Brazil has just approved Law 14,689/23, thus guaranteeing that the representative of the National Treasury (Fazenda Nacional) has the casting vote in the Administrative Council of Tax Appeals (Conselho Administrativo de Recursos Fiscais/Carf), responsible for judging tax issues at the federal administrative level. The text will now be submitted to the National Congress (Congresso Nacional) so that vetoes may be considered.
The casting vote, as approved, allows a tie-breaker in favor of the Tax Authority in administrative judgments.
However, despite the reestablishment of the casting vote in favor of the Tax Authority, the new law provides for a series of benefits in cases of a tie, as highlighted below:
CHANGES IN THE COLLECTION OF TAX CREDIT IN THE HYPOTHESIS OF A JUDGMENT THAT IS FAVORABLE TO THE PUBLIC TREASURY THROUGH THE QUALITY VOTE:
- Cancellation of fines and tax representation for criminal purposes. If there is no payment, debts will be registered as active debts with no fines or charges;
- Exclusion of late payment interest, if the taxpayer expresses interest in paying the debt within 90 (ninety) days. If payment is not made, interest will be resumed.
- Possibility of paying the debt in up to 12 months, covering the main value of the credit, with exclusion of late payment interest if adherence occurs within 90 days;
- Admitted use of tax loss credits and the negative CSLL calculation basis owned by the taxpayer or companies that make up the economic group, and/or use of court orders;
- Credits included in active debt may be the subject of a proposal for a specific tax transaction agreement;
- Taxpayers with (proven) payment capacity will be exempt from presenting a guarantee for legal discussion of credits. Enforcement of the guarantee will not be permitted until final judgment has been reached.
OTHER CHANGES IN ADMINISTRATIVE TAX LITIGATION LEGISLATION:
- Oral defense also within the scope of the Federal Revenue Judgment Offices is guaranteed;
- Qualified fines are 100%, as a rule, and 150% in cases of repeat offense;
- In transactions involving adherence to litigation, reductions are limited to a 65% discount, with a maximum period of 120 months for settlement. In the event of a transaction involving an individual, micro-company or EPP, the maximum reduction is up to 70%, with a term of up to 145 months;
- Establishment of criteria to encourage tax compliance, expanding the possibility of self-regularization for good taxpayers.