R. José Peroba, 123 - Stiep - Salvador - BA, 41770-235, Brasil

Alameda Salvador, nº 1057
Ed. Salvador Shopping Business
Torre Europa, sala 2206
Caminho das Árvores - Salvador - BA
CEP 41820-790
Phone: 71 3646.5000
Fax: 71 3192.5050


The imminent risk of termination of instalments settled in advance based on law 13,043/14

In November 2014, Law 13,043/14 was published as a result of conversion of Provisional Measure (MP) # 651/14, that through its Article 33, granted to taxpayers the right to proceed with the early settlement of the instalments that contained debts due until 12.31.2013, using their own credit or using it from controlled or under common direct or indirect control), from tax losses and negative calculation basis of social contribution (CSLL), calculated until December 31st, 2013 and filed until June 30th, 2014; option that should be formalized by proper application/request and conditioned to the early payment in cash of 30% (thirty percent) from the balance of each modality of the instalment and the full settlement of the remaining balance.

In this legal context, numerous taxpayers liquidated the instalments to which they have joined over the last few years, especially what was conceded by Law 11,941/09 and its reopenings, through the so-called Early Discharge Application (RQA) created by Ordinance PGFN/RFB # 15/2014, which regulates this law.

The general expectation was that, as long as those requirements were not analysed by the tax authorities, the enforceability of due instalments would  remain under suspension, as determined in the Article 33, paragraph 6 of Law 13,043/14 and Article 4, paragraph 6 of the mentioned Ordinance.

Unpredictably, for the companies that have opted for early discharge of debts in instalments, their Tax Status Statements - relating pendency with the Federal Revenue of Brazil and the National Treasury Attorney – began to cite the existence of overdue portions of instalments already settled.

This occurred in late December, when the first instalment of debt expired after early discharge once settled and was repeated in January and February, when the statements already indicated, respectively, two and three instalments in arrears.
As the delay of three consecutive instalments sets grounds for termination of instalment program established by Law 11,941/09, the Federal Revenue of Brazil at the beginning of March issued electronic notices to taxpayers who liquidated their instalments in advance, warning them about the risk of imminent termination.

Certain that this all was nothing but a mere misunderstanding due to failure in the Treasury system, companies rushed to the Federal Revenue Service of Brazil in order to void the said notifications and avoid the adverse effects of termination of instalments which joined the past.

However, there is no a uniformity of treatment on these cases by the Federal Revenue of Brazil in different jurisdictions.

While some Departments are seeking administrative solution to the issue, ensuring that taxpayers will not be harmed by the failure in their internal system, others merely claim that lack the means to provide for the cancellation of the electronic notifications, recognizing the possibility that early settled instalments may be effectively terminated.

So while it may seem absurd, some taxpayers have to turn to the courts to seek the enforcement of Law 13,043/2014 with regard to the suspension of the liability  of all parcels relating to the instalment settled in the provided standards, and avoid its termination thereof.

After all, it is not recommendable to pay to see if, in late March, when thirty days from the expiration of the third “open” instalment is completed and if it sets the default pursuant to §§ 13 and 14 of Article 1 of Law 11,941/09, and the termination will actually happen.

Karina Gomes Andrade 
Lawyer and tax consultant in Salvador / BA; member of Mota Fonseca e Advogados (law firm).

Phone: 55 71 3646-5000
Fax: 55 71 3192-5050