REFAZ 2019: All you need to know

Last Saturday, November 4th 2019, a new Program was published by the state of Rio Grande do Sul, in Brazil, regarding special conditions for payment of ICMS debts. According to the publication, the initiatives were presented in a press conference at the Treasury Office, and the new measures will assist financial management, in the same way that a variety of others initiatives already adopted to balance the budget.

This REFAZ brings new conditions this year, with the possibility for total debts renegotiation. It’s an alternative for the government to increase its income, and for the companies to settle their debts.

Companies with overdue ICMS liabilities until 31st December 2018 can became part of the program.

REFAZ 2019 Modalities:

1st Modality: 90/90 Rule – This modality grantees 90% off on interests and fines overdue. This rule counts to taxpayers from General Category and those opting for Simple National (a Brazilian simplified taxation system), and the payment must be made until 13th December 2019. The term for the taxpayer to present the spontaneous denunciation, request the separation of debts not fitting in the program and give up pending tax offset requests at Compensa-RS (a local tax offset program) ends on December 4th 2019. The savings in this modality is 90% on interest, 50% on formal violation fines and 90% on material violation fines or late charges.

2nd Modality: 60/60 Rule – In the modality, the taxpayers can select part of their tax debts to be included in Refaz 2019 and will be entitled to up to 60% deduction on interests and fines. Taxpayers from General Category and those opting for Simple National may also be benefited. The savings in this modality is 60% on interest, 50% on formal violation fines and 60% on material violation fines or late charge.

3rd Modality – Allows installment payments with a minimum down payment of 15% of the debt and grants reduction of 50% on interest, plus fines discounts that may also achieve 50% off, depending on the number of installments, which vary from 12 to 120.

4th Modality –Allows installment payments with a down payment beneath 15% on the debt and grants reduction of 40% on interest, plus fines discounts that may achieve 30% off, depending on the number of installments, which vary from 12 to 60 for those taxpayers on the General Category, and from 12 to 120 for those taxpayers opting for Simple National.

The adhesion period for REFAZ 2019 is from November 6th to December 13th 2019. Refaz was authorized by National Finance Policy Council (English version of Conselho Nacional de Política Fazendária – Confaz), through the ICMS Agreement 151/19 to Rio Grande do Sul and other states.

By Greice Jasper