Debt forgiveness with the SII: up to 100% of interest

A small principal tax debt can, over the years, become an unmanageable sum: interest and penalties multiply it. The Reconstruction Law opens a 180-day window to address this problem.

Here's how much is forgiven, who can apply, and the pitfall to avoid.

What does tax debt forgiveness allow?

It allows for the regularization of debts with the SII and the Treasury that are due by December 31, 2025, with a significant portion of accumulated interest and penalties forgiven. The taxpayer pays the principal (and a portion of interest and penalties depending on the payment method) and becomes current. The window lasts 180 days from the law's publication.

Why does a small debt become unmanageable?

The principal amount owed is often the smaller part of the problem. Penal interest and penalties accumulate month by month, and for older debts, they can end up exceeding the original principal. This is why a debt that started manageable can become unmanageable over the years, and why a forgiveness program that targets interest and penalties—not the principal—changes the equation so much: it allows the taxpayer to pay, essentially, what they truly owed.

How much is forgiven: cash payment or agreement?

The forgiveness is greater if paid in cash:

Example. A debt with a $10 million principal, $4 million in interest, and $2 million in penalties totals $16 million today. By paying in cash, with 100% of the interest and 80% of the penalties forgiven, the taxpayer pays $10 million in principal plus $400,000 in penalties: $10.4 million instead of $16 million.

Who can apply?

This facility is designed for individuals and for micro, small, and medium-sized enterprises (or unclassified taxpayers), according to information managed by the SII. A single taxpayer cannot enter into more than three payment agreements under this provision.

The regularization is managed through the General Treasury of the Republic, which will apply the provision under generally applicable criteria. Before deciding, it is advisable to review the debt details—principal, interest, and penalties separately—to estimate the real benefit and choose, with all information available, between paying in cash or entering into an agreement.

Warning: the resolutory condition of the agreement

If you enter into an agreement and stop paying, you lose the forgiveness. The reduction in interest and penalties is subject to a resolutory condition: the full and timely fulfillment of all installments. If you default on any, the agreement becomes void, the forgiveness is revoked, and the original interest and penalties are reinstated on the outstanding balance. Therefore, before signing an agreement, it is advisable to ensure you can maintain the installments.

The bill is not yet law. It is in the Senate, undergoing its second reading. Deadlines run from its publication in the Official Gazette, not from today.

This content is for informational purposes only and does not replace advice for your specific case.

Frequently Asked Questions

What debts can I regularize?

Debts with the SII and the Treasury due by December 31, 2025.

How long is the window?

180 days from the publication of the law in the Official Gazette.

Is it better to pay in full or by agreement?

Paying in full offers a greater waiver (up to 100% of interest and 80% of penalties). The agreement waives slightly less and requires a 10% down payment and up to 24 installments.

What happens if I miss an installment payment?

The waiver is revoked, and the original interest and penalties on the balance are reinstated. It's advisable to enter into the agreement only if you can maintain the payments.

Who is eligible?

Individuals and micro, small, and medium-sized enterprises (or unclassified). A maximum of three agreements per taxpayer.

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