With the aim at boosting tax revenues in a moment when economy still struggles under a deep fiscal crisis, without increasing the heavy national tax burden, the Senate approved, on 04/15/2021, Bill of Law no. 458/2021 (PL 458/2021). PL 458/2021 creates the Onshore Transparency and Cost Update Regime (REARP). Authored by Senator Roberto Rocha, PL 458/2021 had a favorable opinion rendered by Senator Marcos Rogério, with presentation of a substitute bill, which Senate approved, and is now being submitted to analysis by the House of Representatives.
If approved by the House of Representatives without amendments and sanctioned by the President, the Law resulting from PL 458/2021 will maximize tax revenues in 2021, and potentially up to 2023, and also allow individuals to update cost of their movable and immovable assets, and individuals and companies to correctly report assets, being subject to a taxation lighter than the ordinary (specifically, 3% individual income tax on asset cost update, and 15% income tax on asset correct reporting added by a 15% fine).
Taxpayers will have up to 210 days to adhere to the Regime, commencing on the date when the new law entries into force (if the Bill passes). To formally adhere, taxpayers will have to file a specific return and pay the respective tax (added by the fine in case of asset correct reporting), at sight or in up to 36 equal, monthly and successive installments, plus interest at the SELIC rate. Taxpayers may advance (full or partially) payment of installments.
In general terms, adhering to REARP and fulfilling its conditions will benefit taxpayers with an amnesty of other taxes on assets correctly reported, and extinction of tax related-criminal sanctions, except for those who have already been convicted for such crimes (with final judgment). REARP may also benefit taxpayers that have been convicted and filed an appeal, provided that all conditions of the regime are satisfied before a final decision is rendered. The punitive power will be suspended while the taxpayer is submitted to the Regime, as long as installment application has been filed before a criminal complaint is filed and received in court, with suspension of statute of limitations terms, which do not run in this period.
Taxpayers that intend to adhere to REARP, specially on the asset correct reporting regime, will be required to maintain in good order, for 5 (five) years, counted from the sale of the asset after adhesion to the Regime, a copy of documents that supported the specific return and to present them, in case of a tax audit, pursuant to regulations.
The information and documents provided under this Regime will be protected by tax secrecy.
After enactment of the Law based on PL 458/2021, the Brazilian Tax Authorities will enact the relevant regulations, probably through normative instruction, which will be important for providing details on the form of joining the Regime, as well as for clarifying issues not expressly covered by law.
Our tax team will continue following PL 458/2021, and is at your disposal to provide more information and clarifications on PL 458/2021.