Ângelo Ambrizzi
Lawyer at Marcos Martins Law Firm
In an effort to minimize the economic impact (Covid-19) on companies and, consequently, maintain jobs, the Federal Government has announced a series of tax and economic measures that may be essential at this time
In general, all of them are aimed at easing the burden of taxes on businesses, which can use this money to pay salaries and help their businesses survive I have listed eight important measures that can be useful in making strategic decisions for your company
1 Guarantee fund – FGTS (Fundo de Garantia do Tempo de Serviço) payments were suspended in March, April and May This measure can be adopted by all companies, regardless of their number of employees, tax regime, previous membership and branch of economic activity Payments can be made in up to six installments from July onwards Note that the company is not exempt from paying the tax, but having cash on hand can help it stay afloat
2 Suspension of protests – In São Paulo, protests of tax debts, such as IPVA and ICMS, have been suspended for 90 days The idea is for companies to reallocate the amount that would have been spent on taxes to cover other essential expenses
3 Extension of Debt Clearance Certificates – The Federal Revenue Service and the Attorney General’s Office have extended the validity of Debt Clearance Certificates (CND) and Positive Credits with a Negative Effect (CPEN), which indicate that companies have outstanding tax payments with the Federal Government, for 90 days.
4 Suspension of procedural acts and administrative procedures – The measure taken by the IRS suspends the exclusion of a taxpayer from an installment plan due to non-payment of installments, as well as the automatic electronic issuance of collection notices and summonses to pay taxes, among other acts
5 IPI and Import Tax exemption for some products – Products that will be used to combat Covid-19, such as masks, alcohol gel, disinfectants and protective clothing and accessories, have had their Industrialized Products Tax rate reduced to zero until September this year This is a way of ensuring that these materials remain on the market and fighting the spread of the virus The import tax for some medical and hospital products has also been zeroed until September 30
6 Simples Nacional: Extension of deadlines – Companies making up to R$ 4.8 million a year can opt for Simples Nacional They represent around half of all Brazilian businesses For them, the deadlines for both payment and compliance with the accessory declarations for the months of March, April and May have been extended by 90 days It is important to note that the deadline extension only covers federal taxes, while state and municipal taxes are still due, except in places where specific legislation has been enacted exempting them from payment.
7 Deferral of payment of PIS, Cofins and employer’s social security contributions– Similar to the proposal to suspend payment of FGTS, this measure allows companies to pay PIS, Cofins and employer’s social security contributions for April and May only in August and October.
8 New line of loans – This is perhaps one of the most positive measures for entrepreneurs An emergency line of credit for companies with a turnover of between R$300,000.00 (three hundred thousand reais) and R$10,000,000.00 (ten million reais) will help them pay their employees’ salaries for a period of two months With an interest rate below the market rate of 3.75% per year, a six-month grace period and the possibility of paying off the debt in up to 36 installments, it is expected that more than 1.4 million companies will benefit
The Brazilian government’s efforts to help companies at this time should be recognized However, an important point to note is that as well as seeking to join these plans, businesses must protect themselves legally Over the next few months, it is possible that there will be an increase in labor claims, from suppliers and consumers who feel they have been harmed in some way
Therefore, the recommendation now is to maintain communication with employees, clients and suppliers, being clear and transparent about the possibilities of delays and breach of contracts Another important factor is to document all strategic decision-making, whether by email, meeting minutes or spreadsheets The purpose of the company having a record of the grounds for the decisions taken is to prove good faith in the relationships established
At this time, it is important to seek dialogue and try to find effective solutions outside the judicial system, either by using specialized professionals or even mediation and arbitration, when possible
This is not an easy time and requires quick and assertive solutions from entrepreneurs Sensitized to the moment and fulfilling our social function, we at Marcos Martins Advogados have created the Crisis Management Committee, whose aim is to provide technical support and guidance to companies, helping them to make strategic decisions, without charging any fees
Demand has been high and the responses positive Most of the questions put to the committee are related to various areas: a) the tax area, whose most recurrent themes are: deferred payment, tax benefits, installment payments and CND; b) in the labor and social security area we are asked about: rules for home office and vacations; c) contractual: review of contracts and implications in the event of contract discontinuity; as well as issues involving the financial area, such as cash management. Based on the information the company provides, we share possible solutions and carry out simulations of the cash flow impacts they may have depending on the scenario, from the most optimistic to the most pessimistic
The best advice is that the entrepreneur cannot remain inert They need to take action and seek accurate and quick information in order to make assertive and strategic decisions The legal and financial conditions are already in place to take this first step It’s the decisions made today that will have an impact in the short, medium and long term The challenge is great, but we believe that by planning and carrying out structured actions it will be possible to meet the challenges posed by the impact of the coronavirus on business
Ângelo Ambrizzi is a lawyer specializing in tax law and head of the tax department at Marcos Martins Advogados.
[rock-convert-pdf id=”14240″]
