Alana Dahrouj and Bárbara de Alcântara Mattos
Lawyers at Marcos Martins Advogados
Ordinance No. 742 of 2018 of the Attorney General’s Office of the National Treasury – PGFN regulated the possibility of entering into a Procedural Legal Business (NJP) between the Tax Authorities and Taxpayers, involving federal debts registered as active debt.
In practice, little is said about this Ordinance, but we see the Procedural Legal Business as an excellent opportunity to establish a business relationship with the Federal Tax Authorities.
It is possible for the parties involved to make proposals along the lines of the Ordinance in order to reach a compromise that balances the prospect of payment with the company’s cash flow.
There are a number of options for concluding the Procedural Legal Agreement, and it is up to the parties involved to establish which options to use and the timeline for fulfilling each one. The possibilities have the following configurations:
(i) the scheduling of Tax Enforcement for cases in which the debt is already under judicial collection. This modality allows the Public Prosecutor’s Office and the taxpayer to negotiate the time or date for carrying out procedural acts, such as offering assets, or granting a deadline for payment of the debt by designating an auction;
(ii) a tax debt amortization plan, which consists of drawing up a structured plan for paying the debt, allowing the taxpayer to make a kind of installment payment without the need to adhere to the existing rules. The amortization plan makes it easier to settle the amount owed, as it takes into account the company’s financial aspects;
(iii) the acceptance, assessment, replacement and release of guarantees. This possibility of negotiating directly with the Public Prosecutor’s Office regarding guarantees brings greater freedom and ease for the taxpayer;
(iv) the method of seizing or disposing of assets, which allows the taxpayer to negotiate the seizure of a particular asset, indicating which assets are available for seizure and which they would not like to be seized.
Objectively, the possibility of negotiating directly with the Public Prosecutor’s Office draws a lot of attention, as these are hypotheses that bring legal certainty to the creditor and the possibility of payment by the company. By way of example, we can list the possibility of disposing of assets by means of prior authorization (agreement with the Public Prosecutor’s Office), without the risk of future allegations of fraud.
It is undeniable that the Procedural Legal Agreement is an excellent opportunity for companies to negotiate how to pay their debts to the Public Prosecutor’s Office, above all because of the opportunity to adjust the company’s cash flow to meet the creditor’s expectations.
The tax team at Marcos Martins Advogados has extensive experience in strategic analysis and planning to adapt the payment of tax debts to the cash flow of companies, and is available to any interested parties to answer questions about this important opportunity.
