Temporary Constitutional Provisions Act

Article 91. The Union shall remit to the States and to the Federal District the amount defined by a supplementary law, in accordance with the criteria, time limits, and terms therein determined, taking into consideration exports of primary commodities and semi-manufactured products to other countries, the import-export ratio, credits deriving from purchases intended for the permanent assets, and the effective maintenance and utilization of the tax credits referred to in article 155, paragraph 2, X, a. (CA No. 42, 2003)

Paragraph 1. As to the amount of funds to be remitted to each State, seventy-five percent of such amount shall be assigned to the State itself, and twenty-five percent to its Municipalities, such percentage being distributed in accordance with the criteria referred to in article 158, sole paragraph, of the Constitution.

Paragraph 2. The remittance of funds set forth in this article shall prevail, as defined in a supplementary law, until such time as the proceeds from the collection of the tax referred to in article 155, II, are predominantly assigned, in a proportion not below eighty per cent, to the State where consumption of the products, goods, or services takes place.

Paragraph 3. Until such time as the supplementary law referred to in the head paragraph is enacted, and so as to replace the system of remittance of funds set forth therein, there shall remain in force the system of remittance of funds set forth in article 31 and Schedule of Supplementary Law no. 87, of September 13, 1996, with the wording provided by Supplementary Law no. 115, of December 26, 2002. Paragraph 4. The States and the Federal District shall present to the Federal Government, under the terms of instructions issued by the Finance Ministry, information regarding the tax referred to in article 155, II, supplied by the taxpayers who carry out transactions involving goods to be shipped abroad or services to be delivered to foreign parties.

Article 92. A period of ten years shall be added to the period of time set forth in article 40 of this Temporary Constitutional Provisions Act. (CA No. 42, 2003)

Article 93. The provisions of article 159, III, and paragraph 4 shall only come into force after the promulgation of the law referred to in said item III. (CA No. 42, 2003)

Article 94. The special tax regimes for micro and small businesses which are specific of the Union, the States, the Federal District, and the Municipalities shall be discontinued as from the date the regime set forth in article 146, III, d, of the Constitution comes into force. (CA No. 42, 2003)

Article 95. Persons born abroad between June 7, 1994, and the date of enactment of this Constitutional Amendment 21 , to a Brazilian father or a Brazilian mother, may be registered with a Brazilian diplomatic or consular authority, or with an official registry if they come to reside in the Federative Republic of Brazil. (CA No. 54, 2007)

Article 96. Acts aimed at the establishment, fusion, merger, and dismemberment of municipalities, whose act of creation was published on or before December 31, 2006, are hereby confirmed, provided that the requirements set forth in the legislation of the respective state at the time of establishment of said municipalities have been fulfilled. (CA No. 57, 2008)

Article 97. Up until the supplementary law referred to in Paragraph 15 of Article 100 of the Federal Constitution is enacted, the States, the Federal District, and Municipalities which, on the date of enactment of Constitutional Amendment no. 62, have not yet effected payment of past due court-ordered debts regarding their respective direct and indirect administration, including court orders issued during the period the special regime instituted by this article is in force, shall effect such payments in accordance with the rules set forth in this article, whereas the provisions of Article 100 of this Federal Constitution shall not be applicable, save for its Paragraphs 2, 3, 9, 10, 11, 12, 13, and 14, and without prejudice to conciliation agreements already formalized by the date of publication of Constitutional Amendment no. 62. (CA No. 62, 2009) Paragraph 1. The States, the Federal District, and Municipalities subject to the special regime set forth in this article shall, by means of an Executive Power act, opt for either:

1. depositing the amount referred to in Paragraph 2 of this article into a special account; or

2. adopting the special regime for a period of up to 15 (fifteen) years, in which case the percentage to be deposited into the special account referred to in Paragraph 2 of this article shall be equivalent to the total yearly balance of court-ordered debts, increased by the official rate applied to savings accounts and by simple interest applied at the same percentage of interest applied to savings accounts for the purpose of compensation of delay in the payment – the employment of compensatory interest being excluded, reduced by any paid amount, and divided by the remaining number of years in the special regime of payment.

Paragraph 2. In order to pay up both its past due and future accruing court-ordered debts through the special regime, the States, the Federal District, and Municipalities in debt shall effect a monthly deposit into a special account created for such purpose, of 1/12 (one twelfth) of the amount calculated as a percentage of the respective net current revenues, as computed in the second month preceding the month of payment, whereas such percentage, calculated at the time of opting for the special regime and kept unchanged through the end of the period referred to in Paragraph 14 of this article, shall be equal to:

1. in the case of the States and of the Federal District: a) at least 1.5% (one whole and five tenths per cent), for the States of the North, Northeast, and Centre-West regions, in addition to the Federal District, or for those States where the backlog of court orders owed by their respective direct and indirect administration corresponds to up to 35% (thirty-five per cent) of the total net current revenues;

b) at least 2% (two per cent), for the States of the South and Southeast Regions, where the backlog of court orders owed by their respective direct and indirect administration corresponds to over 35% (thirty-five per cent) of the net current revenues;

2. in the case of Municipalities:

a) at least 1% (one per cent), for Municipalities of the North, Northeast, and Centre-West regions, or for those Municipalities where the backlog of court orders owed by their respective direct and indirect administration corresponds to up to 35% (thirty-five per cent) of the net current revenues;

b) at least 1.5% (one whole and five tenths per cent), for Municipalities of the South and Southeast Regions, where the backlog of court orders owed by their respective direct and indirect administration corresponds to over 35% (thirty-five per cent) of the net current revenues.

Paragraph 3. For the purposes of this article, net current revenues mean the total sum of tax, industry, and agriculture revenues, property income, revenues from contributions and from services, current transfers, and other current revenues, including those deriving from Paragraph 1 of Article 20 of the Federal Constitution, such total sum being computed in the period including the reference month and the 11 (eleven) preceding months, excluding any double counting but at the same time deducting:

1. in the case of the States, the portions remitted to the Municipalities as set forth by the Constitution;

2. in the case of the States, the Federal District, and Municipalities, the contribution paid by respective employees to fund their own social security and social assistance system, as well as revenues deriving from the financial offsetting referred to in Paragraph 9 of Article 201 of the Federal Constitution.

Paragraph 4. The special accounts referred to in Paragraphs 1 and 2 shall be managed by the respective Court of Justice, for payment of judicial orders issued by courts.

Paragraph 5. The funds deposited into the special accounts referred to in Paragraphs 1 and 2 of this article may not be returned to the States, the Federal District, and Municipalities in debt.

Paragraph 6. At least 50% (fifty per cent) of the funds referred to in Paragraphs 1 and 2 of this article shall be used to pay court orders according to their chronological order of submission, with due regard for the priorities defined in Paragraph 1 of Article 100 – in the case of court orders of one same year, and in Paragraph 2 – in the case of court orders of all years.

Paragraph 7. If it is not possible to ascertain the chronological priority between 2 (two) court orders, the court order stating the smallest amount shall be paid first.

Paragraph 8. The employment of the remaining funds shall depend on option to be effected by the States, the Federal District, and Municipalities in debt, through an Executive Power act, in accordance with the following modes, which may be applied either separately or simultaneously:

1. payment of court orders by means of auctions;

2. payment in cash of court orders not paid up under the terms of Paragraph 6 and of Item I, in a single, increasing order of respective amounts;

3. payment through direct agreement with creditors, under the terms of law specific to each federating unit in debt, which may provide for the establishment and mode of operation of conciliation panels.

Paragraph 9. The following shall apply to the auctions referred to in Item I of

Paragraph 8 of this article:

1. auctions shall be carried out through an electronic system managed by an entity authorized by the Brazilian Securities and Exchange Commission (CVM) or by the Central Bank of Brazil;

2. court orders – or a installment of a court order amount as designated by its holder – with respect to which no appeal or challenge of any nature whatsoever is pending within the Judicial Power shall be qualified to take part in an auction, whereas, at the initiative of the Executive Power, it will be permitted to offset court-order debt payments against clear legal debits, either registered or not under debts in execution and attributed to the original debtor by the Treasury in debt up to the date of issuance of respective court order, save for those whose enforceability has been stayed under the terms of the law, or which have already been subject to deduction under the terms of Paragraph 9 of Article 100 of the Federal Constitution;

3. auctions will be effected through public offer to all creditors qualified by the respective federating unit in debt;

4. any creditor who meets the requirements of Item II shall be considered automatically qualified;

5. auctions shall be carried out as many times as necessary to meet the available amount;

6. inclusion of an installment of the total amount in an auction will be effected at the discretion of respective creditor, at an abatement in the amount of the installment;

7. auctions shall take the form of debt abatement, associated with the largest volume offered – either cumulated or not with the highest percentage of abatement, according to the highest percentage of abatement, in which case the maximum amount per creditor may be stipulated, or according to another criterion to be defined in a public call notice;

8. the price formation mechanism shall be stated in the public call notices issued for each auction;

9. the payment in part of a court order shall be ratified by the court which issued said court order.

Paragraph 10. Should the funds referred to in Item II of Paragraph 1 and in

Paragraphs 2 and 6 of this article not be made available in due time:

1. there shall be effected attachment of the relevant amount in the accounts belonging to the States, the Federal District, and Municipalities in debt, by order of the Presiding Judge of the Court referred to in Paragraph 4, up to the limit of the amount not made available;

2. there shall be established, as an alternative, by order of the Presiding Judge of the relevant Court, in favor of creditors of court orders, against the States, the Federal District, and Municipalities in debt, a clear legal right – self-enforceable and irrespective of regulation – to automatic offsetting against clear debits attributed to said creditors by such debtors, whereas, there being a balance in favor of a creditor, such amount shall automatically be deductible from the taxes owed to the States, the Federal District, and Municipalities in debt, up to the offsetting limits;

3. the head of respective Executive Power shall be held liable under the terms of the legislation on fiscal responsibility and administrative dishonesty;

4. for as long as non-compliance prevails, the federating unit in debt:

a) shall not be allowed to raise loans at home or abroad;

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b) shall not be entitled to receive voluntary transfers;

5. the Federal Government shall not effect the remittances regarding the Revenue Sharing Fund of the States and the Federal District and the Revenue Sharing Fund of Municipalities, depositing them instead into the special accounts referred to in Paragraph 1 of this article, whereas the employment of such amounts must comply with Paragraph 5 of this article.

Paragraph 11. As regards a court order concerning several creditors in a joinder of parties, the court of origin of said court order may dismember the total amount per creditor, and each creditor may participate in an auction with the total amount such creditor is entitled to, the rule set forth in Paragraph 3 of Article 100 of the Federal Constitution not being applicable to such case.

Paragraph 12. Should the legislation referred to in Paragraph 4 of Article 100 not be enacted within 180 (one hundred and eighty) days as from the date of enactment of Constitutional Amendment no. 62, the following amounts shall prevail for the relevant purposes, for the States, the Federal District, and Municipalities in debt which have failed to regulate the matter:

1. 40 (forty) monthly minimum wages in the case of States and the Federal District;

2. 30 (thirty) monthly minimum wages in the case of Municipalities.

Paragraph 13. During the period in which the States, the Federal District, and Municipalities in debt are effecting payment of court orders through the special regime, they may not be subject to attachment of amounts, except when the funds referred to in Item II of Paragraph 1 and in Paragraph 2 of this article are not made available in due time.

Paragraph 14. The special regime for payment of court orders set forth in Item I of Paragraph 1 of this article shall be in force for as long as the amount of court-ordered debts is higher than the amount of funds earmarked under the terms of Paragraph 2 of this article, or for a fixed period of 15 (fifteen) years in the case of the option referred to in Item II of Paragraph 1.

Paragraph 15. Court-ordered debts divided into installments under the terms of Article 33 or Article 78 of this Temporary Constitutional Provisions Act and whose payment is still pending shall be included in the special regime with the amount of all pending installments being updated, whereas the balance of any judicial and extrajudicial agreements shall also be included in the special regime.

Paragraph 16. As from the date Constitutional Amendment no. 62 is enacted, the amounts stated in court orders, up until effective payment, irrespective of their nature, shall be adjusted according to the official rate applied to savings accounts, whereas, for the purpose of compensation of delay in the payment, simple interest will be applied at the same percentage of interest applied to savings accounts, the employment of compensatory interest being excluded.

Paragraph 17. While the special regime is in force, any amount in excess of the limit set forth in Paragraph 2 of Article 100 of the Federal Constitution shall be paid in accordance with Paragraphs 6 and 7 or with Items I, II, and III of Paragraph 8 of this article, whereas the amounts used to meet the provision of Paragraph 2 of Article 100 of the Federal Constitution shall be computed for the purposes of Paragraph 6 of this article.

Paragraph 18. While the special regime referred to in this article is in effect, the original holders of court orders who have reached the age of 60 (sixty) years old by the date of enactment of Constitutional Amendment no. 62 shall also be entitled to the priority referred to in Paragraph 6.

Brasília, October 5, 1988.