Provisional Measure No. 1,990-27, Of 13 January 2000

Original Language Title: Medida Provisória nº 1.990-27, de 13 de Janeiro de 2000

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PROVISIONAL MEASURE # 1.990-27, OF January 13, 2000.

Changes the income tax legislation with respect to the incidence in the source on income from financial applications, including from beneficiaries residing or domiciled abroad, to the conversion, in social capital, of bonds in the exterior of legal persons domiciled in the Country, extends the option hypotheses, by the physical persons, by the simplified discount, regulates the information, in the declaration of income, of deposits held in overseas banks, and gives others provider.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution that confers you the art. 62 of the Constitution, adopts the following Interim Measure, with force of law:

Art. 1º The aliquot of income tax in the source incident on income earned in the rescue of quota of the investment funds of which it treats § 6º of the art. 28 of Law No. 9,532 of December 10, 1997, with the amendment introduced by the subsequent article, is reduced to ten per cent.

Art. 2º The percentage of eighty per cent referred to in § 6º of the art. 28 of Law No. 9,532, from 1997, is reduced to sixty-seven per cent.

Art. 3º The determination of the basis of calculation of income tax at source, in accordance with the provisions of the art. 28, of Law No. 9,532, 1997, will be applicable only from 1º July 1998.

Art. 4º In the first half of 1998, the incidence of income tax at source on income earned in applications in investment funds will give to the quota rescue, if any, to the following aliquots:

I-of ten per cent, in the case:

a) of the funds mentioned in art. 1º of this Provisional Measure ; and

b) of the funds that it treats art. 31 of Law No. 9,532 of 1997, while framed within the limit provided for in § 1º of the same article ;

II-of twenty per cent, in the case of the other funds.

Single Paragraph. The basis of calculation of the income tax of which this article is concerned shall be determined as per the provisions of § 7º of the art. 28 of Law No. 9,532, 1997.

Art. 5º For the purposes of income tax on the source, they shall be deemed to be paid or credited to the quotists of the investment funds, on the date on which the first grace period is completed in the second seed of 1998, the income corresponding to the positive difference between the value of the quota, on June 30, 1998, and:

I-the respective cost of acquisition, in the case of the funds referred to in art. 31 of Law No. 9,532, 1997 ;

II-the respective cost of acquisition, in the case of shares acquired from 1º January 1998 ;

III-the value of the quota verified on December 31, 1997, in the other cases.

§ 1º The provisions of this Article shall not apply to the funds which, in the month of June 1998, fall within the limit of which it treats § 6º of the art. 28 of Law No. 9,532, 1997, with the amendment of the art. 2º of this Provisional Measure.

§ 2º In the case of non-grace-term funds for quota rescue with income or whose grace period is higher than ninety days, they are deemed to be paid or credited with earnings on day 1º of July 1998.

Art. 6º As of 1º January 1999, the incidence of income tax at source on income earned by any beneficiary, including legal person exempts and the immune from which it treats art. 12 of Law No. 9,532, 1997, in the applications in investment funds, will occur:

I-on the date on which you complete each grace period for quota rescue with income, in the case of funds subject to this condition, ressaved the provisions in the following inciso ;

II-on the last business day of each quarter-calendar, in the case of funds with periods of senior grace than ninety days ;

III-on the last business day of each month, or in the rescue, if occurred on another date, in the case of no-caress funds.

§ 1º The basis of tax calculation will be the positive difference between the value of the quota ascertained on the date of rescue or at the end of each incidence period referred to in this article and on the date of application or at the end of the incidence period prior, as the case.

§ 2º The losses ascertained in the quota rescue may be compensated with gains earned on bailouts or later incidences, on the same investment fund, according to procedure to be defined by the Revenue Office Federal.

§ 3º The quotists in the investment funds whose resources are applied in the acquisition of shares of other investment funds will be taxed in accordance with the provisions of this article.

§ 4º The income earned by the portfolios of the funds of which it treats the preceding paragraph are exempt from the income tax.

§ 5º The provisions of this article do not apply:

I-the quotists in the investment funds referred to in art. 1º, which will be taxed exclusively in the quota bailout ;

II-to the legal persons of which it treats art. 77, inciso I, and to the foreign investors referred to in art. 81, both of Law No. 8,981 of January 20, 1995, which are subject to the standards laid down therein and in the later legislation.

Art. 7º For the second half of 1998, it is provided to the investment fund administrator to ascertain the income tax, due to the quotists, in accordance with the provisions of the previous article, as an alternative to the form of disciplined ascertaining in the incisos I and II and in § 5º of the art. 28 of Law No. 9,532, 1997.

§ 1º Exercised the option provided in this article, the fund administrator is expected to submit to the incidence of income tax at the source, on December 22, 1998, the income corresponding to the positive difference between the share value on that date and the ascertained on the date of acquisition or at the end of the previous incidence period, as the case is.

§ 2º The income tax due by virtue of the provisions of the preceding paragraph shall be collected, by the administrator of the investment fund, until the last working day of the year 1998.

§ 3º Adoted the alternative that it treats this article, is exempted from ascertaining the income tax in the manner provided for in art. 5º.

Art. 8º It is reduced to zero the aliquot of the income tax incident on earned income, from 1º September 1998 to June 30, 1999, in financial applications, by the Fixed Income-Foreign Capital Funds, in accordance with the standards set by the National Monetary Council, with the purpose of caption of external resources for investment in issuance securities of the National Treasury or the Central Bank of Brazil and in fixed income financial assets issued by companies and institutions based in the Country.

Single Paragraph. Zero aliquot applies, inclusive, to earned income, in the period referred to in caput, in respect of applications previously made to the publication of this Provisional Measure.

Art. 9º The increase in capital upon conversion of the obligations of which they treat the incisos VIII and IX of the art. 1º of Law No. 9,481 of August 13, 1997, may be effected with maintenance of the reduction to zero of the aliquot of the tax on the income incident at the source relating to interest, commissions, expenses and discounts already referred.

§ 1º For the purposes of this article, it is vetoed, in the remaining period foreseen for final settlement of the capitalized obligation:

I-the restitution of capital, including by extinction of the legal person ;

II-the transfer of the respective shares or shares of capital to physical or legal person, resident or domicile in the Country.

§ 2º The disfulfillment of the provisions of the preceding paragraph shall make the corresponding tax payable, in respect of the amount of interest, commissions, expenses and discounts, from the date of the shipment, plus moratorial interest and fine, of lives or of craft, as per the case.

§ 3º The provisions of § § 1º and 2º shall apply to legal persons resulting from the merger or division of the capitalized legal person and to which it incorporates it.

§ 4º The capital gain arising from the positive difference between the equity value of shares or shares acquired with the conversion of which this article and the value of the converted obligation will be taxed at the source, at the aliquot of fifteen per cent.

§ 5º The amount capitalized in the form of this article will integrate the calculation basis for the purposes of determining interest on the equity capital referred to in art. 9º of Law No. 9,249 of December 26, 1995, observed the other applicable standards, including in relation to the incidence of tax on income at source.

§ 6º The provisions of this article apply, too, to the obligations contracted until December 31, 1996, relating to the operations referred to in the caput, held the tax benefits at the time granted.

§ 7º The Office of the Federal Revenue Office will expedite the acts required to control the provisions of this article.

Art. 10. The devices, hereinafter listed, of Law No. 9,532 of 1997, pass vigorously with the following essay:

I-the art. 6º, inciso II:

?Art. 6º ....................................................................................................................................

..........................................................................................................................................................

II-the art. 26 of Law No. 8,313, 1991, and the art. 1º of Law No. 8,685 of July 20, 1993 will not be able to exceed four per cent of the income tax due.? (NR)

II-the art. 34:

?Art. 34. The willing in the arts. 28 a 31 does not apply to the hypotheses that it treats art. 81 of Law No. 8,981, 1995, which remain subject to the taxation standards provided for in the current legislation.? (NR)

III-the art. 82, inciso II, point?f?:

?Art. 82. ...................................................................................................................................

..........................................................................................................................................................

II-...........................................................................................................................................

..........................................................................................................................................................

f) the art. 3º of Law No. 7,418 of December 16, 1985, remunerated by art. 1º of Law No. 7,619 of September 30, 1987.? (NR)

Single Paragraph. The art. 4º of Law No. 7,418, 1985, remunerated by art. 1º of Law No. 7,619, 1987, whose effects are reinstated by virtue of the provisions of the inciso III of this article, allows the deduction of the corresponding spending as an operational expense.

Art. 11. The arts. 10 and 25 of Law No. 9,250 of December 26, 1995, pass vigorously with the following essay:

?Art. 10. Regardless of the amount of taxable income in the declaration, received in the calendar year, the taxpayer will be able to opt for a simplified discount, which will consist of deduction of twenty per cent of the value of those income, limited to eight thousand reais, in the Declaration of Annual Adjustment, dispensed with the proof of the expense and the indication of its kind.

.................................................................................................................................................? (NR)

?Art. 25. ...................................................................................................................................

...........................................................................................................................................................

§ 4º The deposits held in overseas financial institutions are to be related in the declaration of goods, starting from the calendar year 1999, by the value of the balance of these deposits in foreign currency converted into real ones by the exchange rate quotation on December 31, being exempt from the net addition arising from the currency variation.

.................................................................................................................................................? (NR)

Art. 12. The willing on art. 10 of Law No. 9,250, 1995, with the essay given by art. 11 of this Provisional Measure, only applies to the generator facts occurring from 1º January 1998.

Art. 13. The art. 79 of Law No. 9,430 of December 27, 1996, passes in addition to the following single paragraph:

?Single paragraph. The Executive Power may exception, in temporary character, the application of the provisions of this article in respect of certain goods.? (NR)

Art. 14. The art. 9º of Law No. 9,317 of December 5, 1996, amended by art. 6º of Law No. 9,779 of January 19, 1999, passes vigorously with the following essay:

?Art. 9º .....................................................................................................................................

I-in the condition of microenterprise, which has earned, in the immediately prior calendar year, gross revenue exceeding R$ 120,000.00 (one hundred and twenty thousand reais) ;

II-in the small business condition, which has earned, in the immediately prior calendar year, gross revenue exceeding R$ 1,200,000.00 (hum million and two hundred thousand reais) ;

.................................................................................................................................................? (NR)

Art. 15. The portfolio acquisition of private health care plans does not characterize transmission of tax liability, in the terms of art. 133 of the National Tax Code, provided that they are assured to all participants in the said portfolio the same conditions of assistive coverage, as well as the counting of grace periods and the acquisition of benefits already transfixed, and the disposal, even though the symbolic price or free title:

I-be effected by determination of the competent organ of the Executive Power, for the purpose of preventing damage to the consumer or user ;

II-do not involve transfer to the purchaser of rights to be received concerning operations carried out the services rendered previously to the disposal, or of any other parcel of the disposal's estate.

Art. 16. The taxation scheme provided for in art. 81, of Law No. 8,981 of January 20, 1995, with the amendment introduced by art. 11 of Law No. 9,249 of December 26, 1995 applies to resident or domiciled investor abroad, individual or collective, that to carry out financial operations in the fixed income or variable income markets in the Country, in accordance with the standards and conditions set by the National Monetary Council.

§ 1º It is responsible for the retention and pickup of income tax at source, incident on income from financial transactions earned by any foreign investor, the legal person who is to make the payment of the referred to income.

§ 2º The taxation scheme referred to in caput does not apply to investment from a country that does not tax income or that the tribute to an aliquot less than twenty per cent, which will be subject to the same rules as set forth for the residents and domiciled in the Country.

§ 3º Regarding the provisions of the preceding paragraph it will be noted that:

I-without prejudice to § 1º, the foreign investor shall, in the case of transactions carried out on stock exchanges, of goods, futures and assals, appoint institution authorised to operate by the Central Bank of the Brazil as responsible, in the Country, for the fulfilment of the tax obligations arising from the said operations.

II-in the case of shares acquired until December 31, 1999, for purposes of ascertaining the calculation basis of the income tax, the acquisition cost, when not known, will be determined by the weighted average price in the stock, ascertained in the negotiations occurred, on the stock exchange with higher volume of operations with the stock, in the month of December 1999 or, if there was no business that month, in the previous month closest.

§ 4º The Office of the Federal Revenue Office may lower standards for the control of operations carried out by foreign investors.

Art. 17. Special customs arrangements for importation, without currency coverage, for inputs intended for industrialization by order of the products classified in headings 8701 a to 8705 of the Tax Incidence Table on Industrialized Products-TIPI, per account and order of legal person commission domiciled abroad.

§ 1º Consider inputs, for the purposes of this article, the chassis, bodywork, parts, parts, components and accessories.

§ 2º The importation of the inputs will give with suspension of IPI.

§ 3º The Import Tax will only focus on imported inputs employed in the industrialization of the products, including in the hypothesis of the inciso II of § 4º.

§ 4º The products resulting from industrialization per order will have the following tax treatment:

I-when intended for exterior, resolves the suspension of IPI incident in the importation and acquisition, in the domestic market, of the inputs in them employed ; and

II-when destined for the domestic market, the wholesale commercial undertaking, controlled, directly or indirectly, shall be referred by the legal person commission domiciled abroad, on account and order of this one, with suspension of IPI.

§ 5º The commercial wholesale company acquirer of the products resulting from industrialization per order equip itself with industrial establishment.

§ 6º The granting of the special customs procedure will depend on prior habilitation before the Office of the Federal Revenue Office, which will expedite the standards required to comply with the provisions of this article.

Art. 18. The rectification of tax declaration and contributions administered by the Office of the Federal Revenue Office, in the hypotheses in which it has admitted, will have the same nature of the declaration originally submitted, regardless of authorization by the administrative authority.

Single Paragraph. The Office of the Federal Revenue Office shall establish the chances of admissibility and the procedures applicable to the rectification of declaration.

Art. 19. The acts practiced on the basis of the Provisional Measure No. 1.990-26, of December 14, 1999, shall be convalidated.

Art. 20. This Provisional Measure comes into force on the date of its publication.

Brasilia, January 13, 2000 ; 179º of Independence and 112º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Malan

Martus Tavares