If this package is enacted, taxpayers may benefit from reduced compliance obligations and the settlement of tax liabilities through a tax amnesty program.

On December 15, 2016, the Brazilian President and the Ministry of Finance announced a set of measures aimed at the stimulation of growth and productivity, and reduction of compliance obligations for companies located in Brazil. The package is intended to reduce the fiscal deficit caused by the slow pace of the economy and substantial reduction of investments in the country.

The package would include measures to improve the access to credit, reduce banking spread, and reduce the timing on the importation of goods. It also includes important tax measures, such as a new amnesty program for tax debts due on or before November 30, 2016. This new amnesty program (Programa de Regularização Tributária — or PRT) would:

— Allow the use of tax losses to reduce past tax liabilities, including the losses calculated by other Brazilian companies within the same economic group
— Allow the use of credits from other federal taxes against social security taxes

For companies using tax losses or other tax credits to absorb part of the tax debt, the program would allow:

— Payment of 20% of the total tax liability in one lump sum, with the remaining balance paid in up to 60 monthly installments
— Payment of 24% of the tax liability over 24 months, with the remaining paid in up to 60 monthly installments

For companies not using tax losses or other tax credits to absorb part of the tax debt, the program would allow:

— Payment of 20% of the total tax liability in one lump sum, with the remaining balance paid in up to 96 monthly installments
— Payment of 21.6% of the tax liability over 36 months, with the remaining balance paid in up to 96 monthly installments

The deadline to apply for the PRT has not been announced. There is also no information as to whether there will be reductions in interest and penalties, as in the prior tax amnesty programs.

We are monitoring the implementation of the PRT and will provide updates as necessary. Companies should consider whether they might benefit from the opportunity to settle their tax liabilities through the PRT.

In addition to the PRT, the Brazilian Government would reduce tax filing obligations, with the simplification of the Esocial, Sped (the electronic bookkeeping obligation) and issuance of electronic invoices. To date, it is not clear which measures the Tax Authorities will adopt, but the final package should be adopted soon, considering the deadlines proposed by the President and the Ministry of Finance.

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