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Legal Update

Brazil: Ordinance PGFN No. 33/2018 Establishes New Procedures between the Enrollment of Debts as Overdue Tax Liability and the Filing of Tax Foreclosure

21 February 2018
Tauil & Chequer Legal Update

On February 9, 2018, the Official Federal Gazette published Ordinance No. 33/2018 (“Ordinance”) which, in summary, establishes new procedures to be adopted by the National Treasury Attorney’s Office (PGFN) between the enrollment of debts as overdue tax liability and the filing of Tax Foreclosure.

Among the modifications, it should be highlighted:

i) The carrying out of legality controls of the assessment prior to the debt’s enrollment as overdue tax liability,  as well as the express prohibition of enrolling debts as overdue liability that relates to matters with binding precedents from the Administrative Tax Appeals Council (“CARF”) favorable to taxpayers or with favorable decisions from the Superior Court of Justice and Federal Supreme Court with binding effects since in these cases they which have already been included in the PGFN's list to non-contest and appeal;

ii) After the enrollment of debt as overdue tax liability, the taxpayer should receive notification to pay within 5 days, or either: to present in advance a guarantee for the debt, or to file an Administrative Request for Review of the Registered Debt (PRDI), both within 10 days;

iii) Regarding the presentation of guarantee in advance:

iii.a) Taxpayers can offer cash deposits, insurance bonds, a letter of guarantee or any other assets or rights submitted to the public register;

iii.b) The acceptance of the offer of advanced guarantee does not suspend the enforceability of the debt enrolled as overdue tax liability, but allows the issuance of a tax clearance certificate;

iii.c) After the acceptance of the advanced guarantee, the Tax Foreclosure must be filed within 30 days;

iv) Regarding the Administrative Request for Review of Registered Debt:

iv.a) Will be admitted in cases of suspension of the enforceability; extinguishment of the debts; cases that refer to matters in which the Ordinance prohibits the enrollment of debt as overdue liability; and in cases of amendment of ancillary statements or in the filing of ancillary statements containing formal errors;

iv.b) The Administrative Request for Review of Registered Debt will suspend the practice of acts for the coercive collection of the debt, but will not formally suspend the enforceability of the debts;

iv.c) The taxpayer can file an appeal within 10 days, without suspension effects, in the event that the Administrative Request for Review of Registered Debt is denied;

(v) After such deadlines, the debt can be submitted to extrajudicial objection; reported to credit protection agencies; brought before assets and rights registration bodies for seizure; remitted to the Public Administration for cancellation of agreements based on the tax irregularity or to the Federal Revenue Office for the extinguishment of tax benefits, including those related to Foreign Trade;

(vi) The communication of seizure of the assets among assets and rights registration bodies is allowed, before the filing of Tax Foreclosure, when involving high value debts as defined by the Treasury Minister; referring to acts of crimes against the tax and economic order; or to acts with the purpose of disposing of assets. The taxpayer can file an objection to such communication  within 10 days of its notification; and

(vii) The filing of Tax Foreclosure by the National Treasury Attorney’s Office must be conditioned to the evidence of assets or rights owned by the taxpayer in amounts sufficient for paying wholly or partially the debts that are being assessed.

Finally, it is important to note that the Ordinance will only produce effects after 120 days from its publication.


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