Regulation of the “Acordo Paulista” settlement program provides benefits for settling debts registered as state overdue liabilities

Tax Transaction

In November 2023, State Law No. 17,843/2023 (“Law 17,842/23”) was published, creating the “Paulista Settlement” program, which provides for various types of settlement of tax debts demanded by the State of São Paulo. The aim is to encourage voluntary regularization by taxpayers, as well as to reduce litigation, by granting more beneficial conditions for payment of debts, whether or not they are registered as active debt.

In order for Law 17.842/23 to be effectively applied, it must be regulated by the Finance and Planning Department (“SEFAZ/SP”), for the transaction of debts not registered as active debt, as well as by the State Attorney General’s Office (“PGE/SP”), which manages debts already registered.

PGE/Transaction Notice 1/2024 (“Notice 1/2024“)

In this context, on February 7, 2024, PGE/SP published its first adhesion transaction notice, Notice 1/2024, which regulates the transaction of debts related to the Tax on Circulation of Goods and Intermunicipal and Interstate Transportation and Communication Services (“ICMS”) registered as an active debt, even in the execution phase, which have been updated with default interest higher than the SELIC rate for the periodThis is due to the application of Law No. 13.918/2009 and Law No. 16.497/2017, whose unconstitutionality has already been declared by the Federal Supreme Court (“STF”) in ARE1.216.078.

The deadline for applying for membership began on 7/2/2024 and will end on 29/4/2024.

Taxpayers can choose which debts they want to trade, except for the following debts (i) fully guaranteed, (ii) on which there is a final and unappealable decision in favor of the State of São Paulo, and (iii) which have already been the subject of a previous transaction, terminated within the last 2 years.

According to the notice, ICMS debts can be paid with a a 100% discount on default interest, as well as a 50% discount on the remaining debt (fines and legal charges), without reducing the principal amount. (fines and legal charges), with no reduction in the principal amount. Confirmation of adhesion also depends on payment of a down payment of 5% of the consolidated amount.

For payment of the remaining amount after discounts, up to a limit of 75% of the total, the following may be used (i) accumulated ICMS credits and the rural producer’s own or third-party credits, (ii) your own or third-party writs of payment, and (iii) amounts deposited, blocked, unavailable or pledged, including for the down payment.

The São Paulo laws stipulating interest on arrears were declared unconstitutional by the Supreme Court in 2017, and there is no longer any controversy on the subject. However, the option to enter into a tax settlement represents an opportunity to speed up the closure of the discussions that still exist.

The lawyers from Araújo e Policastro’s tax team are available to provide further guidance and clarify any doubts taxpayers may have about joining the “Acordo Paulista” program.