Tax Law: planning, active tax debt and tax defense in Brazil

Corporate tax planning is the prior legal analysis of the tax consequences of a business decision. It does not promise lower taxes: it shows which paths the law allows, and with what risks, before the decision is made. It generally involves:

• assessing tax regimes, such as Simples Nacional, presumed profit (lucro presumido) and actual profit (lucro real), according to the company's eligibility;
• tax consequences of business transactions, such as the sale and purchase of assets and the distribution of profits;
• corporate reorganizations, such as mergers, consolidations and spin-offs;
• taxation of investments;
• planning of contracts and transactions.

There are legal limits. Planning must take place within the law, with a business purpose and before the taxable event. Practices that the law disregards, such as simulation, can lead to assessments and fines.

In the Federal District, ICMS, ISS, IPTU and ITBI are administered by a single tax administration, because the Federal District combines the powers of a State and of a Municipality. Identifying the competent authority avoids mistakes here and in any other State or Municipality.

Active tax debt (dívida ativa) is the registration, by the public treasury (Fazenda Pública), of a credit that has already been established and not paid. Federal debts are registered by the Attorney General's Office of the National Treasury (PGFN). State, Federal District and municipal debts follow the attorney offices and rules of each authority. Registration allows collection through a tax enforcement action (execução fiscal) and usually affects the issuance of tax compliance certificates.

Regularization alternatives

• Installment payment of tax debts, through programs with their own rules on eligibility, terms and guarantees;
• Tax settlement (transação tributária): the Federal Government allows it under Law No. 13,988/2020 (in Portuguese), by joining public notices or through an individual proposal, depending on the case;
• administrative or judicial challenge of the credit, when there are grounds;
• payment, when it is the most suitable option.

Not every debt is eligible for the same options. The nature of the credit, the amount, the stage of collection, the debtor's situation and the notice or program in force define what is available. PGFN procedures, such as checking registered debts and joining negotiations, are carried out through the agency's official channels.

Consequences of default

• fines, interest and charges;
• registration as active tax debt and protest of the Certificate of Active Debt (CDA);
• difficulty obtaining tax compliance certificates, which are needed to contract with the government or obtain credit;
• tax enforcement action, with the possibility of seizure of assets and freezing of bank accounts;
• restrictions on remaining in tax regimes and programs.

Notices, tax assessments and objections

A tax assessment notice (auto de infração) formalizes the collection of tax, fines and interest. Receiving one does not mean the charge is owed, nor that it is not owed: it means a period has opened, counted from notification, to pay, regularize or present a defense (objection). The analysis starts from the facts, the legal grounds used by the tax authority and the taxpayer's documents.

While the administrative dispute is pending, the claim is generally suspended from enforcement. Depending on the rules of each authority, administrative appeals are available: at the federal level, to the Administrative Council of Tax Appeals (Carf); States and the Federal District have their own bodies.

Deadlines are short and vary depending on the authority, the tax and the rule in force, including how they are counted (calendar or business days). Check the deadline stated in the document you received.

Tax enforcement actions and means of defense

Once a debt is registered as active tax debt, the tax authority may file a tax enforcement action, governed mainly by Law No. 6,830/1980 (in Portuguese), based on the CDA. The analysis checks:

• whether the CDA meets the legal requirements;
• whether the named debtor is the person responsible;
• statute of limitations, expiry of the right to assess, payment or another ground for extinction;
• the possible ways to provide security for the proceeding.

The defense can be made through a motion against enforcement (embargos à execução), which generally requires security, or through a pre-enforcement objection (exceção de pré-executividade), for matters the judge can decide without gathering evidence. Outside the enforcement action, an action to annul the tax debt and a writ of mandamus (mandado de segurança) may also be considered, each with its own requirements and deadlines.

Companies may have paid tax unduly or in excess, because of a calculation or classification error or a charge without legal basis. In these cases, the law provides, in specific situations, for refund (return of the amount) and offset (using the credit to pay other taxes). The analysis considers:

• whether the payment was in fact undue or in excess, and for which period;
• the necessary documentation, such as proof of payment, invoices and accounting and tax records;
• the deadline to claim, which is generally five years, with specific rules depending on the tax and the situation;
• the appropriate route: administrative request, offset or court action;
• legal limitations and prohibitions.

Not every payment generates a credit. An offset made without legal basis may not be approved and may result in penalties. There is no guarantee of recovering amounts: each case depends on proof.

Constitutional Amendment No. 132/2023 and Complementary Law No. 214/2025 (both in Portuguese) created the IBS (Tax on Goods and Services), the CBS (Contribution on Goods and Services) and the Selective Tax. The transition is gradual, with its own transition rules until 2033, and gradually phases out taxes such as PIS, Cofins, ICMS and ISS.

Among the effects that deserve attention:

• long-term contracts and clauses on price adjustment and pass-through of taxes;
• price formation;
• use of tax credits;
• ancillary obligations and calculation systems;
• planning of operations and investments during the transition.

The regulation continues to be supplemented, so the review of contracts and operations should follow official sources.