The destructive debtors' business strategy

In an article published on Portal Jota, ETCO's president talks about the judgment of ADI 3952, which may authorize the operation of persistent tax debtors

If ADI is validated by the STF, society and companies that operate legally would continue to be harmed

The tax burden on cigarettes in Brazil is quite high, ranging from 70% to almost 90% in some states. This is a highly regulated sector, and companies that operate legally in the country must strictly comply with all standards that guide the manufacture of the product in the country.

The manufacture and sale of tobacco products are governed by Decree-Law 1.593 / 77, which among other rules requires the Federal Revenue to install a system called Scorpios in the factories, which accompanies on-site visitthe production. In addition, there is a need for prior authorization from the farm authority for the production of cigarettes, called special registration, which, among other requirements, requires proof of the company's full fiscal regularity.

Despite the intense work carried out by the authorities to properly regulate the sector, over time a group of companies started to adopt tax evasion as a business strategy. We are not talking here about companies that eventually fail to collect taxes due to specific problems, but about a method adopted purely and simply so that it is possible to gain competitiveness through non-payment of taxes. To stay in business, these companies operate by burdening public coffers and undermining free competition in the sector.

It is estimated that the set of taxes owed by the main debtors in the tobacco sector is greater than R $ 32 billion. In addition to evading taxes, these persistent debtors also practice other illicit acts such as counterfeiting tax control seals, non-compliance with regulatory rules on the production, import and sale of cigarettes and other tobacco products.

The Federal Revenue Service, supported by previous decisions of the Supreme Federal Court, has acted to revoke the special registration of companies that, evidently, evade taxes on a recurring basis. The STF has already manifested itself in some opportunities in order to keep the tax evading company contagious with its suspended activities.

But a Direct Action of Unconstitutionality, which has been in progress since 2010, must be voted on the 5th of September at the STF. ADI 3952, proposed by the Christian Labor Party (PTC), disputes changes in the legislation that allowed the cancellation of the special registration to which tobacco companies in the country are subject when it is verified by the Federal Revenue Secretary that a certain company is not fulfilling its obligations tax.

If the ADI is validated by the STF, prohibiting the cancellation of the registration of these debtors, both society and companies that operate legally would continue to be harmed, investing in the country, collecting taxes and generating employment and income. The decision of the ministers must take into account the interests of the country, and not false entrepreneurs who operate outside the law.


Article published on 03/09/2018 in Jota Portal