Smuggling in Brazil: Impacts and Solutions

Brazil loses R $ 100 billion annually to the crime of smuggling, in the form of tax evasion, loss of jobs in industry and commerce and damage to the health of the population. Several sectors of the economy are severely affected by this crime, such as cigarettes, medicines, clothes, drinks, among others.

This Tuesday, the Movement for the Defense of the Brazilian Legal Market brought together a group of experts and authorities in Brasília to discuss the impacts of smuggling in Brazil and seek solutions to this serious problem.

For Evandro Guimarães, president of the Brazilian Institute of Ethics in Competition (ETCO) and one of the coordinators of the Movement, we are experiencing a delicate moment. "The government desperately needs to expand the collection, but for this purpose it is considering adopting measures that will have an opposite effect to that desired". For Guimarães, it is not possible to charge more sectors that today suffer from the loss of the market to illegality. “How to defend new increases knowing that this will generate unemployment, affect tax revenues, increase crime and destabilize companies based in Brazil? ”, Asks the executive.

See below the main highlights of the event:

The Minister of Justice, José Eduardo Cardozo, presented a brief overview of the activities carried out to combat crime in border regions, with emphasis on actions such as the Sentinela and Ágata operations. The minister also highlighted the importance of greater integration with the police forces of neighboring countries, as a way to curb illegality. Asked about the possibility of the government carrying out longer operations at the borders, the minister was skeptical: “it is clear that the ideal would be to have enough effective to block the borders completely, but this is not viable, especially from the point of view of the effective and operating costs, ”said Cardozo.

This is not what federal deputy Efraim Filho (DEM / PB) thinks, president of the Mixed Parliamentary Front to Combat Smuggling and Counterfeiting. For him, it is not only possible to close the borders to crime, but this would be another way for the government to increase the collection, without, however, resorting to further tax increases: “the minister said that the cost of an action like that would be too high. But a recent study by the Institute for Economic and Social Development of Borders (Idesf), showed that the Agate operation, if carried out permanently, would have the potential to add R $ 3 billion annually to the collection of only two taxes, the IPI and the Tax of operation.

Speaking on the industry panel, Andrea Martini, president of Souza Cruz, showed how the increase in taxes in the tobacco sector over the past 3 years has definitely contributed to the expansion of cigarette smuggling in Brazil. “In 2011, smuggling hovered around% of the market, and had remained almost stable. But with the introduction of the current tax model, which increased the sector's taxes by 110% over a 3-year period, smuggling took a leap and reached 34% of the entire national market this year, ”said Martini. For the executive, in addition to the measures to combat smuggling that must be adopted, there is no more room for tax increases, as this would have devastating effects for Brazilian industry.

Credit: Claudio Reis / Esp.CB / DA Press

Credit: Claudio Reis / Esp.CB / DA Press

06/10/2015. Credit: Claudio Reis / Esp.CB / DA Press. Brazil. Brasilia DF. The executive president of the Brazilian Institute of Ethics in Competition (ETCO), Evandro Guimarães, participates in the seminar "Contraband in Brazil: Impacts and Solutions", in the auditorium of the Correio Braziliense. The meeting is promoted by the ETCO Institute.


In the photo, Edson Vismona and Luciano Barros. Credit: Claudio Reis / Esp.CB / DA Press

Letter of intent

At the end of the event, ETCO president Evandro Guimarães delivered a letter to the minister of justice with suggestions to the federal government that could be adopted in the short and medium term, and which would have a positive effect in combating smuggling..


 Your Excellency Sir 

José Eduardo Cardozo

Minister of State for Justice

 In mid-2014, the Brazilian Institute for Ethical Competition (ETCO) created, alongside the National Forum to Combat Piracy and Illegality (FNCP), the Institute for Economic and Social Development of Borders (Idesf) and the Brazilian Combat Association to Falsification (ABCF), the Movement for the Defense of the Brazilian Legal Market, a coalition that already has more than 70 entities representing sectors of the economy affected by different types of legal deviations such as smuggling, counterfeiting, embezzlement and piracy. 

Since then, the Movement has been conducting a series of events, lectures and meetings with the objective of sensitizing Brazilian society and the Federal Government, on these problems. In 2015, for example, we held the 1st National Day to Combat Smuggling, a crime that today brings losses of more than R $ 100 billion to Brazil in the form of tax evasion, losses for the industry and even issues related to health and security of Brazilians. 

During this period, it was clear to members of the Movement that some fundamental measures, of varying complexity, would have highly positive effects in combating illegality in the country. At a time when the federal government is seeking a necessary adjustment of its accounts, these measures could, to a large extent, contribute to the country being able to leave the current moment of crisis, without, however, burdening the Brazilian population and the sector even more. productive, which today live with one of the highest tax burdens in the world. 

In this way, ETCO, on behalf of the Movement for the Defense of the Brazilian Legal Market, hereby requests the collaboration of the Honorable Minister of Justice for the measures below to become part of the government's positive agenda:

1) Greater investment in the security of our borders - A recent study developed by Idesf shows that the execution of Agate operations has a direct effect on tax collection. By analyzing the periods in which this operation was carried out between the years 2011 and 2014, and cross-checking data on the collection of only two taxes (IPI and Import tax), it was possible to verify that Ágata has a highly positive impact on the coffers. If these operations were carried out on a permanent basis, the additional collection of these two taxes would be greater than R $ 3 billion per year.

2) Maintenance of the current tax burden - In times of crisis, it is tempting to take drastic measures to try to resolve the issue in the shortest possible time. But these measures can often prove to be inefficient. This is the case with the indiscriminate increase in taxes, which at first may seem like a real panacea for Brazil's problems. However, especially in the case of sectors severely affected by illegality, it has an opposite effect to that desired: higher taxes increase the competitive advantage of illegal products in Brazil, and weaken companies that operate legally in Brazil. 

3) Brazil / Paraguay Agenda - With a GDP of around US $ 30 billion, and 'exporting' around R $ 20 billion in illegal products annually to Brazil alone, it is clear that activities such as smuggling are part of the economic reality of the neighboring country. It is necessary that Brazil, in the position of the largest economy in South America, act together with the Paraguayan authorities so that the country can develop in a sustainable way, without needing the current heterodox practices.

We can no longer remain indifferent to this situation. The illegal activities mentioned here are destroying the investment and innovation capacity of the Brazilian industry, subtracting billions of reais from public coffers and threatening the employment, health and safety of millions of Brazilians. The real commitment of all, government and civil society, is needed so that Brazil can, once and for all, face with due firmness the problems that affect us all.

Best Regards,

Evandro Guimaraes

Chief Executive Officer of ETCO


To learn more about combating smuggling, click here.

Contraband seizures rise 4,9% in first half, says Fisco

In the first six months of this year, seizures totaled R $ 933 million. Seizures of weapons and cigarettes rise, but they fall from glasses and clothing.

The inspection of the foreign trade area of ​​the Federal Revenue seized R $ 933 million in goods and vehicles as a result of attempts to smuggle, embezzlement or fraud in the first half of this year, which includes customs (ports, airports and land border units) , according to information released on Monday (24) by the agency. The value represents an increase of 4,9% over the same period last year (R $ 889 million).

Most of the tax authorities' seizures made in the first six months of this year refer to cigarettes (R $ 342 million, up 45% over the same period in 2014), followed by electronics (R $ 65,7 million, with increase of 8,6% in this comparison), vehicles (R $ 44,2 million, down 11,8%), clothing (R $ 36,12 million, down 20% over the previous year), sunglasses sol (R $ 23,44 million, down 36%), computer products (R $ 20,1 million, up 6,3%), watches (R $ 17,15 million, up 34,6), 369%), and weapons and ammunition - with a strong increase of 567%, to R $ XNUMX thousand, among others.

“We had a greater presence at the borders. We verified a smaller number of the number of identified cases, but those that were identified, the value increased. There was an increase of 37% in terms of the value of seized goods ”, said the Under Secretary for Customs and International Relations of the Federal Revenue, Ernani Checcucci. He informed that 1.834 surveillance and repression operations against smuggling and embezzlement were carried out in the first six months of this year, which represented an increase of 21,38% over the same period last year.

Postal shipments
The Federal Revenue Secretariat reported that 16,5 million postal remittances from abroad were cleared at the Post Office, which represents an increase of 54,3% over the same period last year. According to the tax authorities, these transactions generally refer to electronic commerce, that is, purchases made in other countries.

The agency recalls that remittances from individuals to individuals, whose value does not exceed $ 50, are exempt. “There is an abuse of this exception. The National Congress must be guided to resolve this. In other countries, this does not exist ”, declared Checcucci, of the Federal Revenue, explaining that the taxpayers are“ splitting ”their orders so as not to pay import tax.

Inspection at airports
The Federal Revenue numbers also show that there was a drop in the number of declarations of products acquired abroad from 7,4% in the first half of this year, to R $ 36,94 million, against R $ 39,9 million in the first six months of the year. last year. These products were declared by taxpayers before returning to the country via airports.

At the same time, occurrences also declined, that is, products imported through airports, without being declared to the tax authorities, in the first half of this year, to R $ 77,7 million. A 10,6% decrease compared to the same period last year (R $ 87 million). According to Checcucci, of the Federal Revenue Service, this is due to the rise in the dollar, which is decreasing the value of imports (which became more expensive) from the beginning of 2014 to the beginning of 2015.

At airports, the import fee is US $ 500. There is also an equal amount for purchases made at freeshops that are at Brazilian airports. For imports that exceed these values, there is a charge of 50% of the import tax and, for undeclared products, there is also a fine of 50%.

Source: Site G1 (24/08)

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