As of February 24, 2022, sole-professional entities headquartered in the City of São Paulo will be subject to the Tax on Services (ISS) payment based on a new progressive calculation system, which should result in a significant increase in the tax due.

Concept of Sole-professional Entity:

The change in the ISS collection system is foreseen in Law No. 17,719/2021, which framed as sole-professional entities “those whose professionals (partners, employees or not) are qualified to exercise the same activity and provide services in a personal manner, on behalf of the entity, assuming personal responsibility”. Among others, entities composed exclusively of doctors, lawyers, psychologists, engineers, economists and accountants fit this definition.

What changes:

The ISS will no longer be due based on a fixed amount and will now be ascertained based on the monthly presumed gross revenue (RBP) ranges of the entity, according to the number of professionals acting in it, as shown below:

  1. RBP: R$ 1,995.26 multiplied by the number of qualified professionals, up to the limit of 5;
  2. RBP: R$ 5.000,00 multiplied by the number of licensed professionals, for the number of professionals exceeding 5 to 10;
  3. RBP: R$ 10.000,00 multiplied by the number of qualified professionals, for the number of professionals that exceed 10 to 20;
  4. RBP: R$ 20.000,00 multiplied by the number of qualified professionals, for the number of professionals that exceed 20 to 30;
  5. RFB: R$ 30.000,00 multiplied by the number of accredited professionals, for the number of professionals that exceed 30 to 50;
  6. RFB: R$ 40,000.00 multiplied by the number of professionals qualified, for the number of professionals exceeding 50 to 100;
  7. RBP: R$ 60,000.00 multiplied by the number of qualified professionals, for the number of professionals exceeding 100.

Vices of Unconstitutionality:

The progressivity of the ISS, based on the presumption of the monthly revenue of the uniprofessional entity, may be subject to challenges, notably for its potential affront to the constitutional principles of non-confiscation, isonomy, legal reserve, contributive capacity and reasonability, in addition to violation of articles 146, III, a, and 150, II and IV, of the Federal Constitution and article 9, paragraphs 1 and 3 of DL No. 406/1968.

On the matter, the Plenary of the Federal Supreme Court, in the judgment of RE 940.769, under the system of general repercussion, decided with binding effects for the “unconstitutionality of municipal law that establishes impediments to the submission of professional law firms to the system of fixed or per capita taxation on an annual basis in the manner established by decree-law 406/1968 (received by the Constitution of the Republic of 1988 with the status of national supplementary law)”.

The matter is already being discussed in the writ of mandamus filed jointly by the Brazilian Bar Association – São Paulo Section (OAB-SP), Center for Studies of Law Firms (CESA) and the Union of Law Firms of the States of São Paulo and Rio de Janeiro (Proc. 1005773-78.2022.8.26.0053).

The tax team of Fraga, Bekierman & Cristiano Advogados is available to clarify any doubts.

Through Decree 50.032/2021, the City of Rio de Janeiro established the requirements and conditions for the taxpayers to settle transaction resolutive of claim related to the collection of tax debts by the City Treasury, enrolled or not as an overdue tax.

The possibility of tax transactions at the Municipality of Rio de Janeiro was introduced by Law 7.000/2021, which changed several provisions of Law 691/1984 (Municipal Tax Code) and is regarded as small municipal tax reform. The transaction is a hypothesis of extinguishing tax debts, outlined in article 156, III of the National Tax Code. It consists of mutual concessions between the taxpayer and the treasury, aiming to regularize tax debts and stimulate the closing of tax disputes.

According to the Decree, the transaction can be individualized or by adhesion.

The individualized transaction can be proposed by the taxpayer, the Municipal Department of Finance and Planning (SMFP), or the City Attorney General’s Office (PGM). Excepted for some justified cases, such transaction modality will only be admitted in the hypotheses of: I – possible frustrated collection; II – difficulty on reverting judicial decision on the upper courts; III – legal entity debtor that had adjudication of bankruptcy or figures as part on judicial or extrajudicial recuperation, or extrajudicial liquidation; IV- need of isonomic treatment of taxpayers on the same factual or legal conditions; or V – facts that justify a potential revision of the tax debt.

The proposal of a transaction by adhesion will be published on official press and public entities websites, by a public edital that specifies, objectively, the factual and legal hypotheses in which SMFP or PGM proposes the transaction in the dispute. This transaction modality comprises dispute resolutions about the same matter, especially when linked to relevant and widespread legal controversy or initiatives aiming the streamlining, economic and efficiency in the taxes collection.

Under Law 7000/2021, the transaction may contemplate the following benefits: I- discounts on fines, default interest and legal charges related to debts to be transacted; II – special deadlines and payment methods, including deferrals and moratorium; III – offer, substitution or disposal of collaterals and judicial liens; IV- option of tax offsetting and payment in kind of immovable property. Among those benefits, the payment in kind of immovable property still awaits regulation.

Regarding the discounts, Decree 50.032/2021 provides:

  • 80% decrease on interest charges and fines, in case of cash payment;
  • 70% decrease on interest charges and fines, in case of payment in 6 installments;
  • 60% decrease on interest charges and fines, in case of payment in 12 installments;
  • 50% decrease on interest charges and fines, in case of payment in 18 installments;
  • 40% decrease on interest charges and fines, in case of payment in 24 installments;
  • 25% decrease on interest charges and fines, in case of payment in 48 installments.

The modalities of tax transaction do not apply to debts: I- due under the simplified tax system regime (Simples Nacional); II – included in Concilia Rio Program; III- benefited by Law 6.625/2019, which establishes remission and amnesty of tax debts related to public notary services; IV- the object of other alternative or adequate means of conflict resolution foreseen in the legislation.

Fraga, Bekierman & Cristiano Advogados‘ tax team is available to clarify any doubts on the matter.

Partner Lycia Braz Moreira will be one of the speakers at the Webinar Retention of Imported Goods: (i)legality, Precedent 323 and the Theme 1042 of the Brazilian Supreme Court, organized by the Brazilian Association of Customs Studies (ABEAD). The event will be broadcasted by Plataforma Zoom on December 15th, at 11am.

Registrations are free and can be made at this link.

The partner Lycia Braz Moreira will be one of the speakers at the Seminar Tributando com Elas III – Webinar: Tax Reform, organized by the Permanent Forum on Tax Law of the School of Magistrates of the State of Rio de Janeiro (EMERJ) and the Tax Debate Group (GDT-RIO). The Webinar will be broadcasted by Plataforma Zoom on August 27, from 6pm to 8pm.

Registration is free and can be made through the EMERJ website: www.emerj.tjrj.jus.br.

In case of maximum capacity of the Webinar, the signal transmission of the event will occur simultaneously on the EMERJ Events channel on YouTube. The Seminars Tributando com Elas stands out for having only female lecturers, representatives of the Judiciary, public advocacy and private advocacy.

 

On 07/21/2020, the Federal Government presented to the National Congress the proposal for the 1st phase of the tax reform elaborated by the Ministry of Economy. The proposal, filed asLegislative Bill no. 3887/2020, foresees the extinction of the Contribution to PIS / Pasep and the Contribution to the Financing of Social Security (Cofins), and institutes, in place, the Social Contribution on Operations with Goods and Services (CBS).

The CBS will levy on the gross revenue arising from operations with goods and services, as well as on amounts paid on imports of goods and services. Under the terms of the proposal, the incidence of CBS is restricted to operating revenue, removing the broad taxation on all business activity.

Other than the exceptions indicated in the proposal, the contribution will follow the non-cumulative system, making it possible for the taxpayer to appropriate credits and use them, at their face value, to deduct the amount of the contribution levied on the operations held in the same or subsequent periods. This format approximates CBS to the Value Added Tax (VAT) since the taxation only applies to the value added to the product or service.

Unlike other taxes that follow the non-cumulative system, the balance of accumulated credits of CBS existing at the end of each quarter may be subject to a request for reimbursement or offset with other taxes administered by the Brazilian Federal Revenue.

Another novelty of CBS is the possibility of appropriating credit in the acquisition of goods and services from legal entities opting for the Nacional Simplified Taxation regime, which shall highlight the value of CBS in the tax documents they issue, only to credit by the acquirer. Excluding some cases detailed in the project, taxpayers cannot appropriate credits related to acquisitions or sales not charged by CBS will be prohibited.

An interesting point of the proposal is the attribution of tax liability to digital platforms if the user selling legal entity does not issue an electronic tax document for registering the transaction. A controversial point is the attribution of joint liability to digital platforms domiciled abroad for the collection of the CBS levied on the import of goods, including accruals and applicable penalties, after simplified online registration with the Federal Revenue of Brazil.

The general rate of CBS on gross revenue and imports is 12% (twelve percent). Financial and similar institutions are subject to a differentiated rate of 5.8% (five integers and eighty-hundredths percent), with no possibility of appropriate credits. There are also specific rates for single-phase taxation.

The CBS assessment basis does not include “internal” charges, as the amounts of ICMS, ISS, and unconditional discounts highlighted in the invoices, as well as the CBS itself.

The Legislative Bill brings transition rules for the implementation of CBS and a 6 (six) months vacatio legis, which is indispensable for the proper adjustments of systems and procedures.

The other phases of the Tax Reform prepared by the Ministry of Economy involve (i) changes in the IRPJ and IRPF legislation, with a reduction in corporate taxation and establishment of dividend taxation, (ii) changes in the IPI legislation, for simplification and alignment with the Excise Tax (selective), and finally, (iii) reduction of the tax burden on the payroll.

The tax teams of Fraga, Bekierman & Cristiano Advogados are following the processing of PL 3887/2020, as well as other projects related to tax reform (PEC 45/2019 and PEC 110/2019) and available to answer any questions.

The Ordinance PGFN nº 14.402/2020, dated June 17th, 2020, rules on the new conditions for the adhesion to the new exceptional transaction program of the overdue federal liabilities, due to the effects of the pandemic caused by COVID-19.

The adhesion to the transaction will take place through the REGULARIZE portal, and the taxpayer must necessarily provide beforehand the following information, also via the portal:

      • full company’s address, name, CPF and complete address of current partners, directors, managers, and officers;
      • monthly gross revenue of the calendar years of 2019 and 2020, being, in the last case, up to the month immediately preceding the month in which the taxpayer provided the information necessary for the formulation, by the PGFN, of the adhesion transaction proposal;
      • the number of employees (formally linked) on the date of the provision of the information necessary for the formulation, by PGFN, of the proposal of adhesion transaction and on the immediately preceding months, starting in January 2020;
      • the number of monthly admissions and dismissals and suspended work contracts, based on Provisional Measure no. 936, of 2020, in the calendar year of 2020;
      • the total value of the assets, rights, and obligations of the legal entity existing on the month before the accession.

The modalities of this transaction are:

      • down payment corresponding to 4% (four percent) of the total amount of debts to be transacted, divided into up to 12 (twelve) equal and successive installments;
      • payment of the remaining debt balance in up to 72 (seventy-two) months, with discounts up to 100% on the amounts of fines, interest and charges, and respecting the limit of up to 50% of the total amount of the debt, for legal entities in general;
      • payment of the remaining debt balance in up to 133 (one hundred and thirty-three) months, with the possibility of discounts up to 100% on the amounts of fines, interest, and charges, respecting the limit of up to 70% of the total amount of the debt for individual taxpayers, individual entrepreneurs, micro-enterprises, small businesses, educational institutions, charity institutions, cooperatives and other civil society organizations covered by Law n. 13.019, of 2014.

The amount of each installment cannot be lower than R$ 100.00 (one hundred reais) when the transaction in 133 (one hundred and thirty-three) months is allowed, and R$ 500.00 (five hundred reais) in the other cases. Employees’ and employers’ social security contributions can only be paid in up to 48 (forty-eight) months.

The debts under litigation may also be subject to the transaction, provided that the debtor proves to have given up the related judicial lawsuits, defenses, or appeals, with a request for the extinction of the respective process with a resolution of its merit.

Overdue debts liabilities being paid in installments can also be included, provided that the taxpayer previously withdraws the installment plan.

The term for joining the exceptional transaction will be open between July 1st and December 31st, 2020.

The teams of Fraga, Bekierman & Cristiano Advogados are available to answer any questions about the legislation mentioned above and help with the procedures to adhesion.

The Ministry of Economy has extended the period of maturity of the monthly installments related to the programs administered by the Brazilian Federal Revenue Office (RFB) and the Office of the Attorney General of the National Treasury (PGFN).

According to Ordinance No. 201, of May 11, 2020, the maturities of the installments originally due in May, June and July of 2020 were extended to the last business day of August, October and December of 2020, respectively.

With the subsequent edition of the Resolution CGSN No. 155, of May 15, 2020, extension of the deadline also apply to the installments within the scope of Simples Nacional.

Our teams from offices in Rio de Janeiro and São Paulo are available to answer any questions about the measures described above.

The Ordinance no 9,924/2020, dated April 16th, 2020, rules on the new conditions for the extraordinary transaction program of the overdue federal liabilities, due to the effects of the pandemic caused by COVID-19.

The adhesion to the transaction will take place through the REGULARIZE portal and will involve:

      • the down payment corresponding to 1% (one percent) of the total amount of debts to be transacted, divided into up to 3 (three) equal and successive installments;
      • payment of the remaining debt balance in up to 81 (eighty-one) months, or up to 142 (one hundred and forty-two) months in the case of individual taxpayers, individual entrepreneurs, micro-enterprises, small businesses, educational institutions, charity institutions, cooperative societies and other civil society organizations covered by Law n. 13,019/2014.

The installment cannot be inferior than R$ 100.00 (one hundred reais) when the transaction is allowed in 142 (one hundred and forty-two) months, and R$ 500.00 (five hundred reais) in the other cases. Employee and employer social security contributions can only be paid in up to 57 (fifty-seven) months.

The debts under litigation may also be the subject to the transaction, provided that the debtor proves to have given up the judicial lawsuits, defenses or appeals related to the credits transacted, with a request for the extinction of the respective process with resolution of its merit.

If the taxpayer who intends to adhere to the proposal has any debt with a previous installment plan terminated, the entry will be increased to 2% (two percent) of the consolidated value of the debts object of the transaction.

The deadline for adhesion to the extraordinary transaction will remain open until June 30, 2020.

The teams of Fraga, Bekierman & Cristiano Advogados are available to answer any questions about the legislation mentioned above.

Law n. 13,988/2020, dated April 14, 2020, brought up rules for the tax transaction between the Federal Government and taxpayers but, in one of its final articles, extinguished the controversial casting vote within the scope of the Fiscal Appeals Administrative Council (CARF).

In the event of a tie in the trial, the vote of the chairman counsel – who, as a rule, is a representative of tax authorities – was worth two.

With the inclusion of the article 19-E in the Law n. 10,522/2002, in the event of a tie in the judgment of the administrative process for determining and requiring the tax credit, the casting vote is not applied, and the case is resolved favorably to the taxpayer.

The removal of the casting vote was the only modification at Law n. 10,522/2002. Therefore, the thesis, sometimes raised by the Federal Government, that the suppression of the casting vote would mean the possibility of it pleading the judicial revision of CARF decisions does not have legal support so far.

The teams of Fraga, Bekierman & Cristiano Advogados are available to answer any questions about the measures described above.

Given the increase in cases resulting from COVID-19, which led to the recognition of the state of public calamity by the Brazilian Senate (Legislative Decree No. 6, of 2020) and by the States of Rio de Janeiro (Decree No. 46,984, of 03.20.2020) and São Paulo (Decree No. 64,879, of 03.20.2020), as well as to the recognition of the state of emergency by the governments of the Municipalities of Rio de Janeiro (Decree No. 47,263, of 03.17.2020) and São Paulo (Decree No. 59,283, of 03.16.2020), among others, several measures have been published, daily, to mitigate the severe impacts on the economy.

Some rules were published, providing for the extension of the deadlines for payment of some taxes and compliance with ancillary obligations, in addition to the reduction of zero the Import Tax (II) and Tax on Industrialized Products (IPI) rate for products related to the prevention and fight against coronavirus.

Norms were also issued suspending debt collection measures, avoiding friendly collections, enrollment in CADIN and enforceable debts’ list, protest of active debt certificates, as well as extending the validity of tax regularity certificates.

Although long-awaited, Federal Revenue Office did not issue a broad normative act based on Ordinance MF No. 12, dated January 20th, 2012, to extend the deadline for payment of federal taxes and also installments plans granted by the Treasury Attorney-General’s Office (PGFN), owed by taxpayers domiciled in municipalities under a state of public calamity recognized by a State decree.

Numerous court decisions have already been handed down, broadly removing any late payment charges due to delay in paying taxes and fulfilling ancillary obligations, given the characterization of force majeure due to the coronavirus pandemic.

We highlight, below, the main aspects of the legislation already published with impacts on the collection of taxes, in litigation and tax transactions:


FEDERAL LEVEL

To access the main Federal tax measures, click here.


STATE LEVEL

To access the main state tax measures, click here.


MUNICIPAL LEVEL

To access the main Federal tax measures, click here.


INSTALLMENTS AND SPECIAL PROGRAMS

To access our newsletter about the Extraordinary Transaction of overdue federal liabilities, click here.

To access our newsletter about the tax benefits approved by the Municipality of Rio de Janeiro, click here.

To access our newsletter about the extension of the maturity of the installments on programs administered by RFB and PGFN, click here.

 


Our teams from offices in Rio de Janeiro and São Paulo are available to answer any questions about the measures described above.