Recently, the Federal Attorney General’s Office (AGU) revealed that tax settlements were the mechanism that allowed it to recover almost 43% of the amounts negotiated by the National Treasury Attorney General’s Office (PGFN) in 2023. They amounted to R$20.7 billion of the R$48.3 billion raised by the government agency. This amount is 46.8% higher than the previous year, which was R$14.1 billion.
In one transaction alone, made by a business group in the cement sector in August last year, R$11 billion was settled, of which R$270 million referred to credits from the Severance Indemnity Fund (FGTS).
A few weeks ago, it was Petrobras’ turn to reach an agreement for the payment of R$19.8 billion to put an end to the state-owned company’s disputes over remittances abroad to pay for chartering oil exploration vessels. The Tax Appeals Administration Board (Carf) unanimously approved Petrobras’ adherence to the PGFN-RFB 6/2024 Federal Revenue Service Settlement Notice.
Tax settlements have been consolidated as the most effective way of recovering amounts without litigation, relieving the various judicial instances.
It is an important tool for companies, which are able to regularize their situation and continue operating, while also keeping their employees’ jobs. For the government, it becomes an important source of revenue, recovering part of debts previously considered “unpayable”. The idea is that the tax transaction will also contribute to achieving fiscal balance, without the need to create new taxes.
Created by Provisional Measure 889/2019 and later converted into Law 13,988/2020, the tax transaction is conceptually an agreement of will between the parties involved, based on mutual concessions.
Unlike installment payment programs, which are adhesion contracts with fixed rules, the tax transaction allows, for example, the installments of a transaction to be different and the company to adjust its payments according to its financial reality, starting with smaller amounts and gradually increasing. In addition, the discounts granted are proportional to the company’s ability to pay, assessed on the basis of turnover and profitability.
The tax transaction offers numerous advantages over traditional methods of settling debts, such as incentive installments. It allows companies to offer customized payment plans, with discounts that can vary significantly depending on each company’s specific financial situation.
An attorney has the flexibility to grant variable discounts, depending on the legislation, with the possibility of adjustments according to the company’s payment ranking and classification.
The introduction of this mechanism has brought a real revolution to the Brazilian tax market. Before its regulation, prosecutors were obliged to rigidly follow the legislation. With the transaction, it became possible to adapt agreements to the specific needs of each taxpayer, offering more customized payment options.
There are various types of tax settlements, from those that are closer to an agreement by adhesion to exceptional and individual settlements, in which the company presents a specific proposal to the Public Prosecutor’s Office in order to settle its debt in time.
In the case of companies with lawsuits recognizing tax credits against the tax authorities, for example, future receivables can be used to amortize the tax debts to be negotiated. Companies in judicial reorganization can also negotiate the use of future assets to pay off debts, avoiding the dilapidation of assets.
Those who opt for this method, however, must be aware of the seriousness of the commitment, as non-payment can result in severe consequences, including bankruptcy requested by the attorney general’s office.
The tax transaction, although still relatively new, has shown its potential by providing a more dynamic and adaptable environment for resolving tax debts.
Since its implementation in 2020, it has established itself as a powerful tool for tax administration in Brazil. It offers unprecedented flexibility, enabling companies and the government to reach fairer and more effective agreements. With the continuation of this model, it is hoped that more companies will be able to regularize their tax situations in a sustainable and efficient manner.
