Tag: Combating tax evasion

“We must be able to solve Brazil's fiscal problem without raising taxes. Score."

“We must be able to solve Brazil's fiscal problem without raising taxes. Score."

(Minister of Finance, Henqique Meirelles - IstoÉ Dinheiro magazine, 11/11/2016)

 

ETCO believes that, in addition to contributing to the resumption of confidence in Brazilian society, the government's decision not to raise taxes is extremely important in the composition of the country's positive agenda, which is about improving tax collection, generating jobs and industry recovery. Especially those hard hit by the disproportionate increase in tax in recent years, which in fact caused a loss of competitiveness due to increased smuggling and counterfeiting, such as cigarettes, beverages and fuels, among others.

Read the full interview by Minister Henrique Meirelles to IstoÉ Dinheiro magazine, by clicking here

 

 

Ambev, Heineken and Coca-Cola prepare for headache

size_810_16_9_bottles_de_coca-cola_vistas_de_up
To adopt the new system, beverage companies will need to stop production at the height of summer

Brazilian beverage producers, including groups representing Ambev, Heineken and Coca-Cola, are fighting a change in the production monitoring system for tax purposes that they say will leave the industry exposed to fraud and put trade secrets at risk. .

In the new system, called Bloco K, companies will be responsible for informing the tax authorities, manually, the quantity of ingredients purchased and the volumes produced by them.

The system would replace the use of machines to monitor the volumes of soda and beer produced - a high-cost technology created to reduce tax fraud, but which ended up being considered an exaggeration.

The IRS says the change is necessary to cut costs and make better use of the revenue generated by state and federal taxes that, combined, account for an average of 44 percent in the case of beer.

But the change comes at a difficult time for Ambev, the biggest selling brewery in Brazil, controlled by the multinational giant AB InBev.

To adopt the new system, companies will have to stop production at the end of the year, at the height of summer in the southern hemisphere, according to Sicpa Brasil, a company that manufactures the current system.

And Ambev is still working to recover from the slowdown in sales that hurt the results of the first half of the year.

The big producers also deal with a growing group of craft breweries and do not want to make life easier for small ones.

Trade associations in the beverage industry said the new taxation method could allow smaller competitors to mask production numbers to pay less tax, thus offering lower prices than larger competitors.

In August, the Brazilian Association of the Soft Drink and Non-Alcoholic Beverages Industries (Abir), the Brazilian Beverages Association (Abrabe), the Brazilian Beer Industry Association (CervBrasil) and the Brazilian Institute of Competition Ethics (Etco) said to the Federal Revenue Secretary, Jorge Rachid, in a letter, that they were concerned with the replacement of the monitoring systems.

Ambev, Heineken and Coca-Cola declined to comment. The various phone calls and e-mails sent to the IRS have not been returned. The agency has not given any indication that it will reverse or postpone its decision.

There is evidence that Sicobe, as the current tax system is known, helped to prevent companies from evading taxes. Tax collection increased by 20 percent after the introduction of the system, according to a study by the Getúlio Vargas Foundation commissioned by beverage associations.

Sicobe uses machines to measure the volumes of beverages produced and tracks the final products using bar codes. This makes it harder for companies to mask the numbers.

“Before Sicobe, the beverage segment was known for its high tax evasion rate,” said Alexandre Gleria, a partner specializing in Tax Law at the ASBZ Advogados office in São Paulo. "This topic needs to be discussed from a fiscal perspective, but also from a competitive perspective."

ASBZ has beverage and chemical manufacturers among its customers. Gleria declined to name them, saying his comments did not refer to a specific company.

Source: Exame.com (13/10/2016)

 

Tighten the siege against the heavy debtor

debtor-contumaz -_- informative-cover

New legislation of the State of Paraná

starts to differentiate the default bad debt

 

Decree No. 3.864, published by the Government of Paraná on April 14, starts to differentiate the regular debtor, creating specific rules and sanctions for those who make default a business model that, according to experts, configures unfair competition and damages public accounts . The executive president of ETCO - Sindicom's partner institute on this issue -, Evandro do Carmo Guimarães, estimates that the gap caused by these debtors in the accounts of the Union and the states is at least R $ 3 billion per year.
Luciana Printim, head of the Paraná State Revenue collection sector, says that the impetus for the new legislation came from the conclusion that there were many taxpayers “who make their default not an occasional thing, a time of difficulty, but a repeated thing; persistent practice. We started to realize that this was not being fair competition with the others, who pay their taxes correctly ”, describes Luciana, adding that the tax that is not paid increases the profit margin of those who do not pay.
The state of Rio Grande do Sul was a pioneer in this differentiation and has one of the most important specific laws against the country's persistent debtor. It was created in 2011 and has since managed to recover R $ 17 million owed by these taxpayers and reduce by 26% the number of companies in this situation. Luciana clarifies, however, that the legislation of Rio Grande do Sul was studied and considered valid, but even so, there are differences between the laws of the two states. “The main difference is that they do not allow the customer of a frequent debtor to have ICMS credit. Our intention is to punish the debtor, not the client, ”he says.
Luciana also explains that there are several sanctions that apply when serious debtors are identified. They include the loss of tax benefits, in addition to the obligation to collect the tax per operation (for each sale) and not for calculation (only once a month). “The taxpayer will be notified and will have 30 days to qualify. Our main objective is for him to stop this practice, which is not sectoral ”, he concludes, counting that this month (May) the first batch of notifications will be made to regular debtors.
According to ETCO's executive chairman, long-term debtors are usually wholesale or distributor companies. “It is common for this business to be in the name of oranges, it has no equity. Thus, true partners escape punishment, ”says Evandro. The executive president also indicates that the profit margin can be increased considerably through this practice. “If it is a company that distributes fuels, it can represent up to 30% of the product's price; if it is a cigarette, up to 70% of the product price ”, he points out.
The importance of the actions developed by ETCO, together with Sindicom, to better explain the difference between the persistent debtor and the one who occasionally experiences some financial difficulty promotes the creation of legal tools to combat this practice, also emphasizes Evandro.
“We hope that the Federal and State legislatures also separate these two different types of defaulters. In a country where the active debt of the states and the union is huge, it is very important to separate the types of debtors ”, he concludes.
Source: Sindicom

States must postpone new declaration of Simples

The National Council for Farm Policy (Confaz) authorized the States and the Federal District to postpone the deadline for micro and small companies taxed by Simples Nacional to send to the Tax Authorities the declaration that gathers data on the ICMS collected in the tax substitution, the differential of rates due interstate operations and anticipating

Source Economic Value (14/04)

Click here and access the full article

Farm does operation in SP against irregular circulation of goods

Agents check documents for products such as fuels and cigarettes.
Inspection posts were set up in several neighborhoods in São Paulo.

On Wednesday (16), inspectors from the Secretariat of Finance take action against the irregular circulation of goods in 37 cities in the state of São Paulo. In Operation Pente Fino, agents will inspect cargo transport trucks, especially in the sectors of fuels, solvents, medicines, beverages and cigarettes, with a focus on product documentation.

In the capital, teams work at inspection posts in the neighborhoods of Brás, Mooca, Bom Retiro, Ipiranga, Interlagos, Butantã, Santo Amaro and Pinheiros. Inland, there will be 40 barriers mounted on state roads.

At Rua Santa Rosa, in São Paulo, agents stop the trucks and check whether the cargo shown on the invoice corresponds to the item shown. The inspectors also check if the ICMS tax, the tax on the circulation of goods and services, is being collected.

The company responsible for cargo with irregular documentation may be fined and the goods seized. The IRS will be called if the agents identify smuggled products.

The Finance Secretariat said it should release a balance sheet for the operation later this afternoon.

Source: G1.com (16/03)

To access the article link, click here

ETCO collaborates with the printing of the Tax Administration Manual

Authored by Matthijs Alink, of the Dutch Tax and Customs Administration and senior adviser to the Center for Tax Policy and Administration of the Organization for Economic Cooperation and Development (OECD) and Victor van Kommer, Director of Tax Services at the International Bureau of Fiscal Documentation ( IBFD), the manual provides a complete and systematic overview of modern tax administration. The book includes chapters on: taxation; the main activity of a Tax Administration; the development of society; organizational structures; risk management, primary Tax Administration processes, and processes involving human resources and support activities; planning and control; performance management; and change management.

The publication, which was supported by ETCO for its printing, is a partnership of CIAT, Encat, Febrafite and Fenafisco. The translation into Portuguese is by the fiscal auditor of Rio Grande do Sul, Vinícius Pimentel.

 
Tax Administration Manual
Mattijs Alink and Victor van Krommer
Translation: Vinicius Pimentel de Freitas
741 pages
Publisher: IBFD

Federal Revenue publishes 2016 annual inspection plan and 2015 balance sheet

The Internal Revenue Service Inspection Secretary, Iágaro Jung Martins, released the Inspection Planning for 2016, and the inspection balance for 2015.

The main operations that will be subject to inspection:

  • Tax planning linked to operations with goodwill amortization
  • Tax planning involving equity investment funds
  • Taxation of profits earned in subsidiaries and associated companies abroad
  • Tax evasion involving non-profit distribution
  • Evasion in the cigarette, beverage and fuel sectors
  • Tax planning involving professional image rights
  • Social security evasion due to improper registration of the option for Simples Naciona

In 2016, the RFB starts to process the information received from the IRS (North American Federal Revenue) and compare it with the other information provided by Brazilian taxpayers who have bank accounts in financial institutions in the United States of America.

 In 2015, the inspection constituted R $ 125,6 billion in tax credits, frustrating the expectation that was R $ 150 billion. According to the Undersecretary, the reduction in the number of tax auditors explains the decrease.

 

 

 

ETCO holds workshop to discuss change in Simples Nacional

_FLA3993

The event was attended by the Federal Revenue Secretary, Jorge Rachid, and tax specialists

 

 

The ETCO-Brazilian Institute of Ethical Competition held in São Paulo, on February 15, the workshop A Ampliação do Simples Nacional. The event brought together business representatives, tax administrators and economists specialized in taxation with the aim of analyzing the Bill of Law of the Chamber (PLC 125-2015) that expands billing limits and introduces changes in the rules of Simples Nacional and Individual Microentrepreneurs (MEI) .

The meeting included lectures by the Federal Revenue Secretary, Jorge Rachid; Luciano Garcia Miguel, representing the Finance Secretary of São Paulo, Renato Villela; economist Bernard Appy, director of the Center for Tax Citizenship; and economist Fernando Holanda Barbosa, from the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV). The four speakers criticized the text of PLC 125 that is about to be voted on in Congress.

The mediation was by ETCO president Evandro Guimarães, who explained the objective of the meeting: “Brazil needs to better understand what is being proposed in this PLC, what are the impacts on the business environment and on the country. Our intention was to bring together subject matter experts to share their views and help deepen that understanding ”.

The following are some of the main points of the project and the criticisms of the speakers:

Federal Revenue Secretary - Jorge Rachid1) Progressive expansion of the revenue limit to fit into the National Simple from the current R $ 3,6 million to R $ 14,4 million in 2018 for federal taxes (for ICMS, state, and ISS, municipal, the limit remains at R $ 3,6 million).

Second Jorge Rachid, this expansion will cause an annual loss of R $ 16,1 billion in federal revenue as of 2018, an opposite effect to the fiscal effort necessary to balance public accounts.

In the opinion of bernard appy, even within the current limits, Simples Nacional does not fulfill one of its initial promises, which was to favor companies that suffer the most from unfair competition from the informal economy. These companies usually have a low profit margin, which makes it impossible to join the program, which calculates the tax on billing. "Simples benefits those who need it least, which are companies with a high profit margin and entrepreneurs with high personal income," he said. According to him, the expansion of the billing limit will further increase this distortion.

_FLA4160

According to a Fernando Holland Barbosa, no other country in the world has a benefit program for small businesses with a limit as high as that of Simples Nacional today. He says that the tax waiver of Simples reached R $ 2015 billion in 72,4. "The project is expensive and has had little impact on its purpose of reducing informality," he said. "The increase in the limit will only worsen this situation".

 

_FLA4098Although PLC 125 maintains the billing limits for ICMS and ISS at R $ 3,6 million, the São Paulo government representative stated that the increase in the limit for federal taxes will cause a reduction in federal transfer funds to states and municipalities. "There will be significant losses in these transfers," he said Luciano Garcia Miguel. The IRS estimates that the reduction could reach R $ 7,5 billion per year from 2018.

 

2) Increase in the Individual Microentrepreneur (MEI) billing limit from R $ 60 thousand to R $ 90 thousand per year

_FLA3884The Economist bernard appy finds raising the MEI limit “unnecessary and unjustifiable”. He sees a contradiction in the criteria that tax salaried workers and MEI participants. “Those who work with a formal contract and earn R $ 5 are taxed in the highest income tax bracket, 27,5%. If you receive the same amount as MEI, you pay 1% tax ”, he compared. "Brazil needs to decide if those who earn R $ 5 a month are rich, as they think the Income Tax is, or if they are poor, as the MEI proclaims."

The São Paulo tax representative stated that raising the limit will reduce the tax revenue of states and municipalities. "The state of São Paulo will lose R $ 100 million a year", said Luciano Garcia Miguel.

3) Inclusion of part of the alcoholic beverage industry and wholesale trade in Simples

The Secretary of Revenue foresees a reduction in tax collection in this segment. Second Jorge Rachid, companies in the sector, which today pay high rates, should opt for Simples Nacional to pay less taxes and may even split into several companies to remain within the required billing limits.

The Economist bernard appy cited another loss. According to him, in the beverage segment, taxation also has the function of controlling demand. Lower taxes encourage alcohol consumption.

4) Inclusion of small credit companies in Simples Nacional

The four speakers stated that this inclusion will represent the legalization of the loan without control by public agencies. "It will be the institutionalization of loan sharking", criticized the economist bernard appy.

The Economist Fernando Holland Barbosa he pointed out that PLC 125 does not establish an interest limit or control by the Central Bank on loans offered by the benefited institutions. "An absurd", he lamented.