Archive for the ‘Public Finances’ Category

Federal government may lose R$500bn in cases linked to tax issues

January 2, 2017

Nine tax issues discussed in lawsuits in both the Federal Supreme Court (STF) and the Superior Court of Justice could together amount to R$500 billion in losses for the federal government if it is defeated in all of them. The case with the greatest impact on public coffers — estimated at R$250 billion — will define if sales tax ICMS is included in the calculation basis of social contributions PIS and Cofins. The case has not yet begun to be tried in the STF. Other pending issues are the definition of an input to obtain PIS and Cofins credits, valued at R$50 billion, and the possibility of collecting PIS and Cofins on revenues from financial institutions, which may reach almost R$136 billion. There is also expectation that the courts will review the right of a credit related to the Tax on Industrialized Products (IPI) in the acquisition of exempt inputs from the Manaus Free Trade Zone.


Brasília considers creation of “recovery law” to aid indebted states

November 30, 2016

The federal government is studying the creation of a “recovery law” for states in financial difficulty. In general, the new law would allow the renegotiation of debts, disciplining the relation with creditors and public officials. Sources heard by Valor emphasize that the measure would have to be approved by Congress and could hardly be applied in the short term. According to one source, this mechanism is already applied in the US, but the conditions for its activation are quite strict. “There, the administrator loses practically all the capacity to manage the state.”

Brasília hardens stance with states over repatriation funds

November 28, 2016

The government rejects sharing the money obtained from fines on undeclared assets abroad with the states unless the states commit to a fiscal adjustment effort, a high-ranking source told Valor. Brasília had agreed to channel R$5 billion from the R$45 billion collected to the states in exchange for a national pact to improve the health of public accounts. Officials argue that current legislation doesn’t force the federal government to share the fines with states and without concessions from them it is even willing to let the Federal Supreme Court resolve the issue.

Repatriation Law raises concerns, but encourages asset managers

January 18, 2016
Fernandes, Figueiredo, Françoso Petros Advogados

Edison Fernandes

The so-called Repatriation Law, which President Dilma Rousseff signed into law Thursday, was received with some concern by law firms and with enthusiasm by wealth-advisory services of financial-service providers. The new act, still dependent on regulation by the Secretariat of Federal Revenue, allows taxpayers to regularize unreported funds they hold abroad by paying a 15% tax and a 15% fine. (more…)

Brazil adopts single standard for fiscal risk

January 14, 2016

The federal government started to use new parameters, similar to private-sector ones, to classify legal liabilities as “fiscal risks” that could cause unlikely, possible and probable losses – the Treasury has to set aside reserves to cover the last ones. Officials say the change aims to create transparent criteria for lawsuits against the federal government and its bodies. Before, every sector classified the risk according to its own interpretation. Last year’s budget had 49 issues that could result in R$838.1 billion in liabilities, while this year the number fell to 12 with R$662.9 billion in potential liabilities.

Brazil offers new credit line as Rousseff pushes positive agenda

June 12, 2013

(Reuters) – Brazil will hand out 17 billion reais ($8 billion) in cheap loans for home appliance purchases, the government said on Wednesday, in a move to bolster Brazilians’ buying power as a lackluster economy and high inflation erode its approval rating. (more…)