Supplement to the General State Budget – Measures to support business activities

August/2020

Summary of some measures foreseen to amend OGE2020 (Law 27-A / 2020)

 

Deduction of Tax Losses

Creation of a special regime for the deduction of tax losses that may be determined in the taxation period of 2020 and 2021, and in relation to tax losses that are reported on the first day of the taxation period of 2020.

  • Tax losses for 2020 and 2021: the reporting period is now 12 years (previously, 5 years for large companies). For SMEs, the 12-year term remains.
  • The limit of 70% for deduction from taxable profit is increased to 80% of taxable profit, whenever this difference results from the deduction of tax losses calculated in the tax periods of 2020 and 2021.
  • Regarding tax losses reported on the first day of the 2020 tax period, the counting of your reporting period is suspended during the 2020 and 2021 tax periods, resulting in a 2-year increase in the reporting period for losses calculated in 2014 and following years. 

Extraordinary limitation on payments on account (PPC)

In terms of IRC, the 1st and 2nd PPC may be limited, under the following conditions:

– The 3rd PPC limitation is applicable, with a limit of 50% of its amount, to the 1st and 2nd PPC of the 2020 tax period, provided that the monthly invoicing average communicated through the E-invoice, referring to the first 6 months of the year 2020 shows a drop of at least 20% in relation to the average verified in the same period of the previous year

– The limitation may extend to the entire 1st and 2nd PPC of the 2020 tax period, provided that the monthly invoicing average communicated through the E-invoice, referring to the first 6 months of the year 2020 shows a break of at least at least 40% in relation to the average verified in the same period of the previous year.

This limitation always applies (regardless of the break in billing) when the taxable person is an SME (micro, small or medium-sized company)

 

Early return of unused special payments on account (PEC)

Entities classified as micro, small and medium-sized companies may request, in 2020, the full reimbursement of the part of the Special Payment on Account that has not been deducted, until 2019, without considering the period defined in paragraph 3 Article 93 of the CIRC (6 years)

 

Exceptional payment system in installments for tax debts and Social Security

An exceptional system of payment in installments is created, applicable to tax debts related to tax facts occurring between 9 March and 30 June 2020, and to tax debts and debts of monthly contributions due to Social Security due in the same period, applicable to any debtors, including those already complying with a installment plan authorized by the Tax and Customs Authority or Social Security under the terms of the recovery plan approved under the insolvency process, special revitalization process, special process for payment agreement or subject agreement to the extrajudicial regime for the recovery of companies, without the need to provide additional guarantees.

Extraordinary Tax Credit for Investment II (CFEI II)

  • An Extraordinary Tax Credit for Investment II (CFEI II) is created, which consists of a deduction from the collection of IRC, in the amount of 20%, of the eligible investment expenses, which are made between July 1, 2020 and June 30, 2021, up to the limit of 70% of that collection.
  • The deduction from IRC collection is made in 2020 or 2021, depending on the relevant dates of the eligible investments, and up to the subsequent 5 years, in case of absence or insufficient collection.
  • Eligible investment expenses include assets allocated to the exploration, acquired in a new state and that start operating or use until the end of the tax period that begins on or after January 1, 2021. Expenses for investment in intangible assets subject to decay.
  • Light passenger or mixed vehicles, furniture and comfort or decoration items and expenses incurred with the construction, acquisition, repair and expansion of any buildings are excluded from eligible investments, except when those buildings are used for productive or administrative activities. , as well as assets related to activities under concession or public-private partnership agreements entered into with public sector entities and intangible assets acquired from related entities.
  • Eligible assets must be held and accounted for a minimum period of 5 years or less than the minimum tax useful life.
  • Beneficiary entities may not terminate employment contracts for 3 years, counting from the date on which this benefit takes effect, under the terms of collective dismissal or dismissal due to the extinction of the job.
  • CFEI II cannot be combined with other benefits of the same nature (deduction from collection) in relation to the same eligible investment expenses.

 

This communication is of a general nature and merely informative, not intended for any particular entity or situation, and does not replace professional advice appropriate to the specific case. Vitis will not be responsible for any damage or loss arising from decisions made based on the generic and synthetic information described here.

The text was prepared based on the best information available at the time of its edition

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