Bill No. 4.257/2019, drafted by Senator Antonio Anastasia, was presented in August 2019 to the Senate introducing the administrative tax enforcement proceedings and the option to submit tax matters to arbitration.
If approved, the new Bill will give taxpayers the option to submit certain types of tax disputes to arbitration.
One justification for the need to change the law is that State courts are clogged and, consequently, settling disputes in court can take too long. Tax enforcement proceedings account for roughly 39% of all cases and 73% of all enforcement cases pending in Courts, as the latest edition of the Justiça em Números report shows.
Moreover, having the option to settle disputes by means other than litigation means that taxpayers can use the most suitable dispute resolution mechanism for each specific case.
The new Bill does not define which matters can be submitted to arbitration and it also does not set any financial limitation as to the amount of tax involved. However, taxpayers who wish to settle their tax dispute through arbitration must meet two requirements:
First, the dispute must first be brought to the Courts and then submitted to arbitration.
Second, the tax liability must be backed by a guarantee – escrow, bank guarantee or bond. Such requirements are meant to protect both the State’s right to be paid the overdue tax and the taxpayer’s individual rights.
Once such requirements are met, the taxpayer may use arbitration as a faster dispute resolution method, one that can properly accommodate the specifics of the case.
The Bill is currently being reviewed by the Constitution, Justice and Citizenship Committee of the Senate and is just about to be voted. If approved, the Bill will then be submitted to the House of Representatives, which will review it and vote. If the Bill passes on the Legislative, then it will be sent to the President for sanction. Only after that, the Bill will be published and enter into force.
