President Dilma defends tackling the tax issue

Source: CBIC - Brazilian Chamber of the Construction Industry (Brasília - DF) - 16/05/2012

The President of the Republic, Dilma Rousseff, said yesterday (15), during an event with mayors, in Brasília, that Brazil needs to face the tax issue, even with the existing resistance to carry out a comprehensive reform.

"The tax reform we want to enter into the agenda", he declared.

On the occasion, Dilma Rousseff mentioned the obstacles that Brazil faces (high interest rates, foreign exchange and high tax burden), and declared that there is a commitment to "all of Brazil to resolve these obstacles". 

“This is very important because when it comes to tax reform, and we know the resistance that exists in Brazil to carry out tax reform, we have already tried twice to carry out a major reform, and we now decide to act, instead of staying discussing whether the reform comes out or not, ”said the president, who acknowledged the existence of flaws in the Brazilian tax system.

"I think that in fact there is an inadequate distribution and taxation in Brazil," he evaluated.

“If we see that we tax fundamental inputs, for example, for the country's development. I don't know many countries that tax electricity, we do, ”he said.

Government tries to reopen negotiations with States

Source: Zero Hora (Porto Alegre - RS) - 17/05/2012

The Union plans to reopen negotiations with States this year to change the Tax on Circulation of Goods and Services (ICMS). It is a strategy of President Dilma Rousseff to implement a sliced ​​tax reform.

It will thus be touching the point where the attempts at change of the last 20 years have sunk. The technicians believe that the chances of advancing this time are greater. Before focusing on the ICMS, however, the economic team has another priority: the cost of electricity. Taxation represents half the tariff, and the federal government is willing to waive part of the specific fees it charges. The discussion on electricity should be concluded in the second half, when the reform of the ICMS should gain momentum.

The change that the government wants will not necessarily decrease taxation, but it will eliminate the main ammunition from the fiscal war and make ICMS more similar to the value added taxes of the United States and Europe. The proposal is to reduce and standardize the ICMS tax rate on interstate transactions.

Fake tax credits: why is this trap so recurrent?

Source: Jornal Indústria & Comércio (Curitiba - PR) - 16/05/2012

We often read news reports that the IRS has been discovering fraud related to scams involving false tax credits for tax relief and federal contributions. The news is alarming with regard to the values ​​and number of companies that use this practice. Currently, the IRS of São Paulo has discovered a scam in which the creation of false credits was improperly launched by more than 100 million. The big question is repeated all the time, as the IRS has a period of five years to inspect and assess, through the PER / DCOMP system, scammers are able - with the filling of simple forms - to manipulate these compensations.

The big move made by scammers is precisely in the situation where they demonstrate credibility, as they charge only after the debts have been written off in the system. However, companies are unaware that in up to five years such operations are inspected as to the origin and legitimacy of these credits and, when detected, debts return with heavy fines along with a criminal case.

Legislation in relation to credits and compensation is highly technical and complex, with several norms, which confuses and often succeeds in even deluding legal operators and businessmen, by hiring various consultants, accountants, lawyers and other professionals in the business environment, in illusion that they would be involved in something lawful, profitable and advantageous for their customers.

This fact happened this week in São Paulo, but it certainly became reality in other states of the Federation, and for quite some time. The question we must ask is the following: even with so much technology in the current scenario, with the IT system of the ultramodern Revenue, in addition to records of annual collection, why intelligent mechanisms have not yet been established to contain these frauds, changing the system inspection and compensation?

The IRS has in its hands an advantage and the convenience of five years to inspect the compensation, if it finds distortions or fraud to apply fines greater than 150% and penal action to those involved. I think that, in the face of a massive tax burden, it is natural for businessmen to be seduced by tempting offers, some illegal and others legitimate, as well as the increasingly frequent use of precatories to compensate ICMS in several States of the Federation.

Going further, the heavy burden of taxes that drive companies to despair in order to remain active, also generates a parallel market that feeds on the anguish of businessmen to circumvent such fiscal tyranny.

Thus, in addition to the proper ways of inspecting illegalities and punishing those who illegally commit these frauds, it is worth reflecting that this may also be only a consequence of much larger causes, of political, economic and, mainly, taxation. In short, the long-awaited and expected tax reform, simplifying and significantly reducing taxes, stimulating the industrial chain in the country, privileging consumption and generating employment and development, would be the best inspection mechanism, as satisfied and prosperous businessmen would greatly reduce this parallel market of tax magic, evasions and desperate attempts to reduce costs.

Daniel Moreira - Managing partner of Nagel & Ryzewski Advogados


Tax reform is divided into different interests of society

Source: UOL - São Paulo / SP - 11/10/2010

SÃO PAULO - Tax reform to reduce the incidence of taxes and stimulate economic activity or to effect changes in favor of social justice?

The next government will certainly include the theme of tax reform in its agenda. It is visible, however, that different reasons dictate the sectors of society in relation to this change: financial and social.

According to Agência Brasil, in the evaluation of businessmen, for example, the reform is necessary to allow investments to flow, so that prices are cheaper and consumption is leveraged.

On the other hand, economists critical of the national tax system point to an uneven payment, that is, poor people who pay proportionally more taxes than the richest.

The economist at Ipea (Institute of Applied Economic Research), Serguei Soares, understands that the current system is “pro-rich” and that a process in which direct taxation is stronger than indirect taxation is fundamental.

IRPF (Individual Income Tax) and IPTU (Property and Urban Territorial Property Tax) are examples of direct taxation, while ICMS (Tax on Circulation of Goods and Services) and IPI (Tax on Industrial Product) are examples of indirect taxes.


Carrying out tax reform in the country is a job that involves "taming" the interests of collecting and distributing resources among the Union, states and municipalities.

The political scientist and professor at the Getúlio Vargas Foundation (FGV), Cláudio Couto, understands that the tax reform is “stuck”, in addition to being conditioned to “a bundle of interests”.

Couto, according to information from Agência Brasil, believes that it is possible that the next government will choose to carry out small reforms as they were done in the FHC and Lula periods.

"One-off reforms can be made, simplifying, resulting in cost reduction, such as reducing the bureaucracy necessary to pay taxes, with the hiring of accountants and lawyers", says the professor.


Demand for tax reform is divided into tax cuts and social justice

Source: Midia Max News - Campo Grande / MS - 10/10/2010

Agência Brasil / PX

There is a strong demand from some sectors of society for the next government to resume the reform agenda, starting tax reform. The consensus, however, hides differences about which tax reform needs to be carried out.

For entrepreneurs, it is essential to try a reform that relieves economic activity, reduces the incidence of taxes in a cascade, allows more investments to be made and, supposedly, lowers the price of products, stimulating consumption.

In addition to this perspective, there are those who defend tax reform to promote more social justice. Critical economists in the national tax system point out that it is the poorest who pay proportionally more taxes than the richest.

“The system is pro-rich” points out economist Serguei Soares, from the Institute of Applied Economic Research (Ipea). According to him, it is necessary to think of “a system in which direct taxation is stronger than indirect taxation. It is direct taxation, for example, the Personal Income Tax (IRPF), the Property Tax and Urban Territorial (IPTU). Indirect taxes are added to the value of products consumed, taxes such as Tax on Circulation of Circulation of Goods and Provision of Services (ICMS) and the Tax on Industrial Product (IPI).

The realization of tax reform, however, comes up against the interests of collecting and distributing resources among the Union, states and municipalities; and in the ties between taxation and the financing of social policies, as is the case, for example, with the education salary that makes up the resources of the National Fund for the Development of Education (FNDE).

According to the political scientist and professor at the Getúlio Vargas Foundation (FGV), Cláudio Couto, not only in the Brazilian case, the tax reform is “stuck”. He recognizes “a bundle of interests” to do and not reform.

The political scientist, however, believes that it is possible that the next government will choose to make small reforms as were done in the FHC and Lula periods (Simples and Super Simples). “Punctual, simplification reforms can be made that result in cost reduction, such as reducing the bureaucracy required to pay taxes, with the hiring of accountants and lawyers”.