Brazilian Federal Revenue Creates Special Voluntary Tax Disclosure Program

On November 30, 2023, Law nº 14.740 (resulting from Bill of Law nº 4.287/23) was published, introducing a special program to incentivize voluntary disclosure of federal tax liabilities. The special program has more lenient terms than those of the existing, standard rules for voluntary disclosure in Brazilian tax law (article 138 of Brazilian Tax Code).

Ordinarily, a taxpayer can avoid incurring penalty fines by voluntarily reporting and paying in full (in cash) tax and interest if the taxpayer takes these actions before a tax audit begins.

The new, special program allows the taxpayer to a) take these actions even during a tax audit, b) apply tax credits already formalized in tax assessments, c) receive full relief from accrued interest and penalties fines, d) pay using a mid-term installment plan, and e) offset payments with federal tax losses credits and government court-ordered credits (further details below).

Scope:
i) Undeclared tax credits, irrespective of any ongoing tax audit;
ii) Registered tax credits , even if the object of tax assessments, tax notices and overruling offsetting administrative decisions.

Not in Scope: Debts derived from the SIMPLES program do not qualify.

Benefits: Full relief from:

• Late payment and ex-officio fines
• Accrued interest

…under the condition that at least 50% of the total debt is settled upfront and the remaining paid in up to 48 monthly installments.

Use of credits: The upfront settlement can be offset by federal tax loss credits and government court-ordered credits. However, this is limited to 50% of the total debt amount and subject to other limits, specific rules, and Brazilian IRS analysis.

Deadline for adhesion: 90 days as from Law No.14.740/23 regulation.

Certificate guarantee: During settlement, tax clearance certificate is guaranteed.

Non-taxation of relieved fines and interest: The fines and interest amounts relieved will not be taxed by IRPJ, CSLL, PIS and COFINS.

We will monitor the Law No. 14.740/23 regulation and inform you of any developments .

Please reach out to us with any questions.