The state tax settlement procedure (transação tributária) allows debts owed to the State of Rio de Janeiro by the habitual debtor to be negotiated, while the repeat debtor faces stricter rules.
The Legislative Assembly of Rio de Janeiro (ALERJ) has approved two bills submitted by the Executive concerning debts owed to the State. One creates the state tax settlement procedure, and the other tightens the response to the repeat debtor. Supplementary Bill No. 61/2026 deals with the settlement procedure, and Bill No. 8,085/2026 deals with the habitual debtor (devedor contumaz). Both were approved on 20 October 2026.
When a person qualifies as a habitual debtor
The bill follows federal Supplementary Law No. 225/2026. In order to be classified as a habitual debtor, the default must be, at one and the same time, substantial, repeated and unjustified. Article 2 defines each of these requirements.
The default is substantial when the tax credits in an irregular status total R$ 15 million or more and exceed 100% of the taxpayer’s known assets. In the case of companies, those assets correspond to the total assets shown in the latest filed balance sheet. If the taxpayer, once summoned, fails to provide the information, the assets will be deemed to be zero.
Fines not linked to the tax credit, such as those imposed for breach of ancillary obligations, are also taken into account. Excluded, among others, are debts under an instalment plan or under a settlement with instalments paid up to date, debts whose enforceability is suspended, and debts discussed in a matter designated for judgment under the repetitive appeals system (recursos repetitivos).
The default is repeated when ICMS (the state value added tax on the circulation of goods and services) remains in an irregular status for at least four consecutive assessment periods, or six non-consecutive periods, within 12 months.
The default is unjustified when there is no objective reason to rule out habitual default. The taxpayer may invoke a state of public calamity recognised by the public authorities, or losses in the current and in the preceding financial year. In tax enforcement proceedings, the taxpayer may also argue that it has not distributed profits, has not reduced its capital and has not granted loans. In all cases, the accounting records must be consistent and there must be no indication of fraud.
The bill also covers any person who is a related party of a company deregistered or declared inapta (unfit for tax purposes) within the last five years and which holds irregular debts of R$ 15 million or more.
Sanctions and regulations still to be defined
Classification depends on administrative proceedings, opened by SEFAZ (the State Treasury Department) or by the PGE (the State Attorney General’s Office), depending on whether or not the debts have been registered as overdue public debt (dívida ativa). After notification, the taxpayer will have 30 days to settle the debts, demonstrate sufficient assets or file a defence with suspensive effect.
That suspensive effect does not apply in situations involving fraud, such as shell companies, management through front persons, trade in stolen or counterfeit goods and concealment of assets. If the defence is rejected, an appeal may be filed within 15 days, and the decision ruling on that appeal closes the discussion at the administrative level.
Payment of the debts in full terminates the proceedings. Negotiation of the debts in full, with instalments paid up to date, suspends the proceedings, unless there is dilatory conduct.
The habitual debtor will be included in a list published on the SEFAZ website, showing the CNPJ (corporate taxpayer number) or CPF (individual taxpayer number), the name or corporate name and the case number. Such a person is subject to the measures set out in Supplementary Law No. 225/2026, graded according to the seriousness of the infringement, the amount of the debt and the tax compliance record. In cases of fraud, the state tax registration may be cancelled.
The law enters into force on the date of its publication, but the procedures still depend on joint regulations to be issued by SEFAZ and the PGE.
In our view, companies with significant state tax debts should review the status of each debt without delay, including ICMS for the last 12 months. They should also gather the documents supporting any justification that may be invoked. Regularising the situation before notification avoids both the proceedings and exposure on the list.
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