House approves MP that facilitates payment of disputed tax debts

Provisional measure allows the taxpayer to settle debts with the Federal Revenue due by June 30, 2015, if they are under administrative or judicial discussion
Nominal Vote MPV 685/2015
Deputies approved an opinion that reduces the value of the cash portion from 43% of the total debt to 30%, 33% or 36%. Photo by: Ananda Borges

The Plenary of the Chamber of Deputies approved on Tuesday (3) Provisional Measure 685/15, which allows the taxpayer to settle tax debts, due by June 30, 2015, with the Federal Revenue Service or the Attorney General of the National Treasury ( PGFN), if they are under administrative or judicial discussion. The matter will be voted on by the Senate.

To adhere to the Tax Litigation Reduction Program (Prorelit), instituted by the measure, the taxpayer must pay part in cash and the other part can be deducted with credits generated by the use of tax losses and the negative calculation base of Social Contribution on Net profit (CSLL).

The text approved for the MP is the opinion of Senator Tasso Jereissati (PSDB-CE), which reduces the value of the cash portion from 43% of the total debt to 30%, 33% or 36%.

If this installment is settled by November 30, 2015, it will be 30% of the consolidated debt. If the company chooses to install monthly installments, 33% (two installments) and 36% (three installments) will be used, with all installments adjusted by the Selic rate plus 1% in the month of payment.

The MP was published in July 2015 and envisaged September 30 as the last day for joining the program. The text approved by the Chamber passed to November 30th.

Already the amounts for settlement with the loss or negative base will be obtained in relation to that determined by the company until December 31, 2013 and declared until June 30, 2015.

The amount to be paid with tax debts will be determined based on the following rates:
- 25% on tax loss;
- 15% on the negative CSLL calculation base for private insurance companies, capitalization and financial institutions; and
- 9% on the negative CSLL calculation base for other companies.

The program allows companies to use their own losses and negative basis first to partially settle the consolidated debt.

If these are not sufficient, they can use those of controlled or controlling legal entities, directly or indirectly, as long as they are in this situation on December 31, 2014.

Another possibility is the use of losses and negative basis of the taxable person, usually the one responsible for collecting the tax without having any relation to the taxable event. However, the MP does not specify what types of situations of responsibility or co-responsibility are contemplated.

Among the subsidiaries that can generate credit to settle debts are those whose shares held by the parent company are less than 50% of the voting capital, but have an agreement to assign decision-making power to the other.

Giving up
Adherence to the program implies an irrevocable withdrawal from the administrative process and legal actions, as well as recognition of the debt in question.

This program will not cover debts arising from the withdrawal of objections, administrative appeals and lawsuits that have been included in previous installments, even if terminated.

Debts arising from the partial withdrawal of these funds and shares can only be paid under the rules of the MP if the respective credit to be paid off can be separated from the others.

The IRS or PGFN will have five years to approve the discharge. If approved, existing deposits linked to the debt will be automatically converted into Union income, with the remaining debt being settled in new money or with credits.

If the tax credit generated with the application of the indexes on the tax loss or negative basis of the CSLL is not validated, the taxpayer will have 30 days to pay this part in cash.

According to the Federal Revenue Service, of the more than 35,4 taxpayers with debts in administrative or judicial litigation, 28,4 (80%) have a tax loss from the Corporate Income Tax (IRPJ) or a negative calculation base of CSLL.

However, as membership is an option of the company, there is no way to estimate how many can join or how much the government should receive. The liability under judicial administrative discussion amounts to approximately R $ 860 billion, according to the agency.

Source: News Chamber Agency .