BRASILIA (Reuters) – Brazil’s Senate approved a bill on Wednesday night that introduces changes to tax trial rules, aimed at raising the bar for companies to win challenges to their tax bills.
The change is a crucial element of President Luiz Inacio Lula da Silva’s economic strategy to eliminate the primary budget deficit by the coming year.
The bill, which now proceeds to the stage of presidential approval, grants the government an automatic victory in cases of a tied vote by a federal tax appeal board regarding challenges raised by companies and individuals.
The previous administration under President Jair Bolsonaro had reversed this provision, tilting the balance in favor of taxpayers, a change that incurred an annual loss of around 59 billion reais ($12 billion) for the state, as estimated by Lula’s Finance Ministry.
Shortly after taking office in January, Lula sent an executive order to Congress aimed at reversing his predecessor’s alteration to the voting rules within Brazil’s Federal Administrative Council of Tax Appeals (CARF), which handles taxpayers administrative cases.
The executive order, which faced resistance from corporations, did not undergo congressional voting and expired in June.
Consequently, the government prioritized a bill addressing the same matter, leading to its approval in July by the lower house of Congress.
($1 = 4.8890 reais)
(Reporting by Marcela Ayres; editing by Grant McCool)
