Revenue launches new phase of Zero Litigation from April 1st

From April 1st, taxpayers who owe up to R$50 million to the Federal Revenue Service will be able to participate in a new phase of the Zero Litigation Program. Requests for repayment can be made until July 31st.

According to the Federal Revenue, the new tax transaction covers debts of both individuals and legal entities in the administrative contestation phase. In exchange for renegotiation, the taxpayer must give up questioning the charge.

“Let’s resolve the past, do this DR [discussão de relacionamento] between us, the Tax Authorities and the taxpayer, so that from now on we can have a more harmonious relationship, without litigation, with more love”, said the Secretary of the Federal Revenue, Robinson Barreirinhas. He highlighted that the Tax Authorities are changing their stance to encourage agreements with debtors and recover part of the amount owed, instead of just punishing large debtors.

Discounts vary depending on the degree of credit recovery. For debts classified as irrecoverable or difficult to recover, there will be a discount of up to 100% of the value of interest, fines and legal charges, subject to a limit of up to 65% of the total debt amount. In this case, the taxpayer will pay a deposit of 10% of the consolidated value of the debt, after discounts, divided into five installments, and the outstanding balance in up to 115 installments.

If the taxpayer uses losses from previous years of Income Tax and Social Contribution on Net Profit to reduce the payment of the debt, they must pay 10% of the outstanding balance in up to five installments. Tax credits from losses calculated up to December 31, 2023 will be used in the deduction, up to a limit of 70% of the value of the debt after entry. The residual balance will be divided into up to 36 installments.

In the case of debts considered to have a medium or high chance of recovery, the debtor must make a deposit of 30% of the consolidated value in up to five installments and use losses from previous years until December 31, 2023 to pay up to 70% of the debt value later of the entrance. The remaining balance will be paid in up to 36 installments. Another option will be to pay 30% of the consolidated value of the debt in up to five installments and divide the remainder over up to 115 months.

>> For debts of up to 60 minimum wages, debts of individuals, micro-enterprises or small companies may be renegotiated with a down payment of 5% of the consolidated value in up to five installments. The remainder can be paid in installments using the following options:

• in up to 12 months, with a 50% reduction in debt, including the principal amount of the credit;

• in up to 24 months, with a 40% reduction, including the main amount of the credit;

• in up to 36 months, with a reduction of 35%, including the main amount of the credit;

• in up to 55 months, with a 30% reduction, including the principal amount of the credit.

Individual transactions

The model for the new phase of Zero Litigation concerns the adhesion transaction, in which the Federal Revenue Service defines the rules through a notice. When announcing the new stage of the program, Barreirinhas presented statistics on individual transactions, through which large companies approach the Federal Revenue Service to repay their debts. In this case, renegotiations occur on a case-by-case basis, with the Tax Authorities establishing governance clauses to provide more transparency in the payment of taxes by companies.

Of 180 renegotiation requests received since the beginning of the year, the Tax Authorities closed 11 individual tax transaction agreements that resulted in the regularization of R$5.2 billion in debts. Of this total, around R$3 billion was regularized only through two agreements between large companies concluded in recent days.

Of the R$5.2 billion, however, only R$376.2 million will be paid in cash over the next ten years, with R$45.3 million entering the government’s cash flow in 2024. Barreirinhas informed that, of the original value of the debt, the IRS granted R$2.1 billion in discounts on fines, interest and charges and allowed the use of R$834.4 million in losses from previous years.

“The amount to be recovered in cash seems small compared to the total value of the debt, but we are talking about irrecoverable credits or credits that are difficult to recover”, explained the Undersecretary of Collection and Service at the Federal Revenue, Mário Dehon. “We are bringing taxpayers who were outside the production process back to life from purgatory. These are companies that will be able to produce and do business again,” he added.