Brazil

Details

  • Service: Tax, Tax Financial Services
  • Type: KPMG information
  • Date: 10/11/2013

Tax News: Law 12.865/2013 – New installment program for federal tax debts 

Law nº 12.865/2013 (conversion of Provisional Measure 615/2013) was published, introducing, among other issues, new beneficial conditions for single payment or installment payments of overdue federal taxes.

Law nº 12.865/2013 (conversion of Provisional Measure 615/2013) was published yesterday, introducing, among other issues, new beneficial conditions for single payment or installment payments of overdue federal taxes. The newly issued Law also reopened the term for companies to join other relevant expired installment programs (the so called “Crisis Refis” and the program provided by Law nº 12.249/2010).

I) New forms of single payment or installment payment
Applicable to tax debts before the National Treasury, related to: 

PIS and COFINS (gross revenue taxes) payable by financial institutions and insurance companies, in accordance with Chapter I of Law No. 9.718/1998, due until December 31, 2012; 

PIS and COFINS amounts under judicial discussion relating to the exclusion of the ICMS from its calculation basis, due until December 31, 2012; and 

Income Tax (IRPJ) and Social Contribution Taxes (CSLL) on the profits earned by subsidiaries and affiliates located abroad, in accordance with art. 74 of Provisional Measure No. 2.158/2001, due until December 31, 2012

According to the newly issued Law, the term for the application to these new methods of single payment or installment payments will be November 29, 2013.

For outstanding PIS and COFINS, taxpayers are entitled to the following benefits:

 

  Reduction
Payment Penalties for delays or official assessment Isolated penalty Interests for delayed payment Legal charges
Single payment 100% 80% 45% 100%
Payment in up to 60 installments, with 20% down payment upon application 80% 80% 40% 100%

 

As to the Income Tax and Social Contribution, Law 12.865/2013 grants the following reductions:


 

  Reduction
Payment Penalties for delays or official assessment Isolated penalty Interests for delayed payment Legal charges
Single payment 100% 100% 100% 100%
Payment in up to 120 installments, with 20% down payment upon application 80% 80% 40% 100%

In the case of Income Tax and Social Contribution debts, the Law provides for the possibility to settle the values of fines (isolated, official assessment or delayed payments) through the use of credits from tax losses and negative basis of Social Contribution tax in the manner specified therein.

 

II) Reopening of deadlines for the application to expired installment programs for federal debts from Laws 11.941/2009 and 12.249/2010

Law nº 12.865/2013, through its article.17, reopened until December 31, 2013 the term for the application to the expired programs for single payment and installment payments of federal debts, provided in Laws 11.941/2009 and 12.249/2010.

The program for single payment and installment payments of federal tax debts established by Law 11.941/2009 grants, in general, the following reductions: (i) 100% to 60% on fines for delayed payment or official assessment; (ii) 40% to 20% over the isolated penalty; and (iii) 45% to 25% on interest from delayed payments, depending on the form of payment (in one off-payment or in installments), and a reduction of 100% from the legal charges over debts being enforced. The possibility of migrating debts from other programs is also included in Law 12.865/2003.

Other benefits introduced by Law 11.941/2009 were (i) the possibility of using the balance of tax losses and negative basis of Social Contribution to the offset other outstanding federal debts and (ii) the non-taxation by Income Tax (IRPJ), Social Contribution (CSLL), PIS and COFINS on the redeemed interests, penalties and legal charges.

How KPMG in Brazil can provide assistance:

KPMG in Brazil can offer a combination of skills and expertise to attend to the needs of our clients regarding the decision of applying or not to the above mentioned program, working along with legal counsels in order to identify administrative and judicial lawsuits from which the debts could be paid in installments, based on the possibility of losses and on the amounts involved in these proceedings.

Our services include not only the analysis of legal and administrative lawsuits, but also the revision of the calculation of tax liabilities subject to inclusion in this program, and the assessment of the effects generated in the calculation basis for Income Tax, Social Contribution, PIS and COFINS.

In this context, for the effective achievement of the objectives outlined above, our work is divided into three phases, namely: 

• Assistance in the analysis of legal and administrative proceedings: Based on our experience in the market, we can assist in the assessment of the possibility of losses in judicial and administrative lawsuits (independent of the opinion from the attorney in charge of the cause); 

• Revision of the calculations of tax debts: Once the judicial and administrative lawsuits, as well as other previous application to other installment paying programs are identified, we can review the calculations made regarding the previous outstanding debts, in order to validate the amounts of principal , interest and penalty that would be consolidated and confessed; and 

• Evaluation of the effects to the calculation basis of other taxes: Finally, it is likely that for every debt that may be paid in installments there is a different tax effect to be observed, given the history of accounting recognition or even the effect that had already been produced in previous tax calculations. Thus, we can assist in the assessment of the effects generated on the calculation bases of Income Tax, Social Contribution, PIS and COFINS, in relation to the fiscal year of 2013.

For more information, please contact a tax professional in KPMG in Brazil:

 

Marcus Vinicius S. Gonçalves, vslemenian@kpmg.com.br
Edilberto Salge, esalge@kpmg.com.br
Carlos Ramenzoni Sefrin, csefrin@kpmg.com.br
Celso Alcantara, calcantara@kpmg.com.br

 

 

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