It is easy to understand how it works and the damage it causes. In Brazil, evading tax is a crime. Who sells products without informing the tax authorities can go to jail. But duty imposed is not a crime. With this, the entrepreneur can be charged, sued, judged and ordered to pay what he owes and, if there is no way to pay off the debt, he remains with the outstanding debt, but does not suffer greater punishment.
To make matters worse, our tax collection process takes too long. In a first step, the tax authorities themselves make the so-called administrative collection, through letters, threats of fines and other extrajudicial instruments. When the debt is not paid, as in the case of the regular debtor, the matter is brought to justice, where it can go through several instances until receiving the final judgment. Even after that, there is still a long way to collect, also subject to a series of resources.
Such a process can take ten, fifteen years or even longer. And it is not uncommon that, at the end of this long period, the Court finds that the company, in addition to having no equity, is legally represented by someone who just lent his name to the operation - the famous oranges. In other words: the debt is never paid, and everything remains for that very reason.
HOW HE DOES
The incumbent tax debtor is a figure who takes advantage of these conditions to make money quickly and illicitly. It makes non-payment of taxes the main strategy of your business. Informs all sales to the tax authorities, so as not to be accused of tax evasion, but does not collect taxes.
In this way, it gains market by selling products for impractical values for those who pay taxes, usually below even the cost price (not least because a good part of the cost of serious companies is made up of taxes). Then, it creates obstacles for the collection actions in order to buy time while the siege of Justice is closing. When this happens, he leaves the boat, shows another company in the name of an orange and starts all over again.
A process can drag on for ten, fifteen years or even longer
There are persistent debtors in different types of business, but they are more common in segments of very high demand, high tax burden and low profit margin, such as fuels, beverages, cigarettes and medicines. With high demand, it is easy to sell large volumes quickly - and profit quickly. The higher the tax burden, the more advantage he has in not paying the tax. And if the segment's margin is low, honest competitors have no room to reduce their prices and end up being expelled from the market.
WHY IT IS DIFFICULT TO ELIMINATE IT
Combating the debtor is not a simple job. The slowness of justice is only one of the obstacles; there are more complex issues. One of them is the low interest of the tax authorities, who are not so sensitive to the default that affects the competitive environment, focusing more on actions to increase the collection of taxes.
From this point of view, it is more worthwhile to charge a large debtor who has equity compatible with the debt. The problem is that big debtors and hard debtors are different figures. A business conglomerate may have a single share of billionaire value and be exercising its legitimate right to question it in court. Debts owed by hard-hitting debtors are not always relatively high, although sometimes they are. And, as we have seen, it is very difficult, if not impossible, to receive their debt. The longer the charge takes, the more difficult it becomes.
EVENTUAL DEBT X CONTUMAZ DEBT
Another complex issue is the distinction between the regular debtor and the eventual tax debtor. Often, absolutely correct and honest entrepreneurs are forced to stop collecting their taxes because of momentary difficulties in business. They adopt the practice for a short period, do not use it as a device to practice predatory prices and show an intention to settle debts in the future. Evidently, Justice cannot treat these two types of debtors in the same way, and much of the legal discussions are related to this aspect of the issue.
The tax he does not pay is no longer applied to health, education, road construction and other important public investments
There is also a legitimate discussion about the extent to which the tax authorities can pressure a company to pay its taxes. One of the measures used by some tax agencies in the country to combat the frequent debtor is the adoption of a differentiated inspection regime. Taxpayers who have various indications of being malicious are subject to special rules, such as having to collect the tax at the time of sale. This is a controversial issue that has been discussed in several instances of the Judiciary, including the Federal Supreme Court (STF).
OUR OPERATIONS
The main mission of ETCO-Brazilian Institute of Ethics in Competition is to defend fair competition in the business environment. We work on several causes in order to eliminate illicit advantages that favor predatory companies and harm those that work within the law. Combating the persistent debtor is one of our priority projects. We contribute by sponsoring studies, promoting debates, raising awareness among the authorities of the three branches of government, taking the issue to the press and proposing actions to the competent bodies.
The higher the tax burden, the more advantage they fear not to pay the tax
In November 2015, in partnership with the Valor Econômico newspaper, we held the seminar O Devedor Contumaz and Ética Concorrencial. On that day, we gathered 11 experts on the subject in São Paulo, including judges, judges, lawyers, representatives of business associations and authorities such as the secretaries Jorge Rachid, from the Federal Revenue Service, and Renato Villela, from the São Paulo State Treasury. This publication summarizes the views of the Seminar participants and provides other important information to explain the problem of the debtor. Our goal is to help the country to eliminate this figure so perverse to the business environment and tax justice: a figure that makes Brazil lose R $ 6 million per day in taxes in the fuel sector alone, or more than R $ 2 billion a year. The tax he does not pay is no longer applied to health, education, road construction and other important public investments. We cannot let this bleeding continue.
