Trust Bloomberg Tax's Premier International Tax offering for the news and guidance to navigate the complex tax treaty networks and business regulations.
By Ed Taylor
The Brazilian government has issued a decree establishing a Tax Regularization Program to entice companies to pay their tax debts.
Under the decree, issued Jan. 5 and first announced Dec. 15, companies will be offered favorable terms to pay accumulated tax debts existing as of Nov. 30. They will be allowed to write off part of their taxes using financial losses reported as of Dec. 31, 2015, and declared by June 30, 2016.
Companies with credits resulting from financial losses can use these credits to write off up to 80 percent of their outstanding tax debts, with the remaining 20 percent to be covered by an initial cash payment. Companies could also opt for a cash payment of 24 percent over a two-year period, with the remainder of the debt written off using credits.
Companies without credits from financial losses could join the program with an initial 20 percent cash payment. The remainder would be paid over 96 months, corrected by Brazil’s base interest rate which now stands at 13.75 percent a year.
Within the next month, the government will issue an application form for companies who will then have four months to sign up for the program. They will be required to list all of their existing tax debts and must agree to drop current appeals of these debts.
The program also permits companies to use any current tax credits to write off social security debts, something not allowed at present. Another attractive element of the program is that business groups can use the financial losses of one unit to write off taxes owed by the entire group.
Finance Minister Henrique Meirelles predicted the program will produce R$10 billion ($3.1 billion) in extra tax payments for 2017. He added that the main target of the program will be companies with large tax debts
The decree creating the program, Provisional Measure 766, must be approved by congress within 120 days or it will lose its validity. Congress could also alter aspects of the program by changing the decree.
To contact the reporter on this story: Ed Taylor in Rio de Janeiro at firstname.lastname@example.org
To contact the editor responsible for this story: Penny Sukhraj at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)