Transaction, reform and division of debtors: solutions to tax litigation

Facing the lack of control of Brazilian tax litigation, which today already reaches a magnitude equivalent to 73% of the country's Gross Domestic Product (GDP), according to Insper data, must necessarily undergo a profound transformation on numerous fronts of the national tax system.

In a webinar held by Casa JOT in partnership with Brazilian Institute of Competitive Ethics (ETCO) this Friday (16/10), experts and authorities listed some of the priorities that can help reduce these disputes.

Among them are the initiative of the Attorney General of the National Treasury to tax transactions, which until August this year negotiated R $ 28 billion in debt. Speakers also stressed the urgent need for comprehensive tax reform, as well as ensuring that stubborn debtor the eventual debtor and the good and bad taxpayer.

João Henrique Grognet participated in the webinar; General Coordinator of PGFN's Credit Recovery Strategy; Breno Vasconcelos, lawyer and researcher at Insper; Zabetta Macarini Gorissen, executive chairman of the Group of Applied Tax Studies (Getap); and Ana Amélia, former senator.

It was a consensus, and it is not new, that the major and main problem lies in the complexity of the tax collection system. “There is no rich country without a legal model that guarantees predictability and security. It's impossible. And tax litigation is generated by unpredictability. How does the taxpayer and entrepreneur do to navigate in an environment so difficult to predict? ”, Said Breno Vasconcelos.

According to the lawyer, there are some factors that increase this insecurity: possibility of retroactivity in new interpretations, absence of acts that register what is the formal and official interpretation of the new tax rule, absence of effective consultation processes, the excessive duration of the processes, which today it takes an average of 19 years to complete, and the uncertainties arising from new technologies. "These are those indicated by the OECD as factors of legal uncertainty and Brazil boasts all of them", pointed out Vasconcelos.

Former senator Ana Amélia cited as an example of the complexity in collecting taxes the reality of a Brazilian businessman, Jorge Gerdau Johannpeter, of the Gerdau Group, which has a steel company in Rio Grande do Sul and another one in Canada. “In RS, he has 250 professionals for the tax area just to meet the almost daily changes. To do the same job in Canada, he needs only 3 people ”.

“This illustrates with crystal clarity the situation we are experiencing. And the foreign investor, when looking at our country, he sees not only the question of competition, but also these archaic structures that we have ”, he added.

For Zabetta Gorissen, in the last four years, Brazil has intensified its critical understanding of tax litigation, with an attempt to bring together taxpayers, the government, the National Congress and the Judiciary. "Unfortunately, litigation has become a multifaceted problem that affects everyone too much," he said.

Read also Brazilian tax litigation exceeds 50% of GDP

In this sense, the president of Getap mentioned the development of mechanisms for cooperative compliance, always focused on bringing taxpayers closer to the taxpayer to more easily solve the problems faced. Zabetta also drew attention to “the great milestone” brought by tax transactions, which are a renegotiation instrument for the extinction of tax credit.

According to data presented by João Henrique Grognet, General Coordinator of Credit Recovery Strategy at PGFN, the renegotiation of R $ 28 billion in debts reached 77,4 thousand contributors and 275 thousand registrations grouped in agreements.

“It seems to me that it was very correct, with wide advantages in the Tax Court. This Justice is good in any case, but we were not finding that clarity in the previous Refis programs. After all, you give discount to those who don't need it, ”said Grognet.

According to Zabetta, a point that needs improvement in the tax transaction involves the fact that Law 13.988 / 20, which instituted the program, established a limit on the payment litigation transaction of 50% of the debt amount. “Setting this limit may slightly restrict society's appetite for this modality. But, as we always said, let's wait ”.

Expectations for tax reform

The challenge of facing tax litigation is great, but in the view of experts and authorities, this scenario will only really change after the tax reform.

“None of this will be resolved if we only work on litigation. We need to work at the source. Litigation is a symptom, not a problem in itself. It is born out of an extremely complex system, full of exceptions. Substantial tax reform is essential for Brazil to emerge from this dysfunctional and counterproductive scenario, ”said lawyer Breno Vasconcelos.

At first, these changes do not automatically mean that a new dispute will not arise, since there will be completely new legislation in force. In the view of Zabetta Gorissen, society should pay “absurd attention” so that the proposals in progress in the National Congress come out with the best possible text and eliminate the largest amount of litigation possible.

“If there is a dispute, we have to immediately go back to Congress and fix it. We are not going to do what we do today. If it doesn't work right away, you have to change the legislation, ”he said.

Stubborn debtor

For ex-senator Ana Amélia, author of the Senate Bill No. 284 / 2017 to characterize the frequent debtor, the more complicated a country's tax system is, the easier it is to evade.

“In this project, we are separating two natures from the taxpayer: one that has as a religion its duty consistently, duty by profession, duty by belief. It is a form of tax evasion. It is a springboard for tax evasion ”, he said, adding that the intention of the PL is to treat taxpayers who have different behavior differently.

The former parliamentarian cited that the characterization of this type of debtor generated a fight within Congress and, because of this legislative vacuum, the Supreme Federal Court (STF) entered the debate. In December of last year, the Court established a thesis in order to criminalize the incumbent debtor, as long as there is evidence of appropriation.

“The STF made a judgment raising the penalty for the stubborn debtor in prison. In our case it was a fine, which had a lot more educational significance than the criminal issue. The Court gave a much heavier treatment than what we intended in the law, ”said Ana Amélia.

Cancellation of registration of defaulting smoking companies back on the STF's agenda


The Supreme Federal Court (STF) again discusses, this Thursday (17/9), the possibility of canceling the registration of smoking companies due to the non-recurring payment of taxes. This is one of the most important issues among those guided by the new President of the Court, Luiz Fux, until the end of the year.

In September 2018, the plenary of the Supreme Court addressed the issue. Eight ministers understood the revocation of registration to be constitutional, but, at the time, there were three different lines of reasoning or argument aligned with this view.

In view of the complexity of the discussion in a case that has been pending before the Court for 13 years and has already accumulated eight volumes, Minister Carmen Lúcia, then President, postponed the announcement of the result. Now, the expectation is that Cármen Lúcia's vote will be understood as the medium and give the contours to the proclamation.

The direct action of unconstitutionality (ADI) 3952 came back to the plenary agenda on October 19, 2019 and March 12, 2020, but ended up not being proclaimed. In view of the repeated postponements, the Court began to receive requests for the proclamation to be concluded soon.

The lawsuit, filed by the Christian Labor Party (PTC), challenges the “summary cancellation” by the Federal Revenue of the special registration of tobacco companies when there is a default of federal taxes. The party claimed that the restriction to the exercise of lawful economic or professional activity would constitute a political sanction prohibited by the Constitution, insofar as it does not admit the existence of “oblique instruments” to coerce or induce the taxpayer to pay taxes.

In summary, it claimed that Article 2 of Decree-Law No. 1.593 / 77, as amended by Law 9.822 / 1999, would violate the constitutional principles of due legal process, wide-ranging defense, contradictory, presumption of innocence, freedom initiative and proportionality. According to the party, the sanction imposed on cigarette companies would not achieve the desired end, which is the payment of taxes or contributions.

Edson Vismona, executive president of the Brazilian Institute of Ethics in Competition (ETCO), which is amicus curiae in the lawsuit, argues that, in fact, impeachment is an appropriate measure for those who, according to him, structure an enterprise in order to harm the Tax authorities to profit. To the extent that they do so, there should be no possibility of recovering the tax due.

“It has debtors with debts of millions. The corrosive action of the heavy debtor is very clear. And you can no longer delay. And that is the preferred verb of the debtor. he exists to delay, to have no decision, to forfeit and he remains free and free, to continue to evade. Cassation is important because it prevents the continuation of a criminal offense and affects all competition ”, emphasizes Vismona.

Contumable debtor is the company that claims to have a tax debt, but in a repeated and premeditated way does not act to settle it. As the entrepreneur does not evade, he just does not pay the tax due, in theory, he does not commit a crime. But, it leaves the competition behind, since the non-payment of taxes positively impacts the price of the products, which are artificially cheaper.

The work to recover the amounts due is, according to Vismona, herculean. And over time, it tends to get even more difficult. “It is an ongoing process for the tax authorities. The cassation does not prevent the action from being repeated, because these groups open new CNPJs, they have a structure around that. But we have to surround them, reduce the space they have. ”

The final definition of ADI 3.952 consolidates an important precedent and, in ETCO's view, strengthens the work of Congress to legislate on combating persistent debtors. Two bills in process in Congress contain criteria to detect and punish companies that use this practice: PLS 284/2017 and PL 1646/2019. The first, for example, differentiates the incumbent debtor from the eventual - just one of the concerns of those who follow the debate. But in Parliament, the discussion is stopped.

The constitutionalist lawyer and professor at the State University of Rio de Janeiro (Uerj) Gustavo Binenbojm works in the cause for the Tobacco Industry Union in the State of Rio Grande do Sul (Sindifumo-RS). According to him, "the cassation takes place in the face of the special circumstance that this is an industry that the taxation is so high that it is not enough for the tax authorities to have at their disposal the traditional instruments for collection, attachment of assets".

In these cases, evaluates Binenbojm, what we have is the constitution of companies that live off tax evasion and “through it distort the market because they offer values ​​much lower than those economically viable for fair competition”.

Thus, the commercial damage caused by the action is irreversible. In this context, the fact would not fit into the jurisprudence of the Supreme Court of not allowing what is called a political sanction. As a rule, extra-fiscal effects are not allowed for non-payment of tax. But in this case, the understanding is that the State has no other means to combat the practice.

“Law works based on reality. It is not a philosophical abstraction. The argument that if you close the company, right there is that you will not be able to pay does not arise with companies that open and close and create new CNPJs to practice the same illegal act. The only way to stop bleeding and prevent further damage is to prevent the action from continuing, ”he said.

Binenbojm recalls the case where the Supreme Court authorized arrest for ICMS debt declared but not paid. “Now it does not involve deprivation of freedom. But the person's right to engage in economic activity or not. If the STF validated the arrest, much more serious, for a greater reason it must validate the revocation of the registration of companies with an inherently unlawful intention ”, he points out.

At the end of 2019, the plenary of the Supreme Court, by seven votes to three, defined the thesis that the taxpayer who fails to collect the ICMS practices crime as long as there is intent and in a persistent manner. On that occasion, the Court judged RHC 163.334 filed by the owners of clothing stores in Santa Catarina denounced for not collecting ICMS between 2008 and 2010. The vote of the rapporteur, Minister Luís Roberto Barroso, which included the criterion of contumacy for the construction of the proposed thesis - changing the initial suggestion, without the expression.

Voting chains

The trial started in 2010 and was suspended after Cármen Lúcia's request for a view. On the occasion, the rapporteur, Minister Joaquim Barbosa, voted for the partial provision of ADI, in order to give the contested normative provisions an interpretation according to the Federal Constitution, establishing the following conditions for the revocation of the registration of companies to take place: analysis of the amount of tax debts not paid off; meeting the due tax administrative process in assessing the enforceability of tax obligations and examining compliance with the due legal process for applying the sanction.

Cármen Lúcia accompanied Barbosa. According to the minister, this interpretation "equalizes the principles of free legal economic initiative, free competition, reconciling with the guarantee of the due tax legal process and the non-avoidability of the jurisdiction, with the taxpayer's duty to fulfill his tax obligations". Minister Rosa Weber and Minister Celso de Mello accompanied this same understanding.

Minister Alexandre de Moraes defended that the company should continue functioning until the secretary of the Federal Revenue Service judges the appeal presented by it. Thus, he voted to exclude the expression “without suspensive effect” in paragraph 5 of article 2 of the rule, maintaining the rest of the law. According to the minister, the rule, with the changes made by the new legislation (Law 12.715 / 2012), provides for the conditions proposed by the action's rapporteur. Ministers Ricardo Lewandowski and Gilmar Mendes followed the current opened by Moraes.

A third line was opened by Fux. He affirmed that the legislator's option must be obeyed and voted for the rejection of the request. "If the legislator understood that the measure has to be severe, he has better expertise than ours to know if a suspensive effect does not postpone an illegal activity". In addition, for Fux, the measure to cancel the registration does not permanently impede the company's economic activity, which can be established as long as the legal requirements are met. “Freedom of initiative when exercised in an abusive manner no longer deserves the protection of the legal system”, he concluded.

The only one to vote for the total validity of the PTC request, and consequently against the constitutionality of the impeachment of company records, Minister Marco Aurélio stressed that the contested rule compels the company liable to pay the tax, regardless of the amount due, to the satisfaction of the tax debt . “The precept does not refer to eventual, repeated or repeated debtor, there is no distinction. The attacked device is content to arrive at this extreme act of forfeiting the registration, with pure and simple default, ”he said.

Ministers Dias Toffoli and Luís Roberto Barroso declared themselves impeded and Minister Luiz Edson Fachin did not vote for having assumed Barbosa's chair.