Lecture by Heleno Torres on Legal Security and Tax Procedure



USP law professor Heleno Torres spoke in his lecture on conflicts between taxpayers and tax authorities, the administrative and judicial process and tax reform. He regretted that the projects under discussion are too focused on the creation of the value added tax, without paying due attention to issues related to legal certainty. In his opinion, Brazil needs a system that brings more predictability to economic activity, allowing “people to know exactly what taxes they must pay and what are the obligations they must fulfill in relation to the taxes that are due and, at the same time, to constitute a state of security, a state of normality, where the business environment can favor new investments and a breadth of business expansion in Brazil ”.

He argued that changing the current system respects five principles:
1. No real cumulative taxation, “with a tax incidence that permits the taking of universal credits, that is, financial credits in all operations;
2 Single rate in the entire circulation process;
3. Reduction of exception regimes, such as tax substitution;
4. Review of the tax benefits model;
5. Simplification of ancillary obligations.

Heleno Torres drew attention to the need to control excesses of tax authorities. “The National Tax Code, for example, lacks a chapter on the inspection process and procedure, which gives taxpayers more candid rights over the limits of inspection and the action of the tax authorities in administrative relations,” he said.

The tax attorney told the case of a client who, after being warned twice by the inspection that his business should be classified as a financial institution, decided to change his corporate name to fit into this category. During this process, he was surprised by CARF's decision against the change, claiming that the company met the requirements of a financial institution. "The tax system cannot lead taxpayers to such a contradiction," he warned. “These contradictions, they aggravate the business environment, heavily aggravate taxpayers with sums of fines, interest, charges, lawyers' payments and so many other repercussions and, in fact, this is not what is expected from a tax system with legal certainty. ”

Heleno highlighted the urgency of a reform of the consultation system to make it effective in resolving taxpayers' doubts and reducing conflicts. “We need to reformulate the system of consultations very urgently, to take advantage of this opportunity so that we have, from the moment of the presentation of the notice of infraction, or even of the launch, the possibility that the taxpayer can start his challenge, that this be quick , to the extent that the market also needs quick tax decisions, ”he said.

He also spoke about the need for greater uniformity of understanding in the judgment of tax cases, to avoid that equal cases have different results in different instances. And he recalled that the current situation is also of no interest to the State, which does not receive tax debts, nor to society. “There is not a single state, a single municipality in the country where the active debt has a collection higher than 1% of the accumulated volume. In other words, the conflict does not matter to the tax authorities ”, stated Heleno Torres. “The tax that does not enter the public coffers due to spontaneity is missing from the public budget. And when there is a lack in the public budget, one of the two: either we have tax increases or we have contingencies until that revenue enters the public accounts and that budget can meet these expenses. Anyway, society loses. ”

At the end of the lecture, in a brief conversation with tax attorney Everardo Maciel, the event's coordinator, he answered a question about the integration of the administrative and judicial stages of tax processes. "If this is to simplify, to reduce litigation, it is urgent that we simplify the processes in this universe so complex that it is the administrative and judicial litigation", he concluded.

The transcript of the lecture follows.