About Us

Projects and Initiatives

Electronic invoice

We contributed to the design, implementation and improvement of the Electronic Invoice project, which began to take effect in 2006. The System improved inspection, reduced tax evasion and reduced costs for tax authorities and companies.

Inspection Support Systems

We help to develop mechanisms to control the manufacture of products with high tax evasion power, such as the Beverage Production Control System (Sicobe) and the Cigarette Production Control and Tracking System (Scorpios).

Member of CNCP - National Council for Combating Piracy and Intellectual Property Offenses

The National Council for Combating Piracy and Offenses against Intellectual Property (CNCP), a collegiate and advisory body of the Ministry of Justice, aims to develop guidelines for the formulation and proposition of a national plan to combat piracy, its tax evasion. arising and offenses against intellectual property.

Underground Economy Index

ETCO believes that knowing the size of the problem is critical to tackling it. Much is said, but little is known about informality, piracy and evasion, as, as illegal activities, they are difficult to measure. In a pioneering initiative, ETCO, together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (IBRE-FGV), annually publishes the Underground Economy Index, a study that estimates the values ​​of activities deliberately not declared to public authorities with the purpose of evading taxes.

To learn more about the Shadow Economy Index, click here

Simplification of the Tax System

Convinced that the complexity of the Brazilian tax system is one of the factors that encourage tax evasion, ETCO has contributed with concrete suggestions for greater efficiency in the payment, inspection and tax collection system. Among these proposals are the federal, state and municipal cadastral unification; the principle of full anteriority, with main ancillary obligations defined until June 30 of the previous year, subject to regulatory taxes; and the simplification of procedures for registration and registration of companies.

Special taxation regimes

One of ETCO's suggestions culminated in the promulgation of Article 146-A, resulting from Constitutional Amendment No. 42/2003. The article foresees that States, the Federal District and municipalities, in addition to the Union, institute differentiated taxation systems in order to prevent competitive imbalances caused by the actions of individuals who use the reduction of their tax costs to gain spurious competitive advantages. ETCO acts with a view to the enactment of a complementary law, essential for the application of the article.

Union of forces for the legal market

We created, in partnership with the National Forum to Combat Piracy (FNCP), the Movement in Defense of the Brazilian Legal Market, which joins forces to act in a coordinated manner in the fight against smuggling, piracy, fraud and counterfeiting of products and defends border control actions. The Movement has the support of 70 entities. Within the scope of cities, also in partnership with the FNCP, we created the Legality Movement, which unites forces between civil society, city halls, the Federal Revenue Service, the Federal Police, parliament, state agencies and the National Front of Mayors to fight, effectively and forcefully the illegal market in Brazilian cities.

Studies, seminars and publications

We sponsor dozens of research, events and books on topics related to ethics, including the Culture of Transgressions in Brazil series, which brings together contributions from great Brazilian thinkers, including the sociologist and former President of the Republic Fernando Henrique Cardoso.

International operations

We are members of committees that fight transnational illicit practices that provoke unfair competition. In 2016, we joined the Latin American Anti-Smuggling Alliance (ALAC), which brings together civil society entities and government agencies from 15 Latin American nations in the search for joint actions to stop smuggling in the region; in 2017, we started to act in this direction also with the World Trade Organization (WTO).

Recognition of ethical companies

We are part of the management committee of Pró-Ética, a recognition program for companies committed to ethics in their relations with the public sector. Pró-Ética was created in 2010 by the Ministry of Transparency, Inspection and Controllership-General of the Union (CGU) in partnership with the Ethos Institute.

Ethics for young people

To strengthen the ethical principles in the training of Brazilian students, we created the Ethics for Young People project. The initiative developed and made available to high school teachers, at the address www.eticaparajovens.com.br, a series of pedagogical activities to deal with the theme with its students in a pleasant and engaging way, stimulating critical thinking.

ETCO and FGV reveal: Underground Economy exceeds R $ 650 billion

ETCO and FGV reveal: Underground Economy exceeds R $ 650 billion in 2010 and stops falling in relation to GDP

After five consecutive years growing less than GDP, the underground economy starts to grow at the same speed as GDP.

Videographer: Underground economy equals 18,6% of GDP (Globo News, Jornal das 10, 24/11/2010)

View the PDF Presentation

São Paulo, November 24, 2010 - The Underground Economy Index released today by the Brazilian Institute of Ethics in Competition (ETCO) together with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV), with the 2009 revision and update for 2010, it shows a data not observed since it started to be estimated in 2003. After spending 5 years - between 2003 and 2008 - growing less than the GDP, the Underground Economy grew with the same speed of the GDP and the curve of the relation of the Index with the GDP stopped falling, showing a trend of stabilization at around 18,6%. This means that, in the last three years, the Underground Economy has grown at the same rate as the Brazilian Gross Domestic Product, which is worrying for the country's economy.

From the point of view of absolute values, the analysis of today's results also presents a new milestone: the Brazilian underground economy, which comprises the set of activities related to the production of goods and services deliberately not reported to governments, in 2010 surpassed the mark of R $ 650 billion. In July of this year, Ibre / FGV and ETCO announced that the values ​​estimated in reais, in 2009 reached R $ 578 billion, an amount equal to Argentina's GDP.

Size of the Underground Economy

 

% GDP

In millions of reais

Current Currencies

Reais at 2009 Prices

2003

21.0%

357388.7

523524.6

2004

20.9%

405317.3

549560.6

2005

20.4%

438417.5

554465.9

2006

20.2%

478455.2

570044.5

2007

19.5%

518520.1

583533.8

2008

18.7%

562276.3

589217.4

2009

18.6%

583663.6

583663.3

2010*

18.6%

656621.5

627438.3

Source: Own elaboration

* Growth forecast of 7,5% of GDP and 5% of inflation in 2010

“The disclosure of absolute values ​​is essential to avoid having the mistaken view that stabilization in relation to GDP is positive. As in 2009, this year another R $ 656 billion should be left out of the Brazilian formal economy ”, comments Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study.

In the view of André Franco Montoro Filho, ETCO's executive president, it is necessary to reflect deeply on the reasons for the current results, so that public policies that are really effective are designed, so that the importance of the underground economy in Brazil gradually becomes less.

For him, the growth of the economy has a double and antagonistic effect on informality. “On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other, income growth increases the consumption of goods and services, including those produced in the underground economy. The results released indicate that the second effect has been prevalent in recent years, ”says Montoro Filho.

Informality, in addition to its relationship with organized crime and precarious employment relationships, brings direct damage to society, creates an environment of transgression, stimulates opportunistic economic behavior with a drop in the quality of investment and reduces the growth potential of Brazilian economy. In addition, it causes a reduction in government resources for social programs and investments in infrastructure.

About ETCO

Founded in 2003, the Brazilian Institute of Ethics in Competition is a civil society organization of public interest -OSCIP- with the objective of promoting competitive ethics to improve the business environment and stimulate economic growth. For this purpose, it develops actions to combat competitive imbalances caused tax evasion, informality, forgery and other misconduct. It also seeks to make society aware of the social harms of unethical practices and their negative effects on the country's growth. The ETCO comprises six sectorial chambers, bringing together companies in the technology, medicine, fuel, tobacco, beer and soft drink segments.

Underground Economy hides an Argentina

Production beyond the control of the State moves 578,4 billion reais according to an estimate by Ibre / FGV under study for ETCO.

Watch the video: Underground Economy (5 min; wmv)

The Brazilian underground economy hides an entire Argentina. According to the study “Estimation of the Size of the Underground Economy in Brazil” produced by the Brazilian Institute of Economics (Ibre) of the Getulio Vargas Foundation, for ETCO, 578,4 billion reais circulated informally last year, equivalent to the country's GDP neighbor. This huge amount of resources corresponds to 18,4% of the country's Gross Domestic Product, according to an estimate by Ibre / FGV.

This is money that escapes State control and encompasses informality in the labor market and the production of goods and services by economic agents who seek to reduce their costs and, thus, increase their profits. “These activities that are not declared to the government seek to evade taxes, contributions to Social Security, labor laws and regulations, and to avoid costs resulting from the compliance with the rules applicable in a given activity”, says Fernando de Holanda Barbosa Filho, Ibre researcher and responsible for the study .

Around the informal activity, the street vendor stand, the irregular selling points also flourish the sale of drugs, stolen or smuggled products, in short, an entire illicit market. “But there is no direct variable that allows the estimation of illicit activities, so our estimation excluded them and focused on seeking the average size of the Underground Economy obtained by two methods: the monetary and informality in the labor market” adds Barbosa (read boxing).

The Underground Economy index was estimated using a historical series of statistical data from 2003 to 2009. The study shows that the estimate of the Brazilian Underground Economy in 2003 was equal to 21% of GDP and came in a gradual reduction until 2009, when it registered 18,4, 10,5% of GDP. Despite the reduction as a fraction of GDP, in real values ​​there was an increase of 2003% in relation to 523, when it reached XNUMX billion reais. "This shows that the informal economy continues to grow, but the good news is that it grows less than the formal GDP and then loses ground as a proportion of GDP," notes Barbosa.

THE ILLEGALITY NUMBERS
Size of the Underground Economy in millions of reais and as a% of GDP

Table: Illegality

For Professor André Montoro, President of ETCO, reducing the size of the Underground Economy as a fraction of GDP is an advance, even if moderate. This reduction is the result of a combination of several factors, such as institutional modernization and the change in the growth regime of the Brazilian economy. “Today, credit has become important both for companies that want to grow and for workers who want to consume,” says Montoro. The worker feels more stimulated to look for a job with a record in order to have access to credit, either payroll deductible or real estate. “For companies, credit expansion brings the need to formalize, since financing for informal companies is almost nonexistent”, he adds.

An important factor in reducing the size of the Underground Economy as a proportion of GDP is the population's awareness of the losses caused by informality and the link between this Underground Economy and crime. This awareness, requiring invoices and not buying products of illegal origin, is helping to reduce the weight of the underground economy.

CALCULATION

Analyzing the study data that show a reduction in the Underground Economy as a fraction of GDP from 2003 to 2009, Luiz Guilherme Schymura, Director of Ibre / FGV, says that “Brazil is modernizing, we are clearly experiencing a moment of transition with some disruptions and a greater effort is needed to overcome these indicators ”.

HIDDEN WEALTH
Size of the Shadow Economy as% of quarterly GDP

Table: Hidden Wealth

Ambassador Marcílio Marques Moreira, President of the ETCO Advisory Council, adds his voice to that of Schymura: “The Underground Economy in Brazil is a legacy of a country that is still institutionally underdeveloped, not very mature from a social point of view. From the point of view of the individual, a change would be necessary in the face of leniency with transgressions of all kinds, both in politics and in the economy. ” The Ambassador recalls that in the political field there are some recent signs of improvement, such as the Clean Record Law, but “we need a clean record law also for those who act in the economic area”, says Moreira.

Due to its size, the Underground Economy causes countless losses to those who live, produce and consume in the country. After all, it is a substantial amount, of almost 600 billion reais circulating illegally. The government loses a lot of resources. If the tax burden of the Underground Economy is similar to that of the rest of the economy, that is, 35%, it means that more than 200 billion reais of revenue is lost. The consumer is harmed because there is no guarantee that the product purchased on the informal market will live up to his expectations. The Consumer Protection Code is not respected in this Underground Economy.

Another one who loses with the Underground Economy is the good producer, the one who obeys the law, because he faces an imbalance of competition. This has a very serious impact on the economy. Illegal activity is an incentive for opportunists, companies or entrepreneurs to appear who seek to make money through transgressions and not through quality investments. Informality attracts opportunists and keeps good investors away. And this is terrible for the country, as it reduces our growth potential, our potential to generate jobs and income. The ETCO President warns: “It is important for the population to be aware of the damage caused by the Underground Economy. It is necessary to reduce bureaucracy, reduce the tax burden in order to make it easier to comply with tax and labor obligations.

In addition, it is necessary to establish more agile and easier mechanisms for monitoring these obligations ”.

In an effort to combat informality and unfair competition, ETCO operates on three fronts and with three strategies. "We seek to stimulate studies and analysis on the underground economy, its causes and relations with the formal economy to increase our knowledge about the problem."

At the same time, ETCO seeks to raise awareness among the population and specific audiences - such as the public and private sectors - about the losses generated by the underground economy and the advantages of competitive ethics. It also proposes and supports public and private initiatives that help to reduce the underground economy. These actions can be both to facilitate compliance with the law and to reduce the tax burden, labor bureaucracy and support for initiatives that improve inspection and punishment for offenders.

PRESENTATION

At the table, during the presentation of the study, André Montoro, President of ETCO,
Ambassador Marcílio Marques Moreira and Luiz Guilherme Schymura, Director of Ibre / FGV

Production deviated from legal frameworks, surreptitious, which evades taxes and labor obligations, occurs to a greater or lesser degree also in developed and developing countries. If in other countries informality is also a burden for those who work, live and produce within the legal norms, for Brazilians it must be clear that only the repressive dimension, with more inspection, is not enough to combat the voracity of this economy that develops contrary to the norms. “If everyone decides to be a profiteer, just following the law at the sight of inspectors, a society is not built”, says Montoro. Every citizen must be clear that respect for the rules is good for him, for his family and for the country.

 

Informal economy must be integrated quickly

Source: Jornal do Comércio - RS - Porto Alegre / RS - 10/12/2010

Publications

The Gross Domestic Product of Brazil (GDP) grew 0,5% in the third quarter of 2010. It will reach, between 7% and 8%, Chinese growth, according to economists. As Christmas is there, consumption is high and, in it, counterfeits and Made in China products proliferate, including prosaic underwear with marks and indications made in Portuguese. That is, the source sends, according to the customer's language, on the other side of the world, a business from China. When Brazil is horrified by the war in Rio, in the fight against drug traffickers, it is noticed that unemployment has decreased. However, there is an alarming fact, that is, the informal economy has increased. People who are not enrolled in Social Security or have official records of another type are not miscreants. However, they fail to protect themselves and to help society and the economy as a whole.

After five consecutive years, between 2003 and 2008, growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not registered with governments - grew in 2010 at the same speed as the country's formal economy. With the 2009 revision and update for 2010, the indicator was released by the Brazilian Institute of Competitive Ethics (ETCO), together with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV). The total handled by the underground economy now exceeds R $ 650 billion in 2010.

According to the research, the curve of the ratio of the index to the Gross Domestic Product stopped falling, showing a tendency of stabilization at around 18,6%. Therefore, in the last three years, the underground economy has increased at the same rate as the Brazilian GDP, which is worrying for the country. The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010. As in 2009, this year another R $ 656 billion should be left out of the formal economy. It is a high amount and it could help in the collection of city halls, state governments and the Union itself. In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP.

In the assessment of ETCO's chief executive, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality. “On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other, income growth increases the consumption of goods and services, including those produced in the underground economy. The results released indicate that the second effect has been prevalent in recent years, ”added Montoro Filho. Many of us, whether we know it or not, stimulate trade that supplies smuggled products, most of them from China. One buys only for the price, without taking into account the terrible quality of what is acquired. When we call hydraulic services, electricity, janitors and others, we do not ask if these workers are registered with Social Security. Probably not, which is a loss for themselves and for the country's economy. Campaigns are carried out so that whoever can enter the formality of the business world, even if it is a micro-business.

 

Informal economy starts to grow at the same pace as GDP

Source: DCI - São Paulo / SP - 26/11/2010

SÃO PAULO - After five consecutive years (between 2003 and 2008) growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not informed to the governments - starts to grow this year at the same speed as the economy country, according to the Underground Economy Index. With the 2009 revision and update for 2010, the indicator was released by the Brazilian Institute of Competitive Ethics (ETCO), together with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre / FGV). The total handled by the underground economy now exceeds R $ 650 billion in 2010.

According to the survey, the curve of the ratio of the index to GDP has stopped falling, and shows a tendency to stabilize at around 18,6%. "This means that, in the last three years, the underground economy has grown at the same rate as the Brazilian GDP, which is worrying for the country's economy," says the statement.

The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010. “The disclosure of absolute values ​​is fundamental to avoid having the mistaken view that stabilization in relation to GDP it's positive. Like in 2009, this year another R $ 656 billion should be left out of the formal Brazilian economy, ”says Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study.

In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP. In the assessment of ETCO's executive president, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality.

"On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other hand, income growth increases the consumption of goods and services, including those produced in the underground economy."

"The results released indicate that the second effect has been prevalent in recent years," added Montoro Filho, commenting on the figures.

After growing less than GDP for five consecutive years, the underground economy starts to grow this year at the same speed as the country's formal economy.

 

Expanding informal economy

Source: A Gazeta - MT - Cuiabá / MT - ECONOMY - 26/11/2010

After 5 consecutive years (between 2003 and 2008) growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not informed to the governments - starts to grow this year at the same speed as the country's formal economy , according to the Underground Economy Index. With the 2009 review and update for 2010, the indicator was released on Thursday (25) by the Brazilian Institute of Ethics in Competition (ETCO), together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV).

The total handled by the underground economy now exceeds R $ 650 billion in 2010. According to the survey, the curve of the ratio of the index to GDP has stopped falling, showing a tendency of stabilization at around 18,6%. "This means that, in the last 3 years, the underground economy has grown at the same rate as the Brazilian GDP, which is worrying for the country's economy," says the statement. The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010. “The disclosure of absolute values ​​is essential to avoid having the mistaken view that stabilization in relation to GDP it's positive.

As in 2009, this year another R $ 656 billion should be left out of the Brazilian formal economy ”, says Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study. In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP. In the evaluation of ETCO's executive president, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality. "On the one hand, growth generates institutional modernization that encourages the formalization of economic activities, but on the other, income growth increases the consumption of goods and services, including those produced in the underground economy." "The results indicate that the second effect has been prevalent in recent years," says Montoro Filho.

 

FGV: informal economy exceeds R $ 650 billion in 2010

Source: Diário do Grande ABC - Santo André / SP - 26/11/2010

SÃO PAULO - After five consecutive years (between 2003 and 2008) growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not informed to the governments - starts to grow this year at the same speed as the economy country, according to the Underground Economy Index. With the 2009 review and update for 2010, the indicator was released today by the Brazilian Institute of Competition Ethics (ETCO), together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV). The total handled by the underground economy now exceeds R $ 650 billion in 2010.

According to the survey, the curve of the ratio of the index to GDP has stopped falling, showing a stabilization trend around 18,6%. "This means that, in the last three years, the underground economy has grown at the same rate as the Brazilian GDP, which is worrying for the country's economy," says the statement. The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010.

“The disclosure of absolute values ​​is essential to avoid having the mistaken view that the stabilization in relation to GDP is positive. Like in 2009, this year another R $ 656 billion should be left out of the formal Brazilian economy, ”says Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study. In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP.

In the evaluation of ETCO's executive president, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality. “On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other hand, income growth increases the consumption of goods and services, including those produced in the underground economy”. "The results released indicate that the second effect has been prevalent in recent years," added Montoro Filho.

 

Informal economy already exceeds R $ 650 billion in 2010

Source: The State of Paraná - Curitiba / PR - 25/11/2010

SÃO PAULO - After five consecutive years (between 2003 and 2008) growing less than the Gross Domestic Product (GDP), the underground economy - business resulting from informal enterprises not informed to the governments - starts to grow this year at the same speed as the economy country, according to the Underground Economy Index. With the 2009 review and update for 2010, the indicator was released today by the Brazilian Institute of Competition Ethics (ETCO), together with the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre / FGV). The total handled by the underground economy now exceeds R $ 650 billion in 2010.

According to the survey, the curve of the ratio of the index to GDP has stopped falling, showing a stabilization trend around 18,6%. "This means that, in the last three years, the underground economy has grown at the same rate as the Brazilian GDP, which is worrying for the country's economy," says the statement. The index takes into account a forecast of growth of 7,5% of GDP this year and inflation of 5% in 2010.

“The disclosure of absolute values ​​is essential to avoid having the mistaken view that the stabilization in relation to GDP is positive. Like in 2009, this year another R $ 656 billion should be left out of the formal Brazilian economy, ”says Fernando de Holanda Barbosa Filho, a researcher at Ibre / FGV and responsible for the study. In July this year, Ibre / FGV and ETCO announced that the estimated values ​​in reais, in 2009, reached R $ 578 billion, equivalent to Argentina's GDP.

In the evaluation of ETCO's executive president, André Franco Montoro Filho, the growth of the economy has a double and antagonistic effect on informality. “On the one hand, growth generates an institutional modernization that encourages the formalization of economic activities, but on the other hand, income growth increases the consumption of goods and services, including those produced in the underground economy”. "The results released indicate that the second effect has been prevalent in recent years," added Montoro Filho.