In exercising its atypical functions, the Executive Branch can legislate, innovating in the legal order by means of provisional measures, with the force of law, in an effective exception to the Principle of Separation of Powers, pursuant to Article 62 of the Federal Constitution, expressed below:
Art. 62. In cases of relevance and urgency, the President of the Republic may adopt provisional measures, with the force of law, and must immediately submit them to the National Congress.
Thus, it is up to the Legislative Branch, in the exercise of its typical legislative function, to define whether the precarious legislative measure will actually be converted into law for definitive entry into the current legal system and, for this deliberation, it has the constitutional time limit of 60 days, extendable for another 60 days.
Therefore, the National Congress can expressly reject it or it can remain inert by failing to consider it within the aforementioned constitutional time limit, in both cases the provisional measure will lose its effects.
This is what happened with Provisional Measure No. 1,158 of 2023, which changed the link between the Brazilian Financial Intelligence Unit (UIF) – part of the Financial Activities Control Council (Coaf), taking it away from the Central Bank of Brazil and returning it to the Ministry of Finance, and changed the composition of the National Monetary Council and of the Technical Commission on Currency and Credit, in other words, it lost its effectiveness as a result of the expiry of the deadline for its vote in Congress, which is why the body returned to being part of the monetary authority as it was under the previous government.
And it also happened with Provisional Measure No. 1,160 of 2023, which re-established the casting vote in favor of the Tax Authorities in cases of a tie within the scope of the Administrative Council for Tax Appeals and had increased the authority limit value for judgment of administrative tax cases by CARF, which is why the “casting vote” returns in favor of taxpayers and access to CARF is once again ensured while respecting isonomy, since the ceiling stipulated in the aforementioned precarious measure that “lost its effectiveness” was very high and privileged only large CARF debtors, since if two taxpayers were in an identical situation and with unfavorable decisions, they could have been prevented from exercising their right to appeal within CARF exclusively due to their lack of economic and financial capacity.
Therefore, the express or tacit rejection of a provisional measure results in the loss of its effectiveness, i.e. it no longer produces effects in the legal system and restores the legislation that existed before the Provisional Measure was issued, the effect of which is called reenactment, as explained by Justice Ellen Gracie, as can be seen below:
“…One cannot, with technical correctness, say that there has been re-enactment. This is because the phenomenon of re-enactment needs to occur expressly, whereas the re-enactment effect occurs automatically, with the rejection of the Provisional Measure. In addition, re-enactment is, by definition, the return to force of the rule that was repealed; however, since the issuing of the PM does not repeal the previous law (it only suspends it), then the rejection of the PM brings back a law that was only suspended, not repealed. It is therefore an institute similar (but not the same) to re-enactment “itself”… (Federal Supreme Court, Full Bench, ADI 2984/DF,)
Thus, as a result of the tacit rejection of these provisional measures, they immediately ceased to produce effects (ex nunc effect), maintaining the effects already produced during the course of their validity, unless the National Congress, as of the rejection, within sixty days, issues legislative decrees providing otherwise (attributing ex tunc effects, for example, to remove the legal effects already produced by the aforementioned Provisional Measures), exactly as provided for in the Constitution, pursuant to article 62, paragraph 3 and paragraph 11 transcribed below:
- 3. Provisional measures, with the exception of the provisions of §§ 11 and 12, shall lose their effectiveness from the moment they are issued if they are not converted into law within a period of sixty days, which may be extended, under the terms of § 7, once for an equal period, and the National Congress shall regulate, by legislative decree, the legal relations arising therefrom…
- 11. If the legislative decree referred to in paragraph 3 is not issued within sixty days of the rejection or loss of effectiveness of the provisional measure, the legal relationships established and arising from acts practiced during its validity shall remain governed by it.”
In short, COAF returns to BACEN, and the casting vote in CARF returns to the previous legal regime, and must be adopted in favor of taxpayers in the event of a tie.