Published in the Official Gazette (“DOU”) on June 22, 2022, Law No. 14,375/2022 emanates from the enactment of Provisional Measure No. 1,090/2021, which, among other changes, amended Law No. 13,988/2020 to improve debts settlement mechanisms.
Notably, Law No. 14,375/2022:
- Applies to tax credits charged by the Brazilian Internal Revenue Service (“Brazilian IRS”), regardless of whether they are being discussed in court or not.
- Enables the settlement of tax credits in tax administrative litigation, which may be proposed by the Brazilian IRS, individually or by adhesion, or at the initiative of the debtor. (This had been restricted to credits charged by the Federal Attorney General's Office included as enrolled into federal overdue tax liability.)
- Allows the settlement to grant discounts on penalties, interest and legal charges related to credits that are classified as irrecoverable or difficult to recover and according to criteria established by the competent authority.
- Enables the use of Net Operating Losses (NOLs), in the calculation of IRPJ and CSLL, up to a limit of 70% of the remaining balance after any discounts.
- Enables the use of certificates of government judgment debt or credit rights with a final and unappealable judicial decision for amortization of the principal amount, penalty and interest of the tax debt.
Law No. 14,735/2022 also prohibits settlements that (i) apply a reduction of more than 65% of the total value of the credits to be settled (before it was 50%); (ii) grant a term for settlement of credits exceeding 120 months (previously, it was 84 months); and (iii) involve credits not registered as federal overdue tax liabilities, except credits charged by the Federal Attorney General's Office or under discussion in tax administrative litigation.
Finally, the new law establishes that discounts granted in the event of a transaction will not be computed in the calculation basis of: (i) IRPJ; (ii) CSLL; (iii) PIS and COFINS.