With the authorization of the Brazilian council on treasury-related policies (CONFAZ), São Paulo State Government created a new installment agreement program (known in Brazil by the acronym PEP) under which taxpayers will be able to pay any overdue amounts related to the tax on circulation of goods and services, the ICMS (state Decree No. 64.564/2019).
The program covers any taxes arising from transactions occurred by May 31 this year, whether they have already been classified as overdue liabilities or not, including those which are currently disputed in court.
Taxpayers that choose to adhere to the PEP and pay in cash will be given a discount of 75% on fines and 60% on interests. For payments in up to 60 monthly installments, discounts will be of 50% on fines and 40% on interest.
The minimum monthly installment must be BRL 500. Payments in up to 12 installments will be subject to a financial charge of 0.64% per month; payments in 13 to 30 installments, 0.80%; and payments in 31 to 60 installments, 1% per month.
In cases of ICMS under the tax substitution regime (“ICMS-ST”), payments are allowed to be made in up to 6 installments.
The PEP also lays down specific conditions for taxpayers who owe amounts which are not yet classified as overdue liabilities. In such cases, additional and cumulative discounts on fines can amount to 70% if the taxpayer pays the relevant amount within 15 days of the notice of default, 60% if taxpayer pays in 16 to 30 days after the notice of default and 25% for any other case.
Time to adhere to the PEP began on November 7 and will end on December 15.
Our tax practice team is prepared to provide you with guidance with on requests for installment agreements concerning ICMS.
