Tax Transaction - "GAÚCHO AGREEMENT" Program

The "Acordo Gaúcho" program, established by State Law No. 16.241/2024, is a tax transaction initiative that offers special conditions, such as discounts and extended payment terms, for the regularization of tax debts of companies and individuals with the State of Rio Grande do Sul.

The program covers credits registered as outstanding debt of the State, its autonomous agencies, and public foundations. Exceptionally, it also includes credits disputed in tax enforcement proceedings or legal actions that question the tax obligation in whole or in part, even if they are not registered as outstanding debt.

TRANSACTION MODALITIES OF THE “GAÚCHO AGREEMENT”

1. Subscription Transaction

The debtor or the opposing party fully accepts the terms and conditions established in a notice that will be published soon by the State Attorney General's Office (PGE).

2. Transaction by Individual Proposal

Negotiations are personalized and can be initiated by either the debtor or the creditor. The terms are determined on a case-by-case basis, after a specific analysis of each taxpayer.

BENEFITS OF THE TRANSACTION

The transaction may include, individually or cumulatively:

• Discounts: On fines, interest, charges and fees, according to rules defined by the State Attorney General's Office or the State Revenue Service.

• Payment options: Special terms, installments, and moratoriums.

• Collateral management: Options to offer, replace, or sell collateral and liens.

• ICMS offsets: Use of accumulated ICMS credits or ICMS-ST reimbursement to settle up to 75% of the tax debt.

• Precatórios (Court-ordered payments): Use of liquid credits originating from final court decisions to offset up to 75% of the principal debt, fines, and interest.

PROGRAM LIMITATIONS

The following will not be subject to transaction:

• Debts not registered as outstanding debt, except in cases provided for by law.

• Reduction of criminal fines or related charges.

• ICMS (Brazilian state sales tax) debts of companies opting for the Simples Nacional (Brazilian simplified tax regime), unless authorized by law or the Management Committee.

• Debts of taxpayers who are systematically in default on ICMS (Value Added Tax).

• Debts fully secured by deposit, surety bond or bank guarantee, when there is already a court decision in favor of the State.

NEXT STEPS

The State Attorney General's Office and the State Revenue Service will regulate the application of the program through ordinances and supplementary acts. Law No. 16,241/2024, published on December 27, 2024, will enter into force within 90 days.

It is expected that the regularization of debts will enable companies to obtain tax clearance certificates, participate in bidding processes, access financing, and achieve greater financial predictability.

Source: Official Gazette - Law No. 16.241/2024.

By Nêmora Andrade