New incentive provided in the Government’s “Zero Litigation” program exempts penalties in cases of voluntary disclosure even if a tax audit procedure has already started

On January 12, the federal government issued Provisional Measure No. 1,160/23, instituting the “Zero Litigation” program, authorizing taxpayers to pay their overdue debts without incurring late payment penalties until April 30, 2023, even if the taxpayer is undergoing an audit by the Brazilian Federal Revenue Service¹.

This measure aims to increase federal revenue and is one of several measures adopted to reduce losses from federal tax litigation, which has caused significant financial losses to the Union in the past two years.

In compliance with § 2 of Article 3 of MP No. 1,160/23, the Brazilian Federal Revenue Service published Normative Instruction RFB 2130/2023 on February 1st to regulate the procedure outlined in the aforementioned provisional measure. According to the Normative Instruction, self-regulation, also known as self-disclosure, must be performed by the taxpayer through the confession and payment of the full amount of the taxes confessed, plus late payment interest, provided that the tax audit procedure has already begun but before the establishment of the tax liability. In this case, the late payment penalty and the penalty imposed by the tax authorities will be waived.

To benefit from this provision, the taxpayer must initiate a digital process on the E-cac portal, complete the self-regulation option form, and submit the rectified version of the following documents, depending on the debts to be confessed: Annual Adjustment Declaration of Individual Income Tax (DIRPF); Rural Property Tax Declaration (DITR); Declaration of Federal Tax Debts and Credits (DCTF) or Declaration of Federal Social Security and Other Entities and Funds Tax Debts and Credits (DCTFWeb); or Payment Slip for Guarantee Fund for Length of Service and Information to Social Security (GFIP).

It is worth noting that the Normative Instruction limited access to these benefits for companies under the Simples Nacional regime, without support from the provisions of MP No. 1,160/23. This may lead taxpayers who opt for this regime to legally challenge such limitation, as the Provisional Measure did not prohibit access to the benefit for any specific tax regime. This fact may indicate the illegality of § 3 of Article 2 of IN 2130/2023. ¹ Article 3 Until April 30, 2023, in the event that the taxpayer confesses and simultaneously pays the full amount of the taxes due after the start of the tax audit procedure and before the establishment of the tax liability, the late payment penalty and the penalty imposed by the tax authorities will be waived.

§ 1 The provisions of the caput shall apply exclusively to tax audit procedures initiated up to the effective date of this Provisional Measure.

§ 2 The Special Secretariat of the Brazilian Federal Revenue Service of the Ministry of Finance may regulate the provisions of this article.