COMPANIES ARE ABLE TO REVERTE, ON INTERLOCUTORY APPEAL, 1ST LEVEL DECISIONS THAT DENIED THE PRELMINARY INJUNCTION TO TEMPORARILY SUSPEND THE PAYMENT OF FEDERAL TAXES DUE TO THE COVID 19
Recently Brazilian companies that did not obtain preliminary injunctions to suspend, due to the COVID 19, the payment of federal taxes, have managed to revert, in interlocutory appeal, the 1st level decision that denied the deferral of federal taxes for 3 (three) months.
So far, there is knowledge of two decisions in from the Federal Court of 1st Region, both originated from Minas Gerais State. Those decision represent an important precedent for taxpayers, along with many others, also in favor – all first level decisions- of which stands out a decision by the Federal District and five decisions by the Federal Court of cities in the countryside of São Paulo State.
The main argument used by taxpayers in their claims is that measures to restrict circulation and social distance to contain the dissemination of COVID 19 are making its financial flow unfeasible, jeopardizing the maintenance of employees and creating the risk of layoffs. In addition, this deferral would have also been authorized by the legislative body under the provisions of the Ministry of Finance Ordinance No. 12/2012, which provides for such postponement of payments in cases of public calamity.
Thus, considering the high Brazilian tax burden, the taxes’ deferral payment , would be a way for the company to obtain financial relief, avoiding layoffs and its harmful economic and social consequences.
The mentioned decisions of second level give support for our understanding that, given the scenario experienced today by the country, as well as decisions by the Brazilian Supreme Court in the sense of the need for extraordinary measures in view of the situation currently experienced by all States and Municipalities, it is appropriate to introduce precautionary measures in order to obtain the taxes’ deferral payments, during the period in which the restrictions mentioned are in effect.
Our team is available to assist in this and other tax law issues. For further information please contact our Tax Team by the following e-mails: rmarques@zaslaw.com.br or zaslaw@zaslaw.com.br