,056/2002. Transactions with power consumption from 300 to 450 or above 450 kilowatt-hours per month (as provided for in sub-items "b" and "c," respectively, of item VI of article 14 of Law No. 2657/97) or for the provision of communication services (provided for in item VIII of the same article) are subject to having 2% added to the ICMS rate, in addition to the regular 2% already levied by virtue of item I of article 2 of Law No. 4,056/2002. These changes will become effective after 90 days from the new law's publication. Personnel expenditures on actions using FECP resources are limited to 50% of the fund's estimated total revenue. The situations in which the State Executive Power is authorized to allocate the revenues of the fund, provided for in article 3 of Law No. 4,056/2002, were extended. Article 7-A was added to Law No. 4,056/2002, stating that the minimum percentages of FECP allocations must be established annually in the Budget Guidelines Law ("LDO"). Measures to increase the collection of debts enrolled as overdue liability in State of Rio de Janeiro

On December 10, 2019, Law No. 8,646 was published, amending Law No. 5,351/2008, which established measures to increase the collection of debts enrolled as overdue liability in the State of Rio de Janeiro.

Among the changes, it should be noted that the installment term has been reduced from 120 to 60 months. The law also reduced the waiting period required to request a new special installment, from 8 to 4 years from the date of the granting of the previous installment.

Termination of 10% contribution to FGTS upon dismissal without cause

On December 11, 2019, Law No. 13,932/2019 was published, with important labor and tax implications. The most significant is the termination of the 10% contribution to the Severance Indemnity Fund ("FGTS") by employers in the event of a dismissal without cause.

Article 12 of the law establishes the termination of this social contribution, which had been created by Complementary Law No. 110 /2001.

However, this change does not impact ongoing lawsuits, as the new law is only applicable to terminations from January 1, 2020, onward.

Temporary Budgetary Fund created in Rio de Janeiro State

On December 12, 2019, Law No. 8,645/2019 was published by the State of Rio de Janeiro creating the Temporary Budgetary Fund, pursuant to ICMS Agreement No. 42/2016 and Federal Law No. 4,320/1964.

This new law revokes Law No. 7,428/2016, which...