In addition to the creation of the Program to Reduce Tax Litigation (“PRORELIT”), Provisional Measure No. 685/2015, published on July 22nd, 2015, established a new tax obligation consisting of filing, by September 30th in each calendar year, a return indicating the operations that occurred in the previous calendar year that resulted in the suppression, decrease or deferment of taxes, whenever:
- the acts or transactions in question do not have a significant non-tax purpose;
- the form adopted is not usual, or uses indirect acts or contains clauses that change the nature - in whole or in part - of the effects of a typical contract;
- the acts or transactions are contained in the specific list to be published by the Brazilian Federal Revenue Office.
A return indicating acts and transactions that have not occurred yet will be deemed a tax law query. If the Brazilian Federal Revenue does not agree with the position adopted by the taxpayer, the taxpayer will be notified to pay the entire amount of taxes due in cash or in installments plus interest for the late payment within 30 days.
A return will be considered ineffective if it:
- is not filed by the taxpayer responsible for the respective tax obligations resulting from the transactions, if any;
- does not provide information that is essential for the understanding of the transaction;
- contains a false declaration or misrepresentation; and
- involves the fraudulent inclusion of an intermediary.
Failure by a taxpayer to file the return characterizes malicious omission for the purpose of evasion or fraud and the taxes due will be charged with default interest and a penalty of 150%.