Non-Overdue Liability Certificates: Why keeping them up-to-date?

It is very important to keep up with tax obligations, an indispensable requirement when there is a need to maintain assets, participate in bids, make bank loans, or any other transaction that needs to attest the company’s liability. To prove this condition, it is necessary to present several documents, among them, the Non-Overdue Liability Certificates (Certidões Negativas de Débitos - “CND”).

The CNDs are issued by local, state, and federal agencies in order to certify that the legal entity or individual do not have any tax pending until the issuance.

The certificates are also required in business transactions such as mergers or acquisitions. They are usually issued during the collection of information in the Due Diligence process, when a specialized team analyzes the documents and accounting and financial data of the asset/company being negotiated. Based on such information, decision makers can assess the risks involved in the operation.

Keeping the certificates up-to-date not only gives better conditions and agility to close deals but it is also a way to keep the risk classification fit in what is desirable, ensuring that the company is able to have its tax situation checked whenever is required.

The periodic issuance of certificates allows the company to constantly monitor the company’s tax compliance and thus reduce the risk of a transaction being delayed or even not performed due to the lack of such documents. Check the following main types of certificates accepted for companies, the issuance process, and validity of each one of them. However, it worth mention that there is a large range of existing certificates and some different CND may be required, depending on the type of operation that is being performed.

Which are the most common CNDs requested?

The issuance of any of the following Non-Overdue Debits Certificates is only possible if the company complies with all of its tax and financial obligations. They are:

1) Joint Debt Certificate Related to Federal Taxes and Federal Active Debt;

2) State Taxes Certificate;

3) Active State Debt Certificate;

4) Municipal Taxes Certificate;

5) Municipal Active Debt Certificate;

6) Liability Certificate in relation to the FGTS

7) Non-Overdue Liability Certificate of Labor Debts;

8) State Labor Court Certificate

Joint Certificate of Federal Tax Debit and Federal Active Debt: after the extinction of the Social Security Debt Certificate, occurred on October 20, 2014, the federal government has unified the certificates proving tax liability of all federal taxes, including of Social Security, within the Federal Revenue scope and within the National Treasury Attorney scope.

State Tax Certificates: it is intended to certify if the individual or legal entity registered in the Taxpayers Registry of ICMS, even though in a written-off situation of register, has debts or not before the State Revenue. The issuance and filing process vary from state to state.

State Active Debt Certificate: it attests or not the existence of debts, taxable or not, enrolled in active debt. The responsible state agency, depending on the procedure adopted by each state, must make the issue it physically or online.

Local Tax Certificates: it states the non-existence of pending payments, infraction notices, installment payments, confessed debts and others. Each city has its own particularity, but it is usually required the Municipal Registration and the CNPJ. One may request at the agency or online, and the fees payment for the certificate issuance depends on the city hall adopted process.

Local Active Debt Certificate: it comprehends the existence of debts, tax or not, registered in active debt of the Municipality. One may issue at the responsible local agency or online, depending on the procedure each city hall adopts.

FGTS Compliance Certificate: it certifies that the company complies with FGTS obligations and with payment of social contributions. In the case of the CRF, one can issue at Caixa's website.

Labor Debts Non-Overdue Liability Certificate: electronically issued, it certifies the non-existence of defaulted debts before the Labor Court. It may be issued at the Labor Court website based on the information provided by the 24 Regional Labor Courts in Brazil. According to the Superior Labor Court, "they include labor obligations, to perform or pay, imposed by judgment, labor agreements ratified by the court and not complied with, agreements reached before the Previous Conciliation Commissions (Law 9958/2000) and not met, the terms of adjustment of conduct signed with the Ministry of Labor (Law 9958/2000) and not fulfilled, court costs, fees, fines, expert fees and other expenses arising from lawsuits and defaulted."

State Labor Court Certificate: electronically issued, it certifies the non-existence of debts defaulted before the state court. The name varies by state and is issued through each state's Labor Justice Website, ie it is necessary to access the website and check the procedures.

DPC also obtains other certificates, such as:

Criminal Distribution Certificate;

Civil Distribution Certificate;

Federal Justice Certificate;

Certificates Class-Agency;

Survey of write-off of protest.

Avoid Surprises

Keeping the certificates up-to-date is a benefit to the company, as it attests the business compliance with the local, state, and federal levels and avoids surprises at decisive moments.

Domingues e Pinho Contadores, through the Paralegal Department, has a specialized team to advise clients in a timely, regular or frequent manner. In addition, DPC is part of the GBrasil de Contabilidade group and thus has 37 corresponding partners who work in the main cities of Brazil, making easier and faster the issuance process of certificates in other locations.