Tax Settlement Adhesion Notice No. 01/2024: Zero Litigation Program 2024

On March 19, 2024, Adhesion Transaction Notice No. 01/2024 (“Zero Litigation Program 2024” or the “Program”) was published, paving the way for tax settlements between taxpayers and the Brazilian Federal Revenue. Through the Program, taxpayers can have the reduction of interests, fines and legal charges for tax credits being challenged in the Administrative Court, while the proceedings are underway at the Brazilian Federal Revenue Judgement Offices (“DRJ”) or the Administrative Council for Tax Appeals (“CARF”), when the value of the credits do not exceed R$50 million.

Some key benefits of the Program are potential discounts for credits considered difficult or impossible to recover, special installment payment conditions, and the option to use credits resulting from tax losses and negative CSLL calculation bases calculated up to December 31, 2023.

In the event that the credits are considered irrecoverable or difficult to recover (Ratings C and D), the program establishes:

• Reduction of up to 100% of interest, fines and legal charges, observing the limit of up to 65% on the total of each credit subject to negotiation;
• Down payment equivalent to 10% of the consolidated value of the debt—after applying the discounts—paid in up to 5 installments, and the remainder in up to 115 monthly and successive installments; and
• In cases of tax losses and negative CSLL calculation bases, payment in cash of at least 10% of the outstanding balance, in up to five successive monthly installments, and the remainder using these credits, limited to 70% of the debt after the down payment, and the residual balance divided into up to 36 successive monthly installments.

On the other hand, for credits classified as high- or medium-prospect of recovery (Ratings A and B), although the program does not provide any type of discounts, it is possible to pay the debts in installments, as follows:

• Down payment equivalent to 30% of the consolidated value of the debt, paid in up to five successive monthly installments, and the remaining in up to 115 installments; and
• In cases of the use of credits arising from tax losses and negative CSLL calculation basis, payment must be made with a down payment of at least 30% in cash, in up to five installments, and the remaining balance using these credits, limited to 70% of the debt after the down payment, and the residual balance in up to 36 successive monthly installments.

In addition, it is worth noting that credits valued at up to 60 times the minimum wage—and for which the taxpayer is a natural person, micro-enterprise or small business—also have specific conditions for reduction and payment.

The adhesion requirement must be formalized by opening a digital process on the Virtual Service Center Portal - e-CAC. The adhesion period begins on April 1, 2024and ends on July 31.