States are authorised to request 10% collateral for benefits granted
The recent Convention ICMS 31/2016 authorised the States and the Federal District to condition the fruition of granted tax incentives or benefits to the deposit of a minimum 10% of corresponding value, subject to the loss of the benefit.
Said request, which may be imposed both to future benefits and to those already in course, applies to tax, financial-tax or financial incentives and benefits and special calculation regimes that result in the reduction of payable ICMS.
Pursuant to the above-mentioned rule, once relevant request is implemented, the default of deposits on the part of the taxpayer for a 3 month period shall cause the definite loss of the benefit.
We now wait for the issue of specific legislation by the States that have already informed the intention to implement the request, which aims at raising funds for the rebalance of public finances.
The validity of the new obligation shall be carefully examined on a case by case basis, especially where the incentive or benefit is granted for a definite period of time and under certain condition, in light of the provision of art. 178 of the National Tax Code.