MP 899 needs refining before it can improve Brazilian tax transactions

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

MP 899 needs refining before it can improve Brazilian tax transactions

Sponsored by

logo.png
The measure aims to improve the tax dispute resolution process

Júlio de Oliveira, Paulo Rogério G. Ribeiro and André Affonso Amarante of Machado Associados discuss the effectiveness of the latest measure related to tax transactions in Brazil.



On October 16, 2019, the federal executive branch issued Provisional Measure (MP) No. 899 to establish conditions related to tax transactions. The purpose of the measure is to improve current regulation and methods for the settlement of tax disputes between the federal government and taxpayers, as provided for in the National Tax Code. Taxpayers currently may negotiate conditions such as penalty and interest discounts, terms and forms of payment, on transactions.



MP 899 can be seen as a commendable act, as it may (i) relieve the Brazilian Courts – which has a backlog of lawsuits without expectation of a prompt and definitive resolution; (ii) represent a way to increase federal tax collection; and (iii) reduce the indebtedness of individuals and companies.



However, in spite of the innovations brought forward by MP 899, the wording of the measure requires adjustments, changes and refinements that, in our view, should be implemented before its conversion into law. The broad debate between the federal government and taxpayers about the subject of the tax transaction is welcomed, especially with publicity, representativeness and participation in defining the variables. 



It can be argued that the unilateral proposal of the Minister of Economy and the mere adhesion of the taxpayer are incorrect ways of materialising the tax transaction. MP 899 prevents the active participation of other interested parties in the formulation of transaction proposals, mainly interlocutors of taxpayers, such as the Order of Attorneys of Brazil (OAB), associations, trade union confederations, and trade associations. The lack of participation of the company in the transaction process may strip the mechanism of its main characteristics, subjecting unilateral proposals to questions of all kinds that may frustrate the tax transaction.



MP 899 also fails to objectively address specific requirements that make a legal discussion relevant and widespread, which in itself is a problem capable of stifling the materialisation of the tax transaction. Firstly, the use of the conjunction “and” in the wording of MP 899, instead of the alternative conjunction “or”, significantly limits tax disputes that may be the subject of a transaction, as the legal controversy may be relevant but not widespread and vice versa. Secondly, it is common for certain tax discussions to be restricted to a particular sector of the economy. When these restrictions exist, this measure could be interpreted as being devoid of dissemination; when it should be relevant to the federal government and to taxpayers.



Moreover, the executive branch has committed an error in authorising the federal government to file for taxpayer bankruptcy in the event of the termination of a transaction. In addition to being inconvenient, such a matter should not be dealt with by means of a Provisional Measure. Furthermore, it affronts case law that rules out the possibility of the federal government filing for bankruptcy in cases where the taxpayer is not interested in the bankruptcy proceedings.



As the executive branch’s initiative to regulate tax transactions at federal level is commendable, there is little doubt that MP 899 deserves to have its content implemented. Following broad discussion in society and from the National Congress, a final agreed version can effectively encourage the federal government and taxpayers to use this important instrument for tax debt relief and dispute settlement.



more across site & shared bottom lb ros

More from across our site

It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
New French legislation should create a more consistent legal environment for taxing gains from management packages, say Bruno Knadjian and Sylvain Piémont of Herbert Smith Freehills Kramer
The South Africa vs SC ruling may embolden the tax authority to take a more aggressive approach to TP assessments, an adviser tells ITR
Indirect tax professionals now rate compliance as a bigger obstacle than technology and automation; in other news, Italy approved a VAT cut on art sales
AI-powered tax agents are likely to be the next big development in tax technology, says Russell Gammon of Tax Systems
FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
Gift this article