President Michel Temer signed a "provisional measure" (a form of executive order) this Tuesday that extends the deadline for people and companies willing to join the Special Tax Renegotiation Programme (PERT), called "Refis" for short.

The Provisional Measure (No. 807/2017) extends the deadline for sign-up, which would have otherwise ended on 31 October, to 14 November. According to Finance Minister Henrique Meirelles, the programme helps indebted companies return to producing and creating jobs in the country.

“The Refis ultimately means that companies in debt with the Federal Revenue Service receive some rebates to pay their debts and, therefore, are able to operate, pay their taxes, produce and create jobs again," he said during a hearing in the Senate Committee on Economic Affairs (CAE).

Delinquent debtors

This year, the minister estimates the government will be able to collect just over R$ 7 billion this year with the measure, which will be important to strengthen the public budget. However, Meirelles warned, after this extension, there will be no new deadlines or reissues of the programme. "There has to be a certain limit in order for us not to be so generous that we encourage companies to stop paying taxes in order to wait for the next Refis," he said.

Debtors who join the new phase of the programme will have to meet more stringent criteria than those who entered before the extension. Companies willing to sign up will have to pay a specific share of the full amount of the rebated debt (between 1% and 12%) by the end of the new deadline, which is November 14. In the original measure, debtors also had to make a larger initial payment, but were allowed to spread them over a three-month period.

Conditions

In order to join the programme, companies formalise their request by means of an application form that can be filed out on the Secretariat of Federal Revenue (RFB) website. The programme provides discounts and more favourable conditions for delinquent companies and individuals to settle their tax debts.

Those willing to make a single down payment to settle all debts with the RFB will obtain discounts equivalent to 90% of the interest and 50% of the fines applied to the principal. For debts that had already been assigned by the RFB to the Attorney General of the National Treasury (PGFN) for judicial collection, the discount will be lower: 25% of all charges and legal fees. Debtors may choose to pay the full rebated amount in as many as 180 instalments.

Adherence to the programme will be effective upon payment of the first instalment/down payment. Subsequent instalments must be of at least R$ 200 for individual debtors and R$ 1,000 for entities.