Brazilian IRS and PGFN Issue Public Notice for Transaction to Pay Tax Debts Arising from Goodwill Tax Amortization

On May 3, 2022, Public Notice No. 09/2022 was published in the Federal Official Gazette to authorize the transaction involving tax debts related to the goodwill tax amortization arising from the acquisition of equity interests in the legal regime framework prior to Law No. 12,973/2014 and being challenged in lawsuits or administrative proceedings.

This applies to tax debts regardless of whether they are enrolled as federal overdue tax liability and that are the object of administrative or judicial proceedings and whose dispute is related to:

i. The tax use of goodwill amortization expenses:

• • • arising from the acquisition of equity interests;
    • limited to merger, consolidation and spin-offs that occurred no later than December 31, 2017; and
    • whose equity interest was acquired no later than December 31, 2014 (the period during which Articles 7 and 8 of Law No. 9,532/1997 were applicable, in accordance with the provisions of Article 65 of Law No. 12,973/2014); or

ii. The addition of goodwill amortization expenses in the accrual of the CSLL calculation basis.

The public notice states that the taxpayer must pay:

• Up-front 5% of the total amount of the debt, with no discount allowed, and
• The remaining balance in up to 5 installments and within up to 55 months, with a discount allowed depending on when the debt is paid off

The application to participate in this payment program must be submitted on or before July 29, 2022, and participation implies the withdrawal of administrative defenses and appeals filed by the taxpayer in relation to these debts, as well as the waiver of legal claims. Any existing deposits related to these debts will be automatically converted into federal government income.

For further information, please contact our Tax team.