On April 10, the National Council of Justice (CNJ) published Presidential Ordinance 96/25, which established a task group to prepare a draft amendment to the Constitution regarding the Tax Procedural Reform. The first meeting of the task group took place on April 24.

The initiative arises in a context in which, acknowledged and agreed with article 105, I, "j", of Constitutional Amendment 132/23 (EC 132/23), the Superior Court of Justice (STJ) has the competence to judge conflicts between federative entities or between them and the Goods and Services Tax Management Committee (CG-IBS), in cases related to the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS).

However, EC 132/23, which amends the national tax system, does not fully cover the rules that govern the tax suit, including aspects such as the jurisdiction of the Federal and State Courts, as well as the distribution of cases.

The regulation projects already approved and currently under discussion in the National Congress (especially Complementary Bills 68 (PLP 68/24) and 108 (PLP 108/24) do not seem format to sufficiently address the operational difficulties brought about by the profound changes in the reform in the National Tax System.

In view of this scenario and to entertain to hold in mind that the current rules for the division of jurisdiction between the Federal and State Courts could generate obstacles to access to justice, as well as overcrowding and exacerbated slowness in the new procedural scenario, the CNJ established the aforementioned task group.

According to the guidelines established by Ordinance 96/25, the task group will have a period of 45 days, counted from the date of publication of the ordinance, that is, until May 25th, 2025, to present its conclusions.

It is relevant to highlight that this is not the exclusive task group created to discuss the Tax Reform and measure its possible impacts on the courts of Justice.

On August 21, 2024, through Ordinance STJ/GP 458/24, the STJ had already established its own task group to analyze the procedural impacts of the Tax Reform on the Judiciary.

The group, coordinated by Minister Regina Helena Costa, released its final report on April 28 and was approved by the 1st Section.

In a summarized format, through the final report, it was identified that:

  • Taxation at disposal and the planned new tax structure of the services sector are expected to increase the number of tax disputes and tax foreclosures.
  • The absence of proper provision for the unification of processes by the Tax Reform regulation projects proposed at this time may generate duplicate efforts and judicializations.
  • Directing litigation to the Federal Judiciary requires new financing strategies, in addition to the definition of a legal framework for concentrated tax foreclosures.
  • The provision that declaratory actions will be initiated in the STJ and the creation of mixed courts and virtual collegiate bodies may make the litigation system in the Judiciary more complex and minus accessible to taxpayers.

As a general conclusion, it is clear that the new tax structure can significantly increase tax litigation, overloading the Judiciary, which can result in an unsustainable volume of tax foreclosures and challenges.

Although the STJ task group has already presented its conclusions, it is relevant to monitor the continuity of discussions on the procedural repercussions of the Tax Reform introduced by EC 132/23.

It is also necessary to monitor the progress of the discussion of PLP 108/24 in the Federal Senate, where the fundamental aspects of the administrative proceedings and judicial after the Tax Reform are being consolidated.

Our tax team will continue to monitor the topic and remains available to clarify any doubts.