COMPANY WAS ABLE TO REVERTE, ON INTERLOCUTORY APPEAL, 1ST LEVEL DECISION THAT DENIED THE PRELIMINARY INJUNCTION TO TEMPORALY SUSPEND THE PAYMENT OF MUNICIPAL TAXES DUE TO COVID 19
Recently a Brazilian company that did not obtain preliminary injunction to suspend, due to the COVID 19 pandemic, the payment of municipal taxes (IPTU and ISS) was able to revert, in interlocutory appeal, the 1st level decision that denied the deferral of municipal taxes for 2 (two) months.
This is the first known decision, regarding this subject, in the municipal area, representing an important precedent in favor of taxpayers, especially because it is a decision taken in the 2nd level, by the São Paulo Court of Justice. In addition, there are already existing decisions rendered, in 1st and 2nd levels, regarding federal and state taxes, all favorable to the taxpayer, determining the suspension of the payment of the respective taxes (IR, CSLL, PIS, COFINS and ICMS).
The main argument presented is that the measures to restrict circulation and social distance to contain the progress of COVID 19 pandemic are making its financial flow unfeasible, jeopardizing the maintenance of its activities. Furthermore, this deferral would also be consistent with Municipal Decree No. 59.326/20, which extended the validity of municipal clearance certificate and postpone the sending of debts registered as collective municipal debt to protest for a period of 60 (sixty) days.
The suspension of the payment of taxes, considering the high Brazilian tax burden, is a way for companies, in general, to obtain financial breath to maintain their activities, as well as their staff, avoiding dismissals and their harmful economic and social consequences.
The aforementioned decision by the São Paulo Court of Justice corroborates our understanding that, given the scenario experienced by the country, as well as decisions by the Federal Supreme Court in the sense that extraordinary measures are needed in view of the situation currently experienced by the Federation’s entities, it is appropriate to interpose precautionary measures with a view to obtaining a temporary suspension of the payment of taxes, during the period in which the mentioned restrictions are in force.
Our team is available to assist in this and other tax law issues. For further information please contact our Tax Team by the following e-mails: rmarques@zaslaw.com.br or zaslaw@zaslaw.com.br.