Provisional decree imposes new procedures for companies entitled to tax benefits 

Statute introduces new registration requirements for entities benefitting from tax reliefs, breaks and exemptions 

 Last updated on June 14, 2024 

On June 4, the Brazilian Federal Government issued Provisional Presidential Decree No. 1,227/2024, introducing important changes to the country’s tax governance.  

The statute, which is currently under review by Parliament, is expected to significantly impact corporate workflows, as its provisions introduce new procedures for reporting information on tax benefits. 

Check out the key changes: 

New registration procedures

According to the recently enacted provisions, legal entities are now required to report to the Federal Revenue Service, through a simplified electronic document, all benefits to which they are entitled (including tax breaks, reliefs and exemptions), as well as the sum of their tax claims subject to offsetting. 

• Compliance with federal taxes and contributions; 
• Good standing with the Registry of Unpaid Public Sector Debts (Cadin) concerning tax and financial incentives;
• Good standing with the Severance Indemnity Fund Administration - FGTS;
• No sanctions for administrative misconduct, temporary prohibition of rights, or disqualification from receiving incentives due to harmful acts against the Government;
• Registration with the Electronic Tax Domicile (DTE);
• Current registration with the Federal Revenue Service.

Penalties

Failure to meet the registration requirements will subject the company to a fine, calculated monthly or for any fraction thereof, based on its gross revenue, according to the following percentages:

• 0.5% on gross revenues up to BRL 1 million;
• 1% on gross revenues between BRL 1 million and BRL 10 million;
• 1.5% on gross revenues above BRL 10 million. 

The penalty can be as high as 30% of the tax benefits sum. Additionally, a 3% fine will be imposed on any amount that has been omitted or misreported, capped at BRL 500.00. 

Other provisions

Finally, the new rules empower the Federal District and municipalities to investigate and file administrative proceedings related to the Rural Land Tax (ITR). This effort reduces the bureaucratic burden on the Federal Government in handling procedures related to this tax, which has been under the purview of local authorities for inspection and assessment since 2005.

Entry into force

The new provisions take immediate effect; however, since they were enacted as a Provisional Presidential Decree, they must be converted into law by the National Congress within 120 days, otherwise they will cease to be effective.

Specialized tax consultancy 

DPC has a dedicated team of experts ready to advise companies on best practices for tax compliance. Contact us today at: dpc@dpc.com.br.