The economic and fiscal situation of the Brazilian federal entities, already deteriorated due to the economic recession and the financial crisis of recent years, has worsened significantly due to the COVID-19 pandemic, implying increased difficulties in maintaining a financially balanced public budget and in meeting the fiscal targets established in the budget laws already approved.
In this scenario, the already recurring default by the States in the payment of their debts, especially those resulting from final court orders, through the tortuous path of precatórios, tends to increase substantially.
Aware of such facts, the Court of Justice of the State of Rio Grande do Sul has recently heeded the plea of a taxpayer to authorize the matching of accounts between its debts - due and falling due - with credits from precatórios, based on the authorization of the constitutional text itself, i.e., without the need for the enactment of a law by the debtor entity.
This decision represents an alternative for the reduction of tax liabilities of companies that are facing cash flow difficulties, while it also solves the problem of the States paying their debts.
For further information, please contact the Tax Litigation team of our office([email protected]).
