On 09/20/2023, the Brazilian president sanctioned the Legislative Bill No. 2.384-A/23 (“CARF Legislative Bill”), givingrise to Law No. 14,689/2023, published in the Federal Official Gazette on 09/21/2023.
As a result, there will be the reinstatement of the casting vote in the event of a tie in CARF´s trials, as well as significant changes to the Tax Administrative Process.
In cases judged in favor of the federal government by a casting vote, the approved text provides for the exclusion of penalties and fiscal representation for criminal purposes, in addition to the following possibilities:
- If the taxpayer expresses an interest in making the payment within 90 days:
- Payment of the principal, without penalties and default interest;
- Use of tax losses, negative CSLL calculation basis, and writ of payment (“precatório”);
- Payment in up to 12 installments;
- Guarantee of a Tax Clearance Certificate;
- If the taxpayer decides to continue challenging the tax being charged:
- At the judicial level, with only the updated principal entered into overdue tax liability without penalties and duties; or
- Proposing a specific transaction before the Office of Attorney-General of the National Treasury (“PGFN”).
The law also implements:
- New provisions on the application of tax penalties, reducing the aggravated penalty (“multa qualificada”) from 150% to 100%;
- Tax compliance measures aimed at self-regularization; and
- Changes to the tax transaction by adhesion in tax litigation, increasing the maximum term for payment of debts and the number of installments available to taxpayers.
The text sanctioned by the president had 15 points vetoed from the original CARF Legislative Bill that had been approved by the National Congress. These include:
- Provisions that set forth changes to the Tax Foreclosure Law, excluding changes to the conditions for guaranteeing debts at judicial level, such as:
- the possibility of early settlement of guarantees;
- insurance and bank guarantees with the same effect as a seizure;
- the taxpayer's right, if the judge ruled in their favor to be fully reimbursed for the costs incurred in offering, contracting and maintaining the guarantee; and
- stipulation that the guarantee only cover the updated principal of the debt, not including interest and penalties.
- Sections that set forth a reduction in the percentage of the ex-officio penalty and the late payment penalty;
- Prohibition of early settlement of the guarantee insurance; and
- Provision for disputes involving debates between the tax or customs authority and the regulatory body to be submitted to the Federal Mediation and Conciliation Chamber (CCAF).