Brazil

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Return to homepage  |  Last updated: 08 July, 2020

The Minister of Economy, Paulo Guedes, announced in March 26th that the economic stimulus package, closed by the Ministry of Economy, Public Banks and the Central Bank will be US$ 150 billion (R$ 750 billion), to face the economic impacts of COVID-19 in Brazil.

The volume of funds includes the following measures: a) loosening of the fiscal target above the previously forecasted deficit of US$ 24.8 billion; b) support for the most vulnerable population, with anticipation of the 13th salary (US$ 9.2 billion) and salary allowance (US$ 2.5 billion), transfer of PIS / PASEP to FGTS (US$ 4.3 billion) and reinforcement of Bolsa Familia (US$ 620 million); c) relaxation of labor laws to maintain jobs; d) aid for informal and self-employed workers (US$ 8 billion); e) extension of payment of taxes, FGTS and contributions reduction (US$ 6 billion); f) financial support to states (US$ 17.5 billion); g) financial support to the airline industry; h) expansion of liquidity in the markets, with the release of US$ 40 billion in compulsory deposits; i) support from BNDES and public banks (BNDES: US$ 11 billion + Caixa: US$ 15 billion + Banco do Brazil: US$ 25 billion); j) support for small and medium-size companies (US$ 8 billion); k) postponement of readjustment of pharmaceuticals products

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Duty relief

• Temporary reduction of the Tax on Industrialized Products (IPI) rates on the products mentioned in the Decree No. 10.285 of March 20, 2020
• Temporary reduction in the rate of the Import Tax under article 50, paragraph d, of the Treaty of Montevideo of 1980, internalized by Legislative Decree No. 66 of November 16, 1981, with the purpose of helping to prevent the Corona Virus / Covid-19 pandemic
• Temporary reduction, to zero percent, of the rate of the Import Tax under Article 50, paragraph d, of the Treaty of Montevideo of 1980, internalized by Legislative Decree No. 66 of November 16, 1981, with the objective of helping to prevent the Corona Virus / Covid-19 pandemic

Customs clearance

• Simplification and acceleration of the customs clearance of imported goods destined to combat Covid-19. The measure is focused on keeping a fast flow of goods, commodities and raw materials to combat the pandemic, as well as speeding up the delivery of cargos. In addition, includes imports promoted by certified importers in the modality AEO (Authorized Economic Operator) in a more simplified import procedure
• Changes the SRF Normative Instruction No. 680/2006, which regulates the customs clearance of imports
• Possibility of registration of Import Declaration, before the release of goods, in the jurisdictions of this Customs, for goods listed in Annex II of IN SRF No 680/2006, while the measures to combat the Coronavirus (COVID-19).
• On May 5th, Normative Instruction RFB nº 1,944 was published, in an extra edition of the Official Gazette of the Union, which provides for priority dispatch for raw materials for the manufacture of medicines, in addition to consolidating the list of products that already had the priority dispatch. With the new rule, the RFB seeks to maintain a fast flow of goods, merchandise and raw materials destined to fight the pandemic, and to avoid bottlenecks in customs areas by speeding up the delivery of the cargo and allowing its economic use to reinforce the fight. to the virus.
• On May 11, the Ministry of Economy expanded the list of products sent by post or international air order that will have their import tax rates zeroed up to September 30, 2020. These products are subject to the application of the Simplified Taxation Regime (RTS), which normally provides for the application of the 60% rate on imported goods, limited to the value of US $ 10,000.
• The measure, foreseen in the Ministerial Order of the Ministry of the Economy nº 194, of May 6, 2020, published on May 5, in the Official Gazette of the Union, will benefit a great quantity of products sent to Brazil, including referring to donations made by people from different parts of the world. The ordinance brings the complete list of products with zeroed rates.
• On May 18, another 118 products used to combat the Covid-19 pandemic in Brazil had the Import Tax reduced to zero by decision of the Foreign Trade Chamber (Camex), an interministerial body chaired by the Ministry of Economy, bringing the total to 509. total of products with Import Tax zeroed. New tariff reduction list includes more than 80 drugs considered essential by Brazilian municipalities to deal with the pandemic.
• On 26 May, The Federal Revenue has expanded the list of products that will have import dispatch carried out in a priority manner to help fight the pandemic caused by the new coronavirus (Covid-19). Normative Instruction RFB nº 1,955, published in a special edition of the Official Gazette (DOU), provides for priority dispatch for hospital equipment and raw materials for the manufacture of medicines, among others.

Export

• Changes Ordinance No. 19/2019, which provides for the issue of licenses, authorizations, certificates and other public export documents through the Single Foreign Trade Portal of the Integrated Foreign Trade System (Siscomex), to provide the Special Export License for Covid-19 Combat Products.
• Prior authorization for the export of chloroquine and hydroxychloroquine, azithromycin and their salts intended for Covid-19 combat.
• Ban on exports of medical, hospital and hygiene products essential to fighting the Coronavirus epidemic in Brazil. (Legislative Proposal, No. 668/20, pending).
• The immediate release of the use of materials, medicines, equipment and supplies in the health area to assist in combating the pandemic of Covid-19 occurs, amending Law No. 6,360, of September 23, 1976 (Legislative Proposal No. 864/20, awaiting Federal Senate review).
• On May 4, Provisional Measure 960 was published in the Official Gazette of the Union, authorizing the Foreign Trade Secretariat (Secex) of the Ministry of Economy to extend, for an additional year, on an exceptional basis, the term of validity of acts Concessionaires of the Special Customs Regime for Drawback in operations that would end in 2020. A survey carried out by Secex points out that, of a stock of 3,356 drawback concessions in the Suspension modality due in 2020, there are approximately US $ 23 billion in exports committed under the regime and not yet completed, which justifies the government's decision now.

Suspension of anti-dumping duties

• Temporary suspension of the anti-dumping duties on vacuum plastic tubes for blood collection and syringes (NCM 3822.00.90; 3926.90.40; 9018.39.99; 9018.31.11; 9018.31.19) imported from China, Germany, the United Kingdom and the United States.

Other measures

• Facilitation, on an extraordinary and temporary basis, on the requirements for the fabrication, importation and acquisition of medical devices identified as a priority for use in health services, due to the international public health emergency related to SARS-CoV-2.
• Reviews and consolidates the measures in response to the public health emergency in water transport and port facilities due to the coronavirus epidemic (COVID-19).
  

• On 23 March, the Federal Government published a Provisional Measure (MP) that alters a series of labor regulations during the pandemic with the aim of preserving helping companies and preserving jobs. The MP establishes that individual agreements will take precedence over other legal and business instruments, and provides for the possibility of:
  • adoption of telecommuting (remote working, such as home office);
  • anticipation of individual vacation and collective vacation concession, with notice to the worker up to 48 hours before;
  • use and anticipation of holidays;
  • special hours compensation scheme in the future in case of interruption of working hours;
  • suspension of administrative requirements for safety and health at work.
• On 30 March, the Brazilian Senate approved a bill that provides for the granting of emergency aid of US$ 116 (R$ 600) to informal workers and US$ 232 (R$ 1,200) to mothers responsible for supporting the family. The impact of the aid is expected to be US$ 8.5 billion (R$ 44 billion) during the period in which the measure is in force, according to members of the economic team.
• The provisional measure 932/20 reduces, until 06/30/2020, the rates of contributions to autonomous social services. The reductions were different for each entity that belongs to autonomous social services, varying from 0.05% to 1.25%.
• Provisional Measure 936/20 establishes complementary measures with the purpose of maintaining employment and income, during the state of public calamity resulting from the coronavirus (COVID-19). Among the provisions, the following should be highlighted:
  • the payment of an Emergency Job and Income Preservation Benefit;
  • the proportional reduction of working hours and wages; and
  • temporary suspension of the employment contract.
• The Emergency Employment and Income Preservation Benefit will be paid for with Federal resources, in the event of proportional reduction of working hours and wages and temporary suspension of the employment contract. The agreement for proportional reduction of working hours and wages may be up to 90 days, subject to the following requirements:
  • preserving the value of the hourly wage of work;
  • the individual written agreement between employer and employee, made 2 days in advance; and
  • reduction of working hours exclusively in the percentages of 25%, 50% or 70%.
• If the temporary suspension of the employments is disregarded, the employer will be subject to the immediate payment of remuneration and social charges for the entire period, plus the penalties established in the legislation and the sanctions determined by the agreement or union agreement.
• Service Guarantee Found – FGTS, labor obligation due by employers (indemnity fund), is suspended from March to May 2020. The suspended contributions may be paid in installments without the impact of monetary adjustments, fines, interests or other charges.
• The Provisional Measure 945/2020 deems port activities as essential services, granting port workers an specific emergency benefit and granting employers more flexible conditions to contract temporary workers despite any collective convention provision. The port companies are also granted tariff exemptions.
• 15 April. The Federal Government and its support base on congress, are supporting the increasing of people able to receive emergency employment aid. Under this project, the emergency aid will be extended the benefit to teenage mothers; informal workers who, in 2018, had high incomes and were excluded from the original proposal; and doubles the amount paid to single men who are heads of household. According to the economic area, the changes will cost U$ 2 billons (R$ 10 billion) more this year.
• On May 15, the Ministry of Citizenship created and disseminated new channels to provide clarifications on Emergency Aid. Information guides, with forms of access, payment dates, necessary documentation, Single Registry, consultations, among other information, can be obtained from the Ministry of Citizenship Portal.
• On May 22, Joint Ordinance No. 17 was published in the Official Gazette, extending remote assistance to policyholders and beneficiaries of the National Social Security Institute (INSS) until June 19. The measure aims to protect the community during the period of coping with the public health emergency resulting from the coronavirus pandemic.
• On May 26, the Chamber of Deputies approved a bill that transfers R $ 3 billion from the Union for emergency actions aimed at the cultural sector during the pandemic of the new coronavirus, such as the payment of an emergency income of R$ 600 to informal professionals in the field.
• On May 28, the Senate approved the bill that includes liberal professionals in the credit line created for micro and small companies due to the crisis caused by the pandemic of the new coronavirus. The bill approved by the Senate foresees that the credit limit will be R $ 100 thousand. Liberal professionals are individuals with an undergraduate or technical course registered with a professional council. The category is different from the self-employed, who can act even without specific qualification.
• Also on May 28, the National Congress extended MP 936 for 60 days. This provisional measure that allows the reduction of wages and the suspension of employment contracts during the covid-19 pandemic. The following changes were made by the Chamber of Deputies, but are not yet in effect. They only take effect if they are confirmed by the Senate and sanctioned by President Bolsonaro. The modifications are:
  • Extension of salary reduction or contract suspension
  • Renegotiation of payroll loans
  • Food costs are no longer wages
  • States and municipalities do not pay terminations
  • Extension of the payroll tax exemption
• On 02 June, the Ministry of Economy (ME), through the Special Secretariat for Productivity, Employment and Competitiveness (Sepec), and the Ministry of Health (MS) announced this Tuesday (2/6) SineSaúde, a digital platform aimed at promoting and facilitate the hiring of professionals to act in the fight against Covid-19. The objective is to create a bridge between health professionals and care units such as hospitals, clinics, laboratories, in addition to state and municipal departments across the country that can act to face the pandemic.
• On June 9, the Minister of Economy, Paulo Guedes, confirmed that the government will extend the payment of emergency aid for two months. However, it is still unclear whether the aid amount will be maintained or whether there will be a reduction. Last Friday (5), the special finance secretary of the Ministry of Economy, Waldery Rodrigues, stated that the government plans to pay two extra installments of R $ 300 each.
• Also on June 9, Minister Paulo Guedes informed the creation of the Renda Brasil Program, which will unify several social and income distribution programs, but without great details on the scope or structure of this new program.
• On June 11, during a videoconference, President Jair Bolsonaro stated that he intends to veto the extension of emergency aid motivated by the coronavirus pandemic if Congress decides to maintain the current value of R $ 600. According to the president, the payment of two installments additional R $ 600 to the public already receiving emergency aid would generate an additional impact of R $ 100 billion on public accounts. Which, says Bolsonaro, would hinder the management of the public debt and the basic interest rate of the economy (Selic rate).
• On June 15, the Special Secretary of the Federal Revenue, José Tostes Neto, stated that the government wants to promote a payroll exemption to stimulate the recovery of jobs after the crisis, and that the reduction of tax benefits or revision of tax rates other taxes may support the onslaught. Tostes stressed that tax reform is one of the government's priorities and that, due to the consequences of the coronavirus pandemic, there is now a greater sense of urgency for adjustments to prosper, to make room for more investment and economic growth.
• On June 16, the Senate unanimously approved on Tuesday (16) the provisional measure (MP) that allowed companies to reduce their working hours with a proportional decrease in wages. The text also authorizes the temporary suspension of employment contracts. With the approval in the Senate, the MP goes to the table of President Jair Bolsonaro, who may sanction or veto the changes made in relation to the original text. The objective of the MP is to preserve jobs and income and also to help companies face the economic crisis caused by the Covid-19 pandemic.
  

• PROGER/FAT: credit for Micro and Small Enterprises (USD 1 billion);
• Caixa Econômica Federal (CEF): The state-owned Federal Savings Bank will extend USD 14.9 billion in credit lines to small-and medium-sized enterprises aimed at working capital, purchase of payroll loan portfolios from medium-sized banks and agribusiness. The bank also cut interest rates on some types of credit and offered clients a grace period of 60 days;
• Banco do Brasil announced a USD 20 billion increase in its credit lines, aimed at working capital, investments, prepayment of receivables, agribusiness and credit to individuals. The bank also increased the credit limit for 13 million customers;
• BNDES: opening of a working capital loan line for small and medium-sized firms of tourism and service sectors;
• Credit contracting requirements: simplification and waiver of documentation (CND) for credit renegotiation;
• Capital charge relief: Lending and credit support through capital charge relief to loans secured by commercial real estate; and credit charge relief to retail exposures, to non-significant investment in the capital of financial institutions and insurance entities and to exposures secured by covered bonds issued by the own bank;
• Restructured loans: Increased flexibility of the provisioning rules for a period of 6 months;
• Conservation Capital Buffer (CCB): reduction from 2.5% to 1.25% for 1 year and setting a transitional arrangement to restore the original 2.5% CCB in the subsequent year;
• FEBRABAN: The Brazilian Federation of Banks announced an agreement by which the five largest banks in the country (BB, Caixa, Itaú Unibanco, Bradesco and Santander) are willing to respond to requests for a 60-day extension for the debt maturity of individual and SMEs.
• On 18 March, Brazil’s Central Bank lowered the benchmark interest rate SELIC by 50 bps to a historical minimum of 3.75%. This follows a reduction of the countercyclical capital buffer requirements.
• On 23 March, the Brazilian Central Bank announced new measures to inject resources into the financial system, which are part of a set of actions taken to minimize the effects of the coronavirus pandemic on the Brazilian economy. The measures for the financial market are:
  • Additional release of US$ 13 billion in compulsory deposits, in addition to the amount of US$ 26 billion announced in February
  • BC loan permission study to banks backed by Financial Letters (Letras Financeiras) of securitized credit portfolios (potential impact of US$ 129 billion)
  • Flexibilization of the rules of the LCA (Financial Letter for Agribusiness), giving more freedom to the institutions to define the destination of the funds raised with this role
  • Provisional repurchase of foreign debt securities
  • New Time Deposit with Special Guarantees (NDPGE) for bank borrowings
  • Loan backed by debentures (corporate debt security)
• On 23 March, the government presented a plan of R$ 88.2 billion for states and municipalities to cope with the health demands and economic impacts of the coronavirus. The package measures include:
  • Transfer of US$1.5 billion to health expenses
  • Transfer of US$387 million to social assistance expenses
  • Recompositing in the amount of US$3.1 billion for the State Participation Fund (FPE) and Municipal Participation Fund (FPM)
  • Suspension of the debts of the states to the Union (US$2.4 billion)
  • Renegotiation of state and municipal debt with banks (US$1.8 billion)
  • Loan facilitation operations, in the amount of US$7.7 billion
• On 26 March, the National Monetary Council (CMN) authorized the permission for the transfer of funds from the National Bank for Social Development (BNDES) to SMEs with through financial service technology companies, the so-called "fintechs".
• On 26 March, Caixa Economica Federal (Federal Savings Bank) announces further reductions in interest rates on overdraft and credit card instalment fees will be 2.9% per month, from the previous 4.9% per month. Caixa also announced an increase from 60 to 90 days in the pause period for loan agreements for individuals and companies, including housing contracts.
• On 27 March, the Brazilian Federal Government (Ministry of Economy, BNDES, Caixa and Bank of Brazil) announced an emergency credit line for SMEs to finance salaries for a period of two months. The program will make available a maximum of US$ 3.8 billion/month, with an overall stimulus package of US$ 7.7 billion in two months. Also according to the Ministry of Economy:
  • Financing will be available to companies with revenues between US$ 70 thousand and US$ 1.9 million per year;
  • Money will be exclusive for payroll;
  • The company will have a 6-month grace period and 36 months to repay the loan;
  • Interest will be 3.75% per year
• In addition, companies that hire this credit line will not be able to fire employees for a period of two months.
• On 29 March, BNDES (Brazil’s Development Bank) announced two support measures for the airlines and healthcare industry:
  • Financial support for airlines: through a system that involves convertible debentures and can contribute capital to these companies through the purchase of shares to sustain their operations through the pandemic.
  • New credit line for the healthcare & life science manufactures to produce 15 thousand ventilators, 5 thousand health monitors, 80 million medical masks and 3 thousand new ICU units.
    
• On 29 March, Paulo Guedes, Brazil’s Minister of Economy defended an emergency law approval to make Fiscal Responsibility Law more flexible during a meeting with the National Front of Mayors.
  
• The government and Congress are discussing the creation of a new management tool for the volume of money in circulation in the economy, as it seeks to control the interest rate. The proposal allows banks to voluntarily transfer funds to the Central Bank (BC), in the form of demand or time deposits. With this, the financial institution that has excess cash will be able to deposit a part in the BC.
• Service Guarantee Found – FGTS, labor obligation due by employers (indemnity fund), is suspended from March to May 2020. The suspended contributions may be paid in installments without the impact of monetary adjustments, fines, interests or other charges.
• On 02 March, the Minister of Tourism, Marcelo Álvaro Antônio, announced lines of credit to serve businesspeople in .he tourism sector, which is strongly impacted by the new coronavirus pandemic. Credit lines will be offered by public banks such as BNDES and Caixa Econômica Federal. The project awaits new regulatory frameworks
• On 06 April, the National Monetary Council authorized that banks participating in the companies' payroll financing program, a measure launched by the government to mitigate the effects of the new coronavirus crisis, could reduce the value of loans in compulsory term deposits. The measure will take effect as of the next 20th. The volume that can be deducted may reach R $ 6 billion, about 5% of the current amount of the reserve requirement on time deposits.
• Also on 06 April, the National Monetary Council authorized that temporarily prohibited the distribution of profits and increased remuneration for bank and other financial institutions. The objective is to prevent important resources for maintaining credit from being used in other expenses in the midst of the Covid-19 pandemic.
• On 08 April, Brazil’s Ministry of Agriculture announced a US$100 million (R$ 500 million) relief plan for small agricultural producers and family owned farms.
• On 08 April, the Minister of Economy, Paulo Guedes, announced that Brazil’s Treasury is preparing a new financing relief plan for Small and Medium Enterprises (SMEs) with yearly revenues up to US$72 thousand (R$ 360 thousand)/year. The Ministry estimates a relief plan of US$2 billion (R$ 10 billion), which will be deployed with the support from SEBRAE (Brazilian Micro and Small Businesses Support Service).
• Also on 08 April, the Federal Government extinguished the PIS-Pasep (Social Integration Program and the Civil Servant Heritage Training Program) and released the withdrawal of US$ 200 (R$ 1.045) on account of the FGTS (Guarantee Fund for Time of Service) as of June 15. From June 15 to December 31, the withdrawal of up to US$ 200 (R$ 1.045) per worker is available due to facing the state of public calamity and the public health emergency of international importance resulting from the coronavirus pandemic.
• On 15 April, The Supreme Federal Court ruled that, in addition to the federal government, state and municipal governments have the power to determine rules for isolation, quarantine and restriction of transport and transit on highways due to the coronavirus epidemic.
• On 15 April, the Federal Government asked the Congress for permission to more than double the deficit forecast of public accounts in 2021. The figures are included in the draft Budget Guidelines Law, presented on Wednesday (15). In the text, the Ministry of Economy asks for permission for a primary deficit of U$ 30 billion (R$ 149.6 billion) in 2021, about 1.86% of the Gross Domestic Product (GDP).
• On 15 April, the Federal Court granted an injunction prohibiting the institutions of the National Financial System from taking measures to increase the interest rate or intensify the requirements for the granting of credit. According to the Federal Court, due to the global pandemic caused by Covid-19, the Brazilian economy was severely affected, which led the Central Bank of Brazil to adopt measures such as the release of banks' cash flow. However, the lawsuit says, banks do not use this asset release to make more credit available to the domestic market.
• On 16 April, the Brazilian Federal Government is working together with private banks, investment funds and the BNDES (National Bank for Economic and Social Development) a relief plan of at least R$ 48 billion to large companies affected by the coronavirus crisis as Airlines, energy companies and large retailers. Under this plan, debt-convertible instruments will be offered to companies that are publicly traded on the stock exchange.
• On April 17, a month after the creation of the Crisis Office of the Ministry of Economy to face the effects of the Covid-19 pandemic, the Ministry presented a balance of the measures adopted by the economic team so far: the Health Plan Economical. The initiative has already reached a total of  US$ 233.8 billion (R$ 1.169 trillion), with a fiscal impact of  US$ 61.5 billion (R$ 307.9 billion) and a primary impact of US$ 57 billion (R$ 285.4 billion). The fiscal cost to confront Covid-19 in the country reaches about 3.8% of GDP.
  Of this total relief package US$ 233.8 billion (R$ 1.169 trillion), up to US$ 42.5 billion (R$ 212.4 billion) were allocated to the most vulnerable population and workers; up to US$ 22,6 billion (R$ 133.4 billion) for support to states and municipalities; US$ 4.9 (R$ 24.3 billion) to combat the pandemic, such as sending resources and measures to ensure supplies, treatment and protection for people; US$ 104.8 (R$ 524.4 billion) in cash flow measures and employment programs for companies, in addition to US$ 54.8 (R$ 274.1 billion) in credit measures that reach from companies to the health sector and public pension retirees.
• On April 20, Caixa Econômica Federal and the Brazilian Micro and Small Business Support Service (Sebrae) announced a US$ 1.5 billion (R$ 7.5 billion) credit line for micro and small companies and individual micro entrepreneurs (MEIs) ). The objective is to support small businesses in the face of the crisis caused by Covid-19. In practice, the initiative will allow a reduction of about 40% in the fees charged today from this public.
• On April 23, the Attorney General's Office (AGU) gave a favorable opinion to the concessionaires of infrastructure and public services to carry out the economic and financial rebalances of the contracts due to the understanding that the pandemic can be classified as a force majeure event or fortuitous event, which attributes the risks to the granting authority.
• On April 27, the Federal Government published Provisional Measure (MP) 958 in the Official Gazette, which suspends until September 30, a series of requirements foreseen in the legislation in force for contracting credit operations with public financial institutions.
  The objective is to simplify and streamline the processes of analyzing, contracting and releasing credits to companies, individuals and economic segments that are being affected by the crisis generated by the new coronavirus (Covid-19).
• On April 29, the Ministry of Economy formalized the creation of 12 strategic task forces to address the economic impact of the coronavirus pandemic. The initiative aimed at supporting the Brazilian productive sector is being monitored by the Ministry of Economy through the Special Secretariat for Productivity, Employment and Competitiveness (Sepec / ME).
• On May 30, the National Monetary Council (CMN) approved a series of measures to make actions related to rural credit more flexible, ranging from extending deadlines for contracting credit to measures to guarantee social distance, said the Ministry of Finance. Economy.
  As a result of the change, rural producers will now be able to access the credit line until June 30, 2021 to finance investments in works, purchases of machinery and equipment and expansion of grain storage capacity.
  In addition, CMN also decided to relax rules for rural credit operations already contracted, aiming to adapt them to the scenario of social distance due to the coronavirus pandemic.
• Also on April 30, the Ministry of Economy, in order to reinforce the fight against the pandemic of the new coronavirus (Covid-19), provided public procurement solutions to offer more agile tools that increase the transparency of acquisitions. The new Covid-19 Trading Panel, which provides details on all electronic trading sessions held in an emergency to combat the pandemic, has been available on the internet since 29 April. Another tool aimed at disclosing and monitoring acquisitions related to the new coronavirus is the bidding waiver panel. The tool provides details on all emergency purchases made during the pandemic period.
• On May 6, the Senate approved  in a remote session, by 80 votes to zero, the bill that provides financial assistance from the Union to states and municipalities to try to reduce the impacts caused by the coronavirus crisis. As the text has already been approved by the Chamber, it will go to the sanction of President Jair Bolsonaro. According to the text, the Union will transfer R$ 60 billion directly to states and municipalities, divided into four monthly installments. The resources will be divided as follows:
  • R$ 50 billion: compensation for the drop in revenue (R$ 30 billion for states and DF; R$ 20 billion for municipalities);
  • R$ 10 billion: health and social assistance actions (R$ 7 billion for states and DF; R$ 3 billion for municipalities).
• On May 07, the Federal Government published Provisional Measure No. 961 (MP 961) to allow the advance payment of public contracts. There will be no amount restriction for prepayment, but the public managers will need to prove the prepayment is essential to obtain the good or service or that the prepayment will generate savings for the government. In order to avoid that the service is not provided or that the product is not delivered, the MP foresees that it will be possible to demand guarantee and partial delivery before the payment is anticipated. The provisional measure also provides that the value of the contract must be returned in full if it is not executed.
  Bidding waiver: The Provisional Measure also increases the value for situations that the public authority may dispense with bidding. According to the Ministry of Economy, the goal is to make hiring faster, since many purchases are essential for actions to combat the new coronavirus.
• On May 5, the Board of Trustees of the Seniority Guarantee Fund (CCFGTS - Conselho Curador do Fundo de Garantia do Tempo de Serviço) held this 174th Ordinary Meeting, by videoconference, in which it approved, among others, some measures to deal with the pandemic.
  
  The first resolution of the meeting (Vote 10/2020 / Fazenda / ME) revoked Resolution No. 78/1992, which provided that the worker periodically received, at his place of residence or where indicated, the printed information extract on the movement of his account linked to FGTS.
  
  The second resolution approved by the Council (Vote 12/2020 / Fazenda / ME) refers to the establishment of an extraordinary measure so that there is no automatic cancellation of the FGTS debts in installments from March to August 2020 in the event of any default.
  
  Another approval concerns the allocation of supplementary financial resources to the Attorney General of the National Treasury (PGFN) for fiscal year 2020 (Vote 13/2020 / Fazenda / ME), intended for the reimbursement to Caixa Econômica Federal (CAIXA) of the expenses related to the operationalization enrollment in Active Debt of debts with FGTS; aid for extrajudicial collection; and judicial representation in the collection of part of the portfolio, in accordance with the Caixa / PGFN Agreement No. 01/19.
  
  The Council decided to dismember the proposal for the temporary suspension of financing payments in the Sanitation and Urban Mobility sectors, due to the measures adopted to face the Covid-19 pandemic (Vote 15/2020 / Sepec-ME / MDR). The Board of Trustees also endorsed Resolutions published “ad referendum” nº 958, of April 24, 2020, which regulated the sale or fiduciary assignment of the right to withdraw birthday (Vote 17/2020 / Fazenda / ME). As provided for in the CCFGTS Internal Regulations, these resolutions must be endorsed by the CCFGTS at the regular meeting following publication.
• On May 7, BNDES (National Bank for Economic and Social Development) will allocate US$ 800 milion (R$ 4billion) to fund managers focused on financing micro, small and medium-sized companies. The funds will be selected through a public call, which will receive proposals until the 3rd of June.
• According to the BNDES, the measure aims to expand access to credit for small businesses and ensure that the resources made available by the state development bank reach more companies and individual entrepreneurs.
• On May 15, the Special Secretariat for Productivity, Employment and Competitiveness of the Ministry of Economy (Sepec / ME) released results of the articulation of several federal government agencies with the private sector, to guarantee the supply of lung ventilators, gel alcohol, protective masks and hospital gowns to combat the effects of coronavirus on public health. As a result, about 15,300 new lung ventilators were contracted by the Ministry of Health, with total delivery expected by July, part of the product has already been received by Health and sent to hospitals.
• On May 28, the President of the Republic, Jair Bolsonaro, signed Complementary Law 173/2020, which will allow the granting of federal aid of approximately R $ 60.15 billion to states, municipalities and the Federal District to strengthen the actions of combating the new coronavirus. The new law establishes the “Federative Program to Combat Pandemic caused by Covid-19” and changes the Law of Fiscal Responsibility.
  
  The Program's objective is to support states and municipalities in combating the new coronavirus in three ways.
  •  Suspension of debts with the Union until the end of 2020.
  •  Renegotiation of credit operations with the financial system and multilateral credit organizations, including debts guaranteed by the Federal Government.
  • Union financial assistance to Federation entities in four equal monthly installments, in the total amount of R $ 60 billion
• Also on May 28, the federal government issued a decree exempting from the Tax on Financial Operations (IOF) in the credit operation designed to help the electricity sector amid the pandemic of the new coronavirus. The National Electric Energy Agency (Aneel) announced a proposed amount of R $ 16.1 billion. The loan will come from a group of banks, coordinated by the National Bank for Economic and Social Development (BNDES).
  
• On June 2, the Ministry of Economy (ME), through the Special Secretariat for Productivity, Employment and Competitiveness (SEPEC), and the National Bank for Economic and Social Development (BNDES) launched the Emergency Credit Access Program, with the objective of facilitating, during the calamity period, the access of small and medium-sized enterprises (SMEs) to new loans. The Program will provide guarantees for financial agents, and aims to facilitate the obtaining of credit by SMEs, contributing to the sustainability of Brazilian companies. It is estimated that the Program will be able to serve companies that employ 3.3 million workers. The Program will be operated by BNDES, along the lines of the Investment Guarantee Fund (FGI). New Treasury contributions may be made until the end of 2020, in the total amount of up to R $ 20 billion, by decision of the ME, according to the performance of the Program and the need to grant guarantees.
• On June 3, the National Treasury reported that it granted a mandate to issue dollar-denominated bonds on the international market. Two new bonds will be issued, one five-year, maturing in 2025, Global 2025, and one 10-year, maturing in 2030, Global 2030. The purpose of the operation is to continue the strategy of the National Treasury to promote liquidity of the sovereign interest curve in dollars in the foreign market, providing a reference for the corporate sector, and anticipating financing of maturities in foreign currency. The operation will be led by banks Bank of America, Deutsche Bank, Itau BBA and JP Morgan.
• On June 10, the Federal Government launched the Operations Guarantee Fund (FGO), with resources from the National Treasury in the amount of R $ 15.9 billion, which will guarantee loans for micro and small companies in the National Support Program for Micro Enterprises and Small Companies (Pronampe). The credit, intended for small businesses, will be managed by Banco do Brasil and will be available at branches of financial institutions that are already being accredited. Entrepreneurs will be able to get to know the banks, which will be operating this credit line by accessing the Entrepreneur Portal.
  
  To be eligible for financing, companies must make a commitment to preserve the number of employees from the date of contracting the loan up to 60 days after receiving the last installment. The funds may be requested from public, private, cooperative and credit unions. The participation of state development agencies, cooperative banks, institutions that are part of the Brazilian Payment System, fintechs and civil society organizations of public interest in credit is also allowed.
  
  
• On June 12, the Federal Government announced that in the coming days it will announce the release of tax credits from banks that expand credit lines for micro and small companies. The joint measure of the Central Bank and the Federal Revenue Service, brought forward to the blog by two sources with knowledge on the subject, aims to encourage the granting of credit to small companies. These companies have faced difficulties in accessing credit, despite specific programs launched by the government, such as payroll financing (Fopas), or the National Support Program for Micro and Small Enterprises (Pronampe), guaranteed by the Treasury Up to 85% of resources. Aid has become even more essential for companies due to the coronavirus pandemic.
• On June 15, the National Bank for Economic and Social Development (BNDES) announced that it will act as guarantor of infrastructure projects and may do the same in capital market operations, said the bank's president, Gustavo Montezano. The objective, according to him, is to reduce the risk of credit operations and make the bank and the financial sector more efficient in granting credit for infrastructure in the country. "Instead of being the main financier, the bank can take some risk matrix, construction, PPP constitution or a temporary part of the project or liquidity reserve and promote a guarantee for that part of the project," said Montezano during a webinar.
• On June 16, the President of the National Bank for Social Development (BNDES), Gustavo Montezano, stated in an audience with Congress, that the bank has more resources to “put into the economy” if the crisis generated by the new coronavirus pandemic continues. . He was asked about the BNDES 'ability to expand its operations and grant more loans to contain the effects of the crisis. "In terms of operational capacity, the bank does have the capacity to do more. The bank does have the operational capacity, yes. Our big challenge at the moment is the execution time," said Montezano. "The challenge is to execute this in an agile and fast way for the necessary period", he added.
• Also on June 17, the National Committee of Secretaries of Finance, Finance, Revenue or Taxation of the States and the Federal District (Comsefaz) asked the National Congress to extend the provisional measure (MP 938) that established financial support from the Union to the states and municipalities in the midst of the new coronavirus pandemic. Provisional measure 938 took effect on April 2 and provides for the transfer of up to R $ 16 billion to states and municipalities. According to the text, the aid will be from March to June, with a monthly limit of R $ 4 billion. According to the secretaries, the tendency is for the effects of the pandemic to extend for longer than the four months provided for in the MP, "with deeper impacts also on the loss of tax collection that are the basis for calculating the FPE and FPM".
• On June 17, the Central Bank announced a 0.75 percentage point cut in the basic interest rate, as expected by the financial market. The evaluation of economists is that the statement by the Central Bank's Monetary Policy Committee (Copom) left the door open for a further cut in interest rates ahead, even though it considered the last reduction "compatible" with the economic impacts of the pandemic. from covid-19.
• Also on June 17, the Federal Government announced, during a ceremony at the Planalto Palace, the release of R $ 236.3 billion in financing through the Plan Safra 2020/2021 for small, medium and large producers. The total value of this season's plan will be distributed as follows:
  • R$ 33 billion for family farmers participating in the National Program for Strengthening Family Agriculture (Pronaf);
  • R$ 33.20 billion for medium farmers (Pronamp);
  • R$ 170.17 billion for other producers and cooperatives.

Of the total, R$ 179.38 billion will be allocated to funding and marketing credit lines and R$ 56.92 billion will be invested in infrastructure.

• Only authorized stores open until further notice, School are still closed in some cities (Rio, Goias Sao Paulo and other cities) until further notice. Restaurants, Sports and events are Not allowed (not an essential service) until further notice. Flights are Authorized under conditions until further notice.
• On June 19, two official ordinances were published in the Federal Official Gazette (DOU) to prevent, control and mitigate the risks of transmission of covid-19 in work environments. One, with general guidelines, is signed by the Special Secretariat for Social Security and Labor of the Ministry of Economy (SEPRT-ME) and by the Ministry of Health; the other, specific to slaughterhouses and dairy, in addition to the two folders, has the signature of the Ministry of Agriculture, Livestock and Supply. Specific to the slaughter and processing industry for meat and meat products intended for human consumption and dairy products, Joint Ordinance 19 aims to prevent, control and mitigate the risks of transmission of covid-19 in work environments during the pandemic. Among the guidelines established by the ordinance, are the immediate removal, for 14 days, of workers who are confirmed or suspected cases of covid-19 and also of those who had contact with confirmed cases of the disease. In the period, the remuneration must be maintained by the company. If employees are asymptomatic for more than 72 hours and a laboratory test discards the new coronavirus, it is possible to return to work before two weeks.

• Government postpones pharmaceutical drugs readjustment for two months amid the coronavirus pandemic.
  
• The government published on Tuesday (31) a PM (provisional measure) that reduces by 50% the contributions to be paid by companies to entities in the S System by the end of June.
• On 31 March, the president of the STF (Supreme Federal Court), Dias Toffoli, prepared a bill taken by the Senate to suspend everything from the payment of rents to the return of goods purchased over the internet during the coronavirus pandemic.
• The Foreign Trade Secretariat published a decree creating the Special Export License for Combat Products from COVID-19, which must be presented for the completion of exports in the case of the products deemed essential to combat the COVID-19.
• The Ministry of Science and Technology signed an agreement with five major telecommunications operators to obtain information from anonymized data from cell phones and monitor agglomerations during the coronavirus pandemic.
• On 01 April, the board of the National Agency of Petroleum, Natural Gas and Biofuels (ANP) approved the temporary suspension of the 17th Bidding Round for areas for exploration and production of oil and gas, under the concession regime, initially foreseen for this year.
• Corporations may, exceptionally, postpone their annual general meeting for seven months counting from the end of its fiscal year. Exceptionally during the year of 2020, the Securities and Exchange Commission (CVM) may extend the deadlines for publicly held companies to present the financial statements.
• ANATEL (National Telecommunications Agency), which took over a claim from the companies and suggested to the government the creation of a monthly voucher so that customers with a lower purchasing power can maintain their cell phone accounts. The proposal is for this monthly voucher to be R $ 30, effective for the next three months, and to be funded with funds from FISTEL (Telecommunications Inspection Fund).
• ANEEL (National Electric Energy Agency) authorized the transfer of US$ 400 million (R$ 2.022 billion) to guarantee liquidity to companies in the electricity sector during the crisis generated by the coronavirus pandemic. The funds will come from a reserve fund composed of charges charged to the electricity bill.
• On 15th April, the Brazilian Federal Government passed a Provisional Measure (MP n°951) which amends Law No. 13,979 and disposes the following administrative measures to support COVID-19 fighting efforts:
  • Enables the use of the price registration system in the event of waiver of bidding for the acquisition of goods, services and inputs intended to face the public health emergency arising from the coronavirus, when whether it is a purchase or contract by more than one body or entity.
  • Authorizes the federative entity to choose to apply the federal regulation on price registration, if there is no specific regulation.
  • Establishes that it is up to the Registration Authorities of the Brazilian Public Key Infrastructure - ICP-Brasil, entities operationally linked to a certain Certification Authority, to identify and register users, forward certificate requests to the CAs and keep records of their operations.
• On 15 April, the External Financing Commission (COFIEX), coordinated by the Special Secretariat for Foreign Trade and International Affairs of the Ministry of Economy, streamlined procedures for the evaluation and authorization of public sector projects and programs.
  • The objective is to accelerate the release of resources from international organizations such as the World Bank, New Development Bank, Inter-American Development Bank (IDB), Latin American Development Bank (CAF) and others. This measure supports actions by municipalities, states and the Federal District aimed at preventing and combating the new coronavirus and its economic effects.
  • Under this streamlined process, COFIEX will resolve within ten days on each claim received. In addition, analysis criteria have been simplified, which for now will stick to the Payment Capacity and a technical analysis.
• Regulatory Agencies of the Transportation Sector (ANTT, ANTAQ and ARTESP) relaxed the terms for complying with contractual and regulatory obligations due to the COVID-19 pandemic. Among the extended deadlines, there are authorizations and licenses for the transport of goods and passengers by road (ANTT), charter services in the State of São Paulo (ARTESP) and submission of financial statements by agents who have a lease, transition or ticket (ANTAQ).
• On May 28, the National Civil Aviation Agency (ANAC) announced that it will postpone the payment of fixed and variable licenses for 6 airports in the country: Confins (MG), Galeão (RJ), Fortaleza (CE), Salvador (BA) ), Florianópolis (SC) and Porto Alegre (RS). Grants due in May may be paid on December 18.
• On May 21, the Ministry of Health together with the national councils of Health Secretaries (CONASS) and Municipal Health Secretariats (CONASEMS), allocated States and municipalities to have R $ 2.2 billion for COVID-19, R $ 2 billion for the holy, non-profit philanthropic hospitals and hospitals that are affiliated with SUS to combat COVID-19. The rest is intended for the accreditation of community health agents, family health teams, oral health teams and river health teams.
• On May 06, the Senate approved in a remote session a project that gives the National Health Surveillance Agency (Anvisa) a 72-hour period to authorize the commercialization of foreign drugs that help in the treatment of covid-19, a disease caused by the coronavirus. Anvisa may allow the import and distribution of medicines, equipment, supplies and material in the health area, as long as they are considered essential to fight the disease.
  
  According to the text, products must be registered and have distribution authorized by at least one of the following foreign health authorities: Food and Drug Administration (FDA); European Medicines Agency (EMA); Pharmaceuticals and Medical Devices Agency (PMDA) and National Medical Products Administration (NMPA).
  
  If Anvisa does not evaluate the sale of the drug in the national market within 72 hours, the drug will be approved automatically.
• On May 07, the President Jair Bolsonaro sanctioned Law No. 13,995 / 2020, which can release up to US$ 400 million (R$ 2 billion) in federal aid to holy houses and non-profit philanthropic hospitals, which act in a complementary way to the Unified Health System (SUS). The money should be used in actions to combat the Covid-19 pandemic. The Law is also signed by the Minister of Economy, Paulo Guedes, and by the Minister of Health, Nelson Teich.
• On May 11, the Federal Government expanded the list of uses of the Differentiated Public Procurement Regime (RDC). From now on, the RDC can be applied to the hiring of any works, services, purchases, disposals and leases. The new rules were instituted, last Thursday (7/5), by Provisional Measure nº 961/2020, published in the Official Gazette (DOU). In addition to expanding the use of RDC, the MP changed the limits for bidding waivers and authorized advance payments in bids and contracts during the pandemic caused by the new coronavirus (Covid-19).
  
  MP No. 961/2020 applies to contracts made during the state of public calamity recognized by Legislative Decree No. 6, of March 20, 2020, valid until December 31, 2020, and to contracts signed in that period, as well as their extensions.
  
  
• On May 21, the Ministry of Health together with the national councils of Health Secretaries (CONASS) and Municipal Health Secretariats (CONASEMS), allocated States and municipalities to have R $ 2.2 billion for COVID-19, R $ 2 billion for the holy, non-profit philanthropic hospitals and hospitals that are affiliated with SUS to combat COVID-19. The rest is intended for the accreditation of community health agents, family health teams, oral health teams and river health teams.
• On May 28, the National Civil Aviation Agency (ANAC) announced that it will postpone the payment of fixed and variable licenses for 6 airports in the country: Confins (MG), Galeão (RJ), Fortaleza (CE), Salvador (BA) ), Florianópolis (SC) and Porto Alegre (RS). Grants due in May may be paid on December 18;
• On May 29, COFIEX authorized the Federal Government to raise up to US $ 4.01 billion in funds from multilateral banks and international development agencies for the Emergency Program to Support the Income of Vulnerable Populations Affected by Covid-19 in the country. The amount will be invested in Basic Emergency Income actions, expansion of Bolsa Família, Emergency Employment and Income Maintenance Program and Unemployment Insurance, partially financing the benefits offered by these social programs.
  The financing will allow reimbursement to the National Treasury of expenses already incurred and linked to the program's objectives. The funds will come from the French Development Agency (AFD), Inter-American Development Bank (IDB), World Bank, Latin American Development Bank (CAF), German Development Bank (KfW) and New Development Bank (NDB).
  
• On June 1, the Federal Government launched a new version of the transparency panel on contracts related to the pandemic caused by the new coronavirus (Covid-19). Data from the “Covid-19 Purchasing Panel” reveal that R$ 1.8 billion have already been invested in fighting the pandemic through public purchases. Since the publication of Law No. 13,979, of February 6, 2020, more than 3,600 processes have been carried out for the acquisition of 11,500 items, which include everything from health supplies such as masks, alcohol gel, gloves to more complex equipment, such as respirators. The Ministry of Economy has not only accelerated actions to simplify public procurement procedures during the pandemic period, with the edition of Provisional Measures (MP), but has also invested in the reformulation of panels for public access to data on acquisitions. Recently, tools were launched to access purchase information via auctions and bidding waivers. Now, a single panel consolidates the data of all the modalities of acquisitions made in the Federal Government Purchasing System (Comprasnet), updated daily.
• On June 5, the Federal Government announced that it has exceeded 150 services turned into digital since the beginning of the coronavirus pandemic, in March. Among the highlights, there are 46 new services from the National Health Surveillance Agency (ANVISA), many considered priority in the fight against Covid-19, and the Domestic Employee Unemployment Insurance, which generates savings of R$ 357.9 million per year for the coffers public and society. Altogether, 58 federal services were digitized in March, 45 in April and 53 in May. Since January last year, the federal government has turned 729 of its services into digital. The estimate of the Secretariat of Digital Government of the Ministry of Economy, the central organ of the digital transformation of the government, is savings of R$ 2.2 billion annually with these digitized services alone.
• On June 18, the National Social Security Institute (INSS) extended the deadline for beneficiaries to comply with requirements with the agency for another 60 days. The measure is contained in Ordinance 680, published in the Official Gazette (DOU), and aims to preserve benefits as long as the public health emergency decree resulting from the coronavirus pandemic is in force. The INSS may extend the deadlines again while the state of emergency lasts due to the pandemic.

Main sources of information

• Government of Brazil
• Ministry of Economy
• Ministry of Health
• Ministry of Infrastructure
• Ministry of Justice and Public Security
• Brazil’s Central Bank
• Brazilian Senate
• Chamber of Deputies
• BNDES
• Caixa Economica Federal
• Banco do Brasil (Bank of Brazil)
  
• ANVISA
  
• ANTT
  
• ANAC
  
• ANTAQ
  
• ANEEL
• ANP
• Brazil: Update on tax relief measures (COVID-19)
  

Tax: Rodrigo La Rosa rodrigolarosa@kpmg.com.br
Restructuring: Alan Riddell  – ariddell@kpmg.com.br
Head of Deal Advisory: Marco André Almeida - MAAlmeida@kpmg.com.br