On April 7, 2025, the Brazilian National Treasury Attorney’s Office (PGFN)¹ published Ordinance No. 721/2025, regulating one of the modalities under the Comprehensive Transaction Program (PTI)², focusing on the settlement of high-impact judicial tax debts through the Reasonable Recovery Potential of Judicial Credit (PRJ)³.

The Comprehensive Transaction Program (PTI), established by Ministry of Finance Normative Ordinance No. 1,383/2024 (published on August 29, 2024), aims to promote debt regularization and efficiently resolve disputes through consensus, comprising measures designed to reduce high-impact tax litigation in Brazil.

The PTI is part of a series of initiatives planned by the Brazilian Ministry of Finance to boost tax collection. According to the 2025 Annual Budget Bill (PLOA)⁴ submitted to the National Congress, the program is expected to generate BRL 30 billion in revenue.

Under Ordinance No. 721/2025, benefits granted to taxpayers will be based on the Reasonable Recovery Potential of Judicial Credit (PRJ), measured by PGFN through criteria such as the uncertainty level of judicial outcomes and the duration of these disputes.

This new tax settlement opportunity is particularly relevant for large taxpayers with good financial health, as it allows debt negotiation from the perspective of judicial dispute opportunity costs, without being tied to their payment capacity (CAPAG)⁵.

Key features of the newly regulated program:

• Eligible Debts: Federal tax debts registered until April 7, 2025, equal to or exceeding BRL 50,000,000.00 (fifty million reais), which are subject to judicial challenge and are fully guaranteed or suspended by court decision.
  Note: The minimum value assessment considers individual registrations, and lower-value debts may be negotiated if they are being collected or disputed in the same judicial proceeding as the qualifying debt.
• Potential Benefits:(i) Discounts up to 65% on interest, fines, and legal charges(ii) Payment plans up to 120 installments(iii) Installment scaling (with or without down payment)(iv) Flexible rules for guarantee substitution or release
• Federal Court Orders and Credit Rights: Usage of federal court orders⁶ or liquid and certain credit rights with final judgments against the Federal Union is permitted.
• Judicial Deposits: Deposits held in the National Treasury Single Account linked to negotiated debts will automatically convert to definitive payments.
  Tax Loss and Negative CSLL Base⁷: Cannot be used in the program.
• Application Process: Exclusively through the REGULARIZE portal, requiring documentation as per Article 6 of Ordinance PGFN/MF No. 721/2025 and completion of the available form.
• Deadline: Taxpayers must submit applications by July 31, 2025.

This new tax settlement opportunity benefits companies considered “good payers” based on their financial health, which typically don’t receive attractive discounts due to their high payment capacity (CAPAG).

The modality established by Ordinance PGFN/MF No. 721/2025 represents a paradigm shift, moving away from evaluating benefits primarily based on the taxpayer’s economic conditions and focusing on aspects related to the opportunity costs of judicial disputes.

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Explanatory Notes:
¹ PGFN: Brazil’s federal agency responsible for representing the National Treasury in tax-related matters
² PTI: A comprehensive program for settling federal tax debts in Brazil
³ PRJ: A metric used to evaluate the likelihood of credit recovery in judicial cases
⁴ PLOA: Brazil’s annual federal budget proposal
⁵ CAPAG: Payment Capacity Assessment, a metric used by Brazilian authorities
⁶ Federal Court Orders (Precatórios): Government-issued debt instruments resulting from final court decisions
⁷ CSLL: Social Contribution on Net Profit, a Brazilian federal tax