These are two problems that cause a lot of damage to the country. On the one hand, the predatory action of persistent tax debtors: companies structured with the purpose of never collecting the taxes due and using this illicit advantage to practice unfair competition, damaging the tax authorities and distorting the Marketplace. On the other hand, the gigantic nature of tax litigation, which feeds on the complexity and deficiencies of the Brazilian tax system and generates enormous legal uncertainty for both those who pay and those who collect taxes.

Gathering experts to discuss solutions to these two themes was the objective of the Tax Litigation webinar: How to value the relationship with good taxpayers and fight hard debtors, held on October 16 by Casa Jota, sponsored by ETCO. The participants were ex-senator Ana Amélia Lemos, author of the Senate Bill (PLS) 284/17 (awaiting vote), which distinguishes between the hard debtor and the other types of debtors and authorizes tougher punishments against that ; Attorney João Henrique Grognet, general coordinator of the Credit Recovery Strategy of the Attorney General of the National Treasury (PGFN); the executive director of the Group of Applied Tax Studies (Getap), Zabetta Macarini Gorissen; and tax attorney Breno Vasconcelos, a researcher at Insper. The mediation was in charge of Laura Diniz, co-founder of Jota, and reporter Jamile Racanicci.

Diagnosis of litigation

The debate started with the study that E&Y (Ernst & Young) consultancy carried out for ETCO on the evolution of litigation in recent years, its causes, proposed solutions and examples of what works in other countries. The work showed that the sum of the amounts in dispute or in the collection process rose from R $ 2,275 trillion (42,7% of GDP) in 2013 to R $ 3,44 trillion (50,4%) in 2018.

The study was published in the August 2020 issue of ETCO Magazine. With interviews with 27 experts involved in this discussion, including lawyers, tax experts and representatives of the three branches of government and the private sector, a detailed table of proposals was presented. The publication can be freely downloaded on the Institute's website.

Several suggestions were discussed in the webinar. Prosecutor Grognet argued that the country should place more emphasis on resolving disputes at the administrative level, thus reducing the number of cases that go to court. "We must consider tax enforcement as a last tool for recovering public credit and strengthening administrative enforcement," he said. "Any country that values ​​taxpayers' money minimally has to dedicate themselves to this task, after all, tax enforcement costs money."

Recent advances

Grognet highlighted the strategy that the PGFN has been adopting to give up resources in processes of low value or with no chance of recovering the tax credit. In total, according to him, there are already more than 2 thousand dropouts. The prosecutor cited two other recent advances that have contributed to improving the relationship between the tax authorities and taxpayers. One of them was the adoption of the Legal Procedural Business institute in the tax sphere, starting in 2018. This instrument allows the parties in dispute to negotiate, not the amounts under discussion, but rather some important aspects of the tax process, such as deadlines, conference calculations and guarantees.

The other was the approval of Law No. 13.988 / 2020, which regulated the first types of tax transaction in the country, authorizing the tax authorities to grant discounts on some types of negotiations with taxpayers. According to Grognet, until August 2020, transactions with 77,4 thousand contributors had already been signed, totaling payment commitments of R $ 28 billion.

The director of the Applied Tax Studies Group stressed the importance of regulating the tax transaction and celebrated the level of adhesion in 2020. "I was surprised by the first results of the tax transaction, especially in a year of pandemic," she said. Zabetta regretted, however, that Congress has set a limit of 50% on the total discount that can be offered to taxpayers through the tax transaction. She recalled that the Provisional Measure that gave rise to the Law did not provide for this limit. "The fact of placing the 50%, in a certain way, may limit society's appetite in relation to the transaction a little," he said.

Zabetta also stressed that taxpayers await the use of the transaction to resolve disputes involving the so-called tax theses, part of the litigation that arises from differences between the tax authorities and taxpayers on the correct way to interpret certain laws. This modality is provided for in Law No. 13.988 / 2020, but until the date of the webinar, no proposal for a transaction involving a tax thesis had been proposed by the tax authorities. "If we have a positive agenda of topics to transact, it can be a very useful initiative to clean up the infraction notices and the actions that are in progress", he explained.

Cooperative compliance

In a message sent to the panelists, ETCO's executive president, Edson Vismona, also praised the instrument of the transaction and suggested the adoption of another mechanism widely used in the world to resolve differences between the tax authorities and taxpayers: mediation at the beginning of the assessment process Supervisor.

Tax lawyer Breno Vasconcelos defended the creation of a law in this regard. "Mediation is a way of reducing important litigation, within a large cooperative compliance program," he said. "Instead of continuing the logic of the discussion only after the application of penalties, we have the possibility to open a channel for discussion and mediation before the infraction is drafted." He emphasized that the measure should be restricted to good contributors.

Breno listed a series of characteristics of the tax system that increase legal uncertainty in the country. To begin with, he cited the risk, always present, that a new interpretation of a tax rule has retroactive application. "The taxpayer complies with an interpretation in force at a given moment and then is inspected, assessed and judged according to the new interpretation", he criticized.

Another factor of insecurity, according to him, is the absence of acts that register the official interpretation of tax rules. "The edition of a new standard should be accompanied by a guide explaining how to interpret it", he suggested. In his opinion, this would avoid a practice that is usually adopted by the tax authorities of trying to increase revenue through the easy shortcut to reinterpret tax rules, instead of the appropriate, but more difficult, way of approving legislative change in Congress.

Breno also cited the absence of an effective consultation process, the lack of systematization of the current legislation required by Article 212 of the National Tax Code and the excessive duration of tax processes in the country among the causes of legal uncertainty.

Project against persistent debtor

Former Rio Grande do Sul senator Ana Amélia lamented the complexity of the Brazilian tax system and its negative impacts on the competitiveness of national companies. "The problem is not just the weight of the cargo, but the complexity of the system, which costs a lot of money," he said. She recalled a comparison made by businessman Jorge Gerdau Johannpeter, owner of steel mills of equivalent size in Brazil and Canada, on the structures dedicated to tax tasks in the two units. “For the steelmaker located in Rio Grande do Sul, it has 250 professionals taking care of matters involving taxes. In Canada, the same service requires only three people, ”he said.

Citing the Spanish saying hecha la ley, hecha la trampa, which can be freely translated as “made the law, made the breach”, Ana Amélia pointed out the relationship between the complexity of the system and practices such as evasion and persistent default. Malicious businessmen, who fail to collect due taxes, take advantage of the extensive tangle of rules and the slowness of justice to prolong collection processes as much as possible. In the meantime, they use the illicit tax advantage to gain market share and transfer the defaulting company's profits to other businesses.

Project stopped in the Senate

Ana Amélia, who did not run for re-election in the Senate, regretted that the bill she presented in 2017 to combat this practice, which had been advancing in the previous legislature, did not evolve from 2019, when a new legislature began. “We made a very well constructed proposal, with specialists, with the participation of ETCO, because it involves unfair competition, to separate the types of debtors. The discussion was a war, but we still managed to approve the proposal in the Special Commission with an absolutely acceptable modulation of the penalty, ”he said.

The former senator drew attention to the much more severe punishment that ended up being authorized by the Federal Supreme Court in late 2019, in the assessment of the Ordinary Appeal in Habeas Corpus 163.334. At the time, most ministers understood that a debtor from Santa Catarina could be judged not only in the civil sphere, as the legislation provides for defaulters, but also criminally, for misappropriating ICMS. The penal type provides for imprisonment.

Although referring to only one case, the decision paved the way for other debtors to be tried and convicted criminally. "They fought so much against what we were proposing in the special committee of the Senate and the STF came, in the legislative void, and established a much tougher penalty", compared Ana Amélia.

The webinar also discussed the institution of the so-called Cadastro Positivo Fiscal, which creates criteria to distinguish good taxpayers. “The objective is to bring tax authorities closer to the good taxpayer, so that they can pay their taxes more easily, more efficiently and with less litigation”, summarized the director of Getap.

According to Zabetta, the taxpayer classification can take into account criteria such as the existence of outstanding debts, compliance with installment agreements, the risk of default and the delivery of accessory obligations required by the tax authorities. And the counterparts may include benefits such as the permission for self-regulation before the application of the tax assessment notice, the conclusion of a procedural legal transaction and the substitution of guarantees. "Why demand a guarantee [to discuss a case in court] from a taxpayer who has a good payment history and does not present a risk of default?" He asked.

Attorney Grognet also defended the establishment of the Cadastro Positivo, noting that the advantages offered do not constitute a tax advantage. "These are benefits that aim, ultimately, to reduce the cost of companies with litigation," he said.

Unification of taxes

Finally, the participants addressed the role of tax reform in simplifying the tax system and reducing disputes related to consumption taxes. “Today, we have the Federal Government, 27 states and 5.570 municipalities with the power to legislate, each on its own tax, due to the fragmentation of the tax base and the various consumption taxes that exist in the country”, pointed out the tax attorney Breno Vasconcelos . For him, the Constitutional Amendment Proposals found in Congress (PECs 45 and 110), which propose the unification of consumption taxes, can greatly improve legal security and reduce disputes between the tax authorities and taxpayers. “Simplicity, obviously, generates less litigation. When the rule is clear, when you have few rules, few exceptions to the rules, there is a reduction in litigation ”, he justified.

Zabetta agreed that the simplification provided for in these proposals can bring many benefits to the country. When asked about the risk that changes as profound as those envisaged in the PECs will generate new sources of litigation, she admitted that this possibility exists. "You will have new concepts, new activities, which, without a doubt, can generate new litigation", he commented. “We don't want to change to reach exactly the level of litigation that we have today.”

The director of Getap said, however, that it is possible to circumvent this danger through a good legislative work in the process of approval of the PEC in Congress and in the subsequent elaboration of the infra-legal legislation. "For this, it is important that we have the opportunity to discuss the concepts exhaustively", concluded Zabetta.