Brazil tightens rules for large tax debtor bankruptcies and municipal debt deals

Brazil's Superior Tribunal de Justiça (STJ) ruled that the Federal Treasury can request the bankruptcy of a company when a fiscal execution fails and the tax debt is substantial, signalling a shift from the previous view that tax liabilities alone did not justify insolvency proceedings.

In March 2026 the Procuradoria‑Geral da Fazenda Nacional (PGFN) issued Portaria 903/2026, establishing five cumulative criteria for filing a bankruptcy request against large tax debtors: active debt of at least R$ 15 million, frustrated fiscal execution, compliance with the Bankruptcy Law, lack of active negotiation with the Union, and prior authorization from the PGDAU.

Municipal governments are also acting on debt recovery. Natal's mayor proposed a permanent “transação resolutiva” system that would allow individuals and companies to settle tax and non‑tax debts with discounts of up to 80 % and repayment periods of up to ten years.

Separately, Treasury Secretary Daniel Leal told Congress that Brazil’s post‑pandemic growth has risen to about 3 % a year, double the pre‑pandemic average, and that fiscal targets aim to cut the public‑debt ratio starting in 2029. The central government reported a primary surplus of R$ 9 billion in the first four months of the year, while high interest rates have pushed the net debt ratio from 65.2 % to 66.8 % of GDP between December 2025 and March 2026.