Brazil Targets 13 Cigarette Makers in First Use of Devedor Contumaz Law

Overview

• The Federal Revenue Service, which issued notices Tuesday, said the 13 companies owe more than R$ 25 billion and now have 30 days to pay, adjust assets, or present a defense.
• Seven of the notified firms already have their CNPJ ruled inapt for omitting required filings, and together they account for about 12% of Brazil’s cigarette production.
• The law classifies a repeat debtor as one with irregular tax debts of at least R$ 15 million that exceed its equity or with nonpayment across four straight or six alternate periods in 12 months without a valid reason.
• If debts are not resolved or a defense is rejected, penalties can include listing in the federal debtors’ registry, a ban on tax settlements and fiscal incentives, invalidation of the CNPJ, and loss of the right to seek court-supervised recovery.
• Receita and the federal treasury’s attorney identified signs of concealed owners and possible money laundering and referred cases to federal prosecutors and police for criminal investigation.