The Supreme Federal Court (STF) will examine, within the scope of ADI 7943, the constitutionality of a provision contained in Article 13 of Complementary Law No. 225/2026, which established the so-called Taxpayer Protection Code. The action, assigned to Justice Flávio Dino and already submitted for consideration, was filed by the Federal Council of the Brazilian Bar Association (CFOAB).
The challenged provision prohibits the filing of applications for judicial reorganisation, the continuation of ongoing reorganisation proceedings and, furthermore, authorises the conversion of judicial reorganisation into bankruptcy at the request of the tax authorities when a taxpayer is administratively classified as a “persistent tax defaulter”, defined as “a taxpayer whose fiscal conduct is characterised by substantial, repeated and unjustified tax delinquency”.
The controversy centres on the nature and limits of this restriction, particularly in light of its impact on business preservation and free enterprise. The claim advanced in the constitutional challenge is that the provision creates a mechanism of a materially punitive nature, producing structural effects on business activity by preventing access to judicial reorganisation based solely on an administrative classification.
In addition, the possibility of converting judicial reorganisation into bankruptcy on the basis of an administrative qualification significantly alters the dynamics of the Brazilian insolvency system by increasing the role of the tax authorities at the expense of the negotiated framework established under Law No. 11,101/2005.
MJAB Insights: From the perspective of the economic order, the discussion requires balancing the State’s interest in tax collection with the principles of free enterprise and business preservation, both enshrined in Article 170 of the Federal Constitution. In this context, restricting access to judicial reorganisation, as well as allowing bankruptcy proceedings to be initiated by the tax authorities based on the administrative classification of a company as a persistent tax defaulter, may constitute a systemic disincentive to corporate restructuring, favouring liquidation solutions over the continuation of economic activity.
Although combating persistent tax defaulters is a legitimate objective, measures that effectively prevent access to judicial reorganisation may be viewed as inconsistent with constitutional principles already established by the STF. The Court has repeatedly rejected measures that, under the guise of tax collection, impose disproportionate restrictions on the exercise of economic activity.
From the taxpayer’s perspective, particularly in capital-intensive sectors with significant tax exposure, a potential declaration of unconstitutionality could restore access to corporate restructuring mechanisms, preserving economic value and productive capacity.
Conversely, the provision for tax settlement mechanisms reinforces the need for negotiated and tailored solutions, encouraging the development of alternatives capable of reconciling tax regularisation with the continuity of business activities.