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Brazil: Tax developments in response of COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated on a regular basis. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 9 September 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: 

  1. loosening of the fiscal target above the previously forecasted deficit of US$ 24.8 billion; 
  2. 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); 
  3. relaxation of labor laws to maintain jobs; 
  4. aid for informal and self-employed workers (US$ 8 billion); 
  5. extension of payment of taxes, FGTS and contributions reduction (US$ 6 billion); 
  6. financial support to states (US$ 17.5 billion); 
  7. financial support to the airline industry; 
  8. expansion of liquidity in the markets, with the release of US$ 40 billion in compulsory deposits; 
  9. support from BNDES and public banks (BNDES: US$ 11 billion + Caixa: US$ 15 billion + Banco do Brazil: US$ 25 billion); 
  10. support for small and medium-size companies (US$ 8 billion); 
  11. postponement of readjustment of pharmaceuticals products.

Tax relief measures provided to taxpayers in Brazil in response to the coronavirus (COVID-19) pandemic include the following: 

  • On May 11 the Ministry of Economy  published Ordinance 201 extending installment payments from the Federal Revenue Service and the Attorney General's Office National Treasury, with payment deadlines in May, June and July, for August, October and December, respectively. 
  • Normative Instruction 1950 was published by the Federal Revenue, extending to the end of July the delivery of the Digital Accounting Bookkeeping (ECD), whose deadline was on May 29. It is now possible to await a possible move by the Federal Revenue to also extend the submission of the Tax Accounting Bookkeeping (ECF), which is the corporate income tax return, with delivery originally for the end of July. It is important to remember that the ECD is used to fill a large part of the ECF, that is, we have no doubt that the Federal Revenue is evaluating, and probably will announce, in the next days or weeks, the extension of the delivery of the ECF. This gives more impetus for companies to continue in the process of adapting to "new reality", with employees working on mobility, which makes group activities, synchronized and those where the technology infrastructure is relevant, mainly to handle ("downloads" challenging) "and" uploads ") the files of the ancillary obligations (ECD, ECF, SPED Fiscal, SPED Contributions etc.).
  • Social contributions due by employers and domestic employers, including the contributions due by rural producers, individuals and companies and agroindustry, as well as the social security due on revenues (CPRB), related to March and April 2020 should be paid in August and October 2020, respectively. 
  • The terms for collecting PIS/PASEP and COFINS contributions regarding March and April 2020 were postponed to August and October 2020, respectively.  
  • The normative instruction 1932/20 extends the deadline for filing the Declaration of Federal Tax Debts and Credits (DCTF) and the Digital Tax Bookkeeping of the Contribution to PIS / PASEP, the Contribution for the Financing of Social Security (COFINS) and the Social Security Contribution on Revenue (EFD – Contribution). In this sense, the DCTF and EFD originally scheduled to be remitted to tax authorities in the months of April, May and June, should now be filed by July 2020.
  • The Joint Resolution of SFP / PGE - 2, extends the term of validity of Positive Tax Certificates with Effects of Negative issued by SEFAZ / PGE for 90 days.
  • The Federal Government zeroed import tariffs on pharmaceutical and medical-hospital products used to fight the new coronavirus and adopted a measure to facilitate the import of disposable syringes and plastic tubes for blood collection.
  • Excise Tax rates (IPI) levied on products considered essential for the current global moment with the presence of COVID-19, were reduced to zero (0%), by the Federal Government.
  • The Chamber of Foreign Trade published a resolution reducing to zero (0%), until September 30, the Import Tax rate of several goods to be used in the fight against COVID-19.
  • The Attorney General's Office of the National Treasury suspended, for 90 days, the taxpayers’ defense term in the administrative proceedings regarding charges of debts posted in the federal debt roster, as well as authorizing transactions by adhesion regarding debts posted in the federal debt roster.
  • The Rio de Janeiro City Council suspended the terms established by tax legislation concerning the filing of objections and administrative appeals, as well as compliance with administrative requirements and cancellation of municipal registration or exclusion of all service activities from the activity registry economic. In addition, it extended for 60 (sixty days) the validity periods of the certificates which expired sixty days before the date of publication of this Decree.

Decree 10.305/20 reduces to zero the tax on financial transactions daily rate (0.0041% or 0.0082% per day) and its complementary rate (0.38%) levied on credit transactions carried out by individuals and legal entities. 

  • The change takes effect for transactions contracted from 03/04/20 to 03/07/20.
  • Excise tax rates reduced to 0% on products considered essential Import tax reduced to 0% on certain goods, medical equipment, and medicines used to address COVID-19.
  • The reduced rate will also be applied, during the same period, in case of credit transaction’s extension, renewal, novation, consolidation, debt confession and other similar transactions, as well as for transactions in default whose taxation has not reached the maximum tax rate of 1.5%.
  • The Brazilian IRS extended the deadline of Individual’s Income Tax Declaration (DIRPF) related to the calendar year 2019 to June, 2020.    It was established that, in case the tax payer opts for prompt payment or payment in installments automatically debited from a bank account, mentioned tax declaration must be submitted:
  1. until 06/10/2020, for a unique quote or 1st quota; and
  2. between 11/06/2020 and 30/06/2020, from the 2nd quota.
  • The Normative Instruction 1.924/20 also revoked the obligation of submitting in Individual’s Income Tax Declaration the number of the receipt from the last declaration submitted.

On 14 April, the President signed a law that encourages the renegotiation of tax debts with the Union. The text regulates the so-called tax transaction, a legal tool provided for in the National Tax Code (CTN), with the purpose of ending or preventing deadlocks by granting concessions to the parties involved. The law determines the following types of transactions:

  • in the collection of credits registered in the active debt of the Union, of its autarchies and public foundations, or whose collection is the competence of the Attorney General's Office;
  • in other cases of judicial or administrative tax litigation;
  • small tax litigation.

On May 12, the Ministry of Economy extended the terms of installments of tax installments due in May, June and July 2020. Amount of deferred funds is R $ 9.58 billion and installments may be paid, respectively, in the last working days of August, October and December 2020.

On May 18, the Federal Revenue published in the Official Gazette (DOU) Ordinance No. 2,256 of May 18, 2020 which defined the extension, exclusive to information referring to the base year 2019, of the FORMP & D (Form for Information on Technological Research and Technological Innovation Development Activities) delivery deadline for November 30, 2020.

On May 13, the IRS extended the deadline for the transmission of the Digital Accounting Bookkeeping (ECD) for the calendar year 2019 to July 31. The measure meets requests from class entities in the accounting area, who say they are having difficulties in carrying out their activities due to restrictions resulting from the coronavirus pandemic.

On 01 June, The Federal Revenue extended until June 30 the temporary measures adopted due to the coronavirus pandemic (Covid-19) regarding the rules for face-to-face assistance and the various administrative procedures adopted in Ordinance No. 543/2020. The change was made official in Ordinance RFB No. 936/2020, published in an extra edition of the Official Gazette. 

Also, on 01 June, The Federal Revenue extended until June 30th - due to the state of health emergency resulting from the pandemic of the new coronavirus - the rule that eases the delivery of documents. Normative Instruction RFB No. 1,956 / 2020, published in an extra edition of the Federal Official Gazette of Friday, 5/29, allows the delivery of simple copies of documents, in digital or physical format, without the presentation of the document being mandatory until the end of the semester.

On June 9, the Ministry of Economy announced new rules for the payment of administrative fines imposed on suppliers hired by the federal government. The amounts can now be paid in installments, cleared, and their payment postponed to 2021. The changes are in a normative instruction published in the "Official Gazette". According to the Ministry of Economy, the new rules may also be applied by states and municipalities in acquisitions made of resources from the Union's voluntary transfers.

On June 10, the IRS announced that the automatic debits of installment payments with maturities in May, June and July 2020 were suspended. These installments had maturities extended to August, October and December 2020, respectively, due to the Covid-19 pandemic. The decision was taken in compliance with Ordinance ME No. 201, of May 11, 2020, which determined the extension of the deadlines in the installment programs.

On June 17, the IRS reported that the payment of social contributions due in June was postponed to November. The change follows the pattern of late payments in April and May, which had been pushed to August and October, respectively. The measure was published in the Federal Official Gazette, under Ordinance ME No. 245. The determination also provides that there will be no interest or late payment penalty on the payment made until the new term.

On June 19, the National Treasury updated the Manual for Instruction of Claims (MIP), with the objective of including specific guidelines and procedures related to credit operations under Complementary Law No. 173/2020, which established the Federative Program of Confronting the Coronavirus (covid-19) and brought important changes to the Fiscal Responsibility Law (LRF). Chapter 16 was inserted in the MIP, which deals with contractual amendments to be made based on Article 4 of Complementary Law 173/2020. This legal provision allows the restructuring of credit operations already contracted by subnational entities, in order to allow the suspension of payments due in 2020, including principal and any other charges, by making contractual amendments to these operations, to be signed directly with financial institutions by the end of this year, maintaining the Union's guarantee, when applicable. In addition to the new chapter created, MIP also presents section 4.12, which deals with new credit operations in situations of public calamity recognized by the National Congress.

The Ministry of Economy, aiming at relieving the companies' cash during the COVID pandemic19, issued Ordinance 245 extending the payment period for the Social Security Contribution (CPP), PIS and COFINS referring to the May competence, from June to November. This had also been done for the March and April competencies.

Additional Information

On June 22, the Federal Revenue published an Ordinance that regulates the suspension of the payment of employers' social security contributions and the installments of installment agreements, corresponding to the months of March to December 2020, by municipalities that have their own Social Security Schemes (RPPS).

On July 1, the Attorney General's Office of the National Treasury extended the deadline for entry into the extraordinary transaction and adhesion transaction modalities, and an exceptional transaction adhesion period was also opened to collect the Federal Active Debt. An Ordinance was also issued. by the Federal Revenue and the Attorney General of the National Treasury (PGFN) clarifies points of the law that instituted the Federative Program to Confront the Coronavirus, such as those related to the suspension of tax payments.

On July 3, a Decree was published that extends the reduction of the IOF tax rate on credit operations for a period of 90 days, thus, the reduction becomes effective until December 2, 2020.

On July 14, the Federal Revenue Service and the Attorney General's Office of the National Treasury extended the term of validity of Negative Debt Certificates and Negative Certificates with Negative Effects for another 30 days, both related to federal tax credits and the Union's active debt. On the same day, the Special Secretariat of Finance of the Ministry of Economy presents updated data on the impacts of Supplementary Law 173/2020 on the finances of states, municipalities and the Federal District.

On July 15, the Federal Revenue Office extended the delivery of the Tax Bookkeeping for 2020 to the last business day of September and Law No. 14,025 / 2020 was sanctioned with a presidential veto, which prevented contributions to the S System from being normalized in the month of June.

On July 30, the Attorney General's Office of the National Treasury (PGFN) extended the term for adhering to the extraordinary transaction and adhesion transaction modalities, relating to the administrative collection of the Union's active debt. PGFN also extends until August 31, in as a result of the Covid-19 pandemic, the temporary suspension of the following collection acts: a) acts of termination of installments due to default, b) sending of debts for protest at a notary public office, c) term for the manifestation of defense in administrative procedures and term for advance offer of guarantee in tax execution and presentation of request for review. On the same day, the Federal Revenue Service extends until August 31 the measures adopted due to the Covid-19 pandemic regarding the rules for face-to-face service and various administrative procedures, such as the automated electronic issuance of billing notice and subpoena for payment of taxes, notification of the launching of the Individual Taxpayers' Network and the procedure for exclusion of installment taxpayers due to default of installments.

On August 4, the deadlines for submitting a defense and appeal in the administrative proceedings for labor infraction notices and debit notifications from the Time Guarantee Fund (FGTS) were extended to after the reopening to the public of the Secretariat's decentralized units Ministry of Economy.