In 2013, the Brazilian Superior Court (STF) decided on the ADIs 4357 and 4425 and declared unconstitutional devices of article 100 of Federal Constitution, which establishes rules on the payment of Writs of Payment[1](“Precatórios”), and article 97 of the Transitory Constitutional Disposition Act (ADCT), which predicted a special regime of payment. On the effort to regulate the STF’s understanding, Constitutional Amendments n. 94/16 and 99/17 were enacted.

As a result of those amendments, article 105 of ADCT allowed the use of Writs of Payment to offset State and Municipal collectible tax debts registered until 03/25/2015. A 120-day deadline was established (starting on January 1st, 2018) for States and Municipalities to regulate the matter. According to article 105, §3º, once this deadline expires, if there’s no State of Municipal law regulating such payments, Writs of Payment creditors may proceed with the offset.

The deadline expired in the beginning of May, and a lot of States and Municipalities still have no law on the matter. In the State of São Paulo, Bill of Law n. 807/17 has been fast-tracked, but has not been updated since October 2017. Currently, since there is Constitutional authorization, but no regulation, taxpayers who wish to offset Writs of Payment with collectible tax debts in the State of São Paulo can do so judicially.

[1] “Precatórios” are negotiable debt instruments issued by judicial courts in Brazil that represent monetary non-appealable judgments against Brazilian governmental entities. Historically, Brazil has used precatórios as a means to ease payments on federal, state and municipal longstanding debt, functioning as de factosecurities exchangeable in the market and with fixed payment schedules.







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