After a month of discussions, the Minister of Finance, Fernando Haddad, and the Brazilian Bar Association (OAB) closed today (14) an agreement on the provisional measure with the changes in the Administrative Council of Tax Appeals (Carf). The minister accepted the proposal forwarded by the entity to exempt from fines and interest the taxpayer (generally large companies) defeated by the government’s tie-breaking vote in the organ’s judgments.
The agreement was closed in a meeting between Haddad and the president of the federal OAB, José Alberto Simonetti. Around 5 pm, the two took the proposal to Minister Dias Toffoli, of the Federal Supreme Court (STF), rapporteur for the action of the OAB that questions the return of the government’s casting vote in Carf, the Federal Revenue agency that judges tax debts in administrative sphere.
Last month, Haddad announced the resumption of the government’s casting vote in CARF, as part of the fiscal package that intends to reduce the deficit in public Accounts to up to R$ 100 billion this year. Until 2020, the government had tie-breaking power in CARF trials, a possibility that was lost after the approval of a provisional measure.
To reverse the situation, the government edited another provisional measure in January reestablishing the casting vote in Carf, with the expectation of boosting collections by up to R$ 70 billion in 2023 (R$ 20 billion as extraordinary revenue for this year and R$ $50 billion a year in permanent revenue going forward). Parties and public entities are contesting the change in the STF.
The resumption of the casting vote reaches 100 to 200 taxpayers, all large companies. Under the agreement closed today, the defeated companies would be exempt from the fine, paying only the principal debt and interest. If the company pays the debt within 90 days, the interest will also be cancelled.
The main debt can be divided into up to 12 installments, with companies deducting losses from previous years, through Social Contribution on Net Income (CSLL) and Corporate Income Tax (IRPJ) credits. If the taxpayer resorts to Justice, the collection of fines and interest returns.
Impact
After meeting with Dias Toffoli, Haddad returned to the Ministry of Finance and left again to meet Justice Ricardo Lewandowski at the STF. In an interview at the ministry’s entrance, Haddad stated that he hopes that the agreement will allow the Union to raise up to R$ 50 billion this year.
The minister recognized criticism from Federal Revenue auditors that the agreement would mean a benefit to taxpayers who did not pay on time. However, he said that this was the best thing to do at the moment to correct distortions in the Carf and recover the government’s cash. “The criticism is valid, but I have to reverse a situation that I did not create or this government,” he declared. “We were going to lose everything. A draw eliminated the debt.”
Haddad did not estimate how much the government would lose in revenue without the fine and interest, but said he believes it is possible that the provisional measure after the agreement with the OAB will result in a collection of R$ 50 billion. “I think it is possible to target this value [de R$ 50 bilhões]. It was said that it might have a fall, and there was skepticism about this initiative. I think that, with this agreement, skepticism will give way to good expectations”, he highlighted. The minister informed that only one state-owned company has a dispute of R$ 100 billion in Carf, but did not specify the company.
