"We need to simplify our tax system"

The ideal tax reform must guarantee some assumptions: be economically sustainable; reassess the distribution of taxes between consumption, income and wealth; reduce the complexity and litigation level of the current system; respect the federative pact; review tax benefits; reform the tax collection process; and fight the stubborn tax debtor. These were the topics addressed by the Deputy Attorney General of the National Treasury, Phelippe Toledo Pires de Oliveira, at the Taxation in Brazil seminar, held in partnership by ETCO and the newspaper Valor Econômico. Following, a selection of excerpts from the lecture.

Optimal level of taxation

"Adequate taxation cannot be too low to not compromise the sustainability of the State in the provision of services, nor so high that it stifles the economy, kills the goose that lays the golden eggs."

Collection sources

“As taxable wealth, we traditionally have assets, income and consumption. From the Brazilian point of view, in income taxation, we have the IRPJ, the IRPF and the Social Contribution on Profit; on equity, IPTU, IPVA, ITBI and ITCMD; consumption, IPI, ICMS, PIS and Cofins. Today taxation in Brazil is based on consumption (48% of revenue) and payroll (26% of payroll and just under 20% of income tax). Taxation on equity in Brazil is less than 5%. ”

Why is it so complex

“Complexity is inherent in our tax system. It is complex because there are different tax types - taxes, fees, improvement contributions, compulsory loans - and within each of these species there are also the taxes themselves: Income Tax, Contribution for Intervention in the Economic Domain, contribution on the payroll . We have countless tributes. And countless taxes collected and imposed by different entities. So complexity is inherent in the system. ”

We need to simplify

“There are a multitude of taxation regimes, collection regimes, single-phase system, forward replacement, backward replacement, income tax withheld at source… So our legislation is a daily challenge. And complex legislation, combined with other economic factors, gives rise to enormous litigation. ”

High level of litigation

“We have about 6 million tax foreclosures within the Union alone. Today, in CARF alone, there are around 150 thousand cases in process and approximately 12 thousand to 14 thousand trials per year. Just to put an end to the tax liability today at CARF, considering that no more lawsuits would enter, it would take ten years. ”

“Legal discussions sometimes take twenty years. We need to try to reduce this dispute. A reformulation of the collection system is necessary. Tax enforcement is sometimes there for years, creating an incentive for the bad debtor. ”

Exemption from dividends

“The dividend exemption brought a great benefit, which was to end the discussion about the disguised distribution of profits. But it also spawned the phenomenon of ‘wronging’ to pay less taxes. ”

Reassess tax benefits

“The issue of tax benefits exists worldwide, but are the tax benefits here in Brazil fulfilling their purpose? To what extent would the reduction of these benefits not allow a consequent reduction in the corporate income tax rate? Just as we are seeing a discussion about the end of privileges for public servants and the end of privileges for deputies in relation to the social security benefit, it is necessary to rethink in relation to the tax, in relation to the return of this benefit to society. ”

Fight against the debtor

“Most of the time, they are companies that have nothing in their names. So the problem is timing in relation to the time of inspection and the time of collection, which the regular debtor will discuss administratively and judicially, postponing the payment until after ten years, when there will be no more equity. With this project to combat the persistent debtor [PLS 284/2017, pending in the Senate], in some very specific situations it is possible to cancel even the CNPJ registration, so that, immediately, it cannot continue to work. ”

“Tax competition has always existed and will not end”, says Everardo Maciel

According to him, it is necessary to maintain the limit of the so-called extrafiscality, which is a way for governments to tax some product to induce behaviors


The tax consultant and partner-president of Logos, Everardo Maciel, defended during the seminar “Mail Debate: Taxation and Economic Development”, That fiscal competition has always existed and will not end, but that it is necessary to maintain the limit of the so-called“ extra-fiscality ”, which is a way for governments to tax some product to“ induce conduct ”.
The practice of extrafiscality, in the consultant's view, is reasonable when it serves to restrict the consumption of that product, but assesses that the “excess” creates problems. "Once you start to exaggerate, they provoke reactions," said Maciel, exemplifying the case of taxation on cigarettes in Brazil.
“When they make mistakes in the hand. We are going to raise taxes to make people stop smoking, ”he said. “In practice, people will not stop smoking. This is not the way to induce this conduct. People are going to smuggle, ”he added, noting that this generates a significant and growing presence of the product from neighboring countries. "It is no use having a tax that encourages this type of criminal behavior," he declared.

Inspection and collection

Maciel also pointed out that there are "businessmen" who create businesses to act illegally, which is enhanced by legal uncertainty. “Any tax issue that goes to the Supreme Court takes us 15 years, 20 years, to pacify,” he said. "We now have 51% of GDP (being discussed. The drama is: if you charge, it breaks the country, and if you don't, it breaks the country," he added.
Source: Jornal Correio Braziliense

The nation is unfeasible ', says Nardes, from TCU, on fiscal framework

Minister of TCU warns about the problem of public accounts and defends the governance of public spending, in an event of the Correio

One of the main measures to solve the problem of public accounts, which, according to the speakers, has never been as serious as it is today, is to improve the governance of expenditures, according to Nardes. And, in this sense, he suggested measures not only to increase the efficiency of civil servants with a smaller staff, but also to create mechanisms to avoid wasting taxpayer money.
“We have more than 15 million people working in governments, without governance, without evaluation and without adequate training. We have to start with a transformation of the nation and governance is the great background for this change ”, he said. “Raising we know, but spending, we don't know. Throwing money in the gutter and in the wind is the simplest and easiest thing in the Brazilian state ”, warned Nardes.
 Minister was the rapporteur of the TCU who rejected the accounts of ex-president Dilma Rousseff of 2014, paving the way for the impeachment of PT. He cited as an example of the disregard for public money by government officials “the thousands of day care centers and UPAs (Emergency Care Units) abandoned in Brazil that consumed billions of public investment”.

Incompetence of government officials 

Nardes also argued that incompetence is the hallmark of the country's rulers, who spend a lot and badly. “The nation is unfeasible”, he criticized, pointing out that, between 2014 and 2015, the Federal Executive had expenses of R $ 365 billion.
The minister pointed out that there is widespread disorganization in the state, because there is no good governance and performance evaluation of public policies and employees. “Collect, we know. Spending, we don't know, ”he said. "Throwing money in the wind is simple and easy," he added.
Nardes stated that, according to the audits carried out at TCU since 2014, incompetence is what is most characterized. He exemplified excess spending in city halls, refineries and construction of daycare centers. “Fighting corruption without governance is not going to change anything. Everything remains the same, because nobody controls where the money goes, ”he said.
"We have to decrease spending, and certainly not increase taxes, but increase efficiency," he argued. “We are in a situation of economic impossibility for the nation. The time has come to transform ”, concluded Nardes. The minister closed the seminar by highlighting the need for debate by praising the initiative of the Mail Braziliense.

R $ 4 trillion

In Nardes' assessment, the next president needs to be aware of these problems and candidates need to debate this problem, as well as pension reform, and not just attack one or the other. “Leaders need to be aware of this role. It is worth provoking the discussion that is the background of the situation of collapse if the reform (social security) is not carried out now ”, he highlighted. According to the minister's accounts, the size of the Social Security gap in the states is R $ 2,8 trillion and that of the Union, including the public and private systems, R $ 1,2 trillion, in actuarial values ​​brought to the present that together add up R $ 4 trillion, more than half of the country's Gross Domestic Product (GDP). "We are unable to pay those who have the prospect of retiring in the future because we are in a situation where the nation is not viable," he warned, adding that he maintains the optimism that something needs to be done and soon.
Source: Mail Braziliense

To grow, Brazil needs to simplify taxation

Brazil may have come out of the recession, but it will only be an internationally competitive economy if it changes its tax legislation. At the seminar Correio Debate: Taxation and Economic Development, authorities and experts in the field agreed that the charging model needs to be changed, making it less complex and distorted. In the assessment of the Federal Revenue Secretary, Jorge Rachid, who opened the event, the simplification of taxes enables economic development. Authorities and experts in the field agreed that it is necessary to change the charging model, making it less complex and distorted. In the assessment of the Federal Revenue Secretary, Jorge Rachid, who opened the event, the simplification of taxes enables economic development.

mail debate_rachidHe stressed that it is necessary to eliminate deficiencies, anomalies and distortions in the Brazilian tax system. "The current situation has a negative evaluation, no doubt," he guaranteed. "The proliferation of subsystems and regimes fragments the tax system".


One of the 15 priority measures in the government's economic area, the proposal for the reformulation and simplification of the PIS-Cofins is ready and should be sent “soon to the National Congress”, said the Federal Revenue Secretary, Jorge Rachid, after a seminar at Post office.

The project is worth changing the form of PIS taxation first. After testing the new rate, which should last about a year, the idea is to proceed with the unification of these systems with Cofins. "Tax change is a process," he said. According to Rachid, the rates will be disclosed in the presentation of the proposal. In due course, when we formalize the proposal, these numbers (rates) will appear, he added. This, for him, is the result of a decentralized tax policy, which allows states and municipalities the autonomy to create taxes, fees and contributions.

The “ideal” tax reform, according to the Federal Revenue Secretary, would create a single consumption tax with centralized collection in the federal government. Which, in his opinion, is a process that should not be carried out. "That is why we are committed to correcting the distortions in the PIS-Cofins, unifying them in the long run," he said.

The change in the tax system is one of the guidelines that Brazil will need to play in order to join the Organization for Economic Cooperation and Development (OECD), as is in the government's interest. But analysts of the Brazilian tax regime say that it is necessary to do more than a simplification.

Ana Frazão, lawyer and professor of Civil Law at the University of Brasília (UnB), argues that it is necessary to end tax privileges. given to certain sectors of the economy, as this creates an uneven system and contributes to the concentration of income.

In addition, the expert argues that the State should be the first to comply with the legislation, which it has not been doing, contributing to the practice of evasion.
Ana Frazão criticized the Special Tax Regularization Program (Pert), better known as Refis, which was approved by the National Congress in 2017, giving discounts of up to 90% and splitting corporate debts. The text of the provisional measure (MP) benefited irregular companies. “I imagine a businessman who is even correct, who pays taxes correctly, feeling obliged not to pay (taxes) to remain in the market. Well, how will you compete with someone who is not subject to the same tax burden? ”, He asked. "These installments harm taxpayers who pay taxes on time," agrees the Secretary of Revenue. Rachid stressed that the tax authorities are working to identify frauds intensively. Of the total tax procedures, 25% result in the discovery of irregularities. "We have to identify the mechanisms that intentionally aim to avoid paying taxes," he commented.


Rachid considers that there are several fiscal incentive policies that did not achieve the objectives and favored the deficit in public accounts. He classified some of these programs as tax irrationality, such as the exemption from payroll, a practice that the government is trying to reverse in the National Congress. Another criticism made by the secretary to the current tax system is the differentiation of product charges. “The refrigerator for administrative rooms does not generate (tax) credit, but for production rooms it does. This ends up causing legal uncertainty ”, he exemplified. “When the investor arrives in Brazil, he has to ask a series of questions, including which product he manufactures and, depending on, will have a different tax burden.

We have to correct this distortion. This is not correct ”, he added. The tax consultant and partner-president of Logos, Everardo Maciel, said that there are exaggerations in “extrafiscalidade”, which is the term used to explain the taxation to “induce conduct”. He exemplified the issue with the case of cigarette taxation in Brazil.

In Maciel's opinion, the government “got it wrong” by significantly raising taxes in the sector to try to curb smoking. "Once they start to exaggerate, they provoke reactions," he declared. “In practice, people will not stop smoking. This is not the correct way to induce this conduct. People go to smuggling, ”he added, noting that this generates a significant and growing presence of the irregular product coming from neighboring countries. "It is no use having a tax that encourages this type of criminal behavior", he added.

by: Hamilton Ferrari

Correio Braziliense Newspaper / 07-03-2018

PEC intends to further restrict the issue of provisional measures on tax matters

Pedro França / Senate Agency

Senator Ronaldo Caiado (DEM-GO) presented, at the end of 2015, a proposal to amend the Constitution (PEC 137 / 2015) that prohibits the Executive from editing a provisional measure on tax issues. Caiado presented the PEC following the suggestion of the Federation of Trade in Goods, Services and Tourism (Fecomércio), the Commercial Association of São Paulo and the Brazilian Institute of Ethics in Competition (ETCO).

Currently, the Constitution already prohibits MPs that raise or create taxes, but the ban does not apply to taxes on Import (II), on Export (IE), on Industrialized Products (IPI) and on Financial Operations (IOF).

PEC 137/2015 ends these four exceptions. According to Caiado, the rule in force today "does not seem to be enough to prevent excesses, which has created enormous legal uncertainty for the Brazilian taxpayer".


The proposal also determines the minimum period of six months after the creation of the tax for the Union, states and municipalities to charge the taxpayer. Currently, only 90 days must be observed, a rule that is technically called the Priority Tax Principle.

The senator starts from the premise that taxpayers, especially legal entities, "need more time to conceive and execute their business strategies".

The six-month period, however, is not valid for compulsory loans, II, IE, IOF. For these, the 90-day period remains valid.

PEC 137/2015 is in the Constitution and Justice Commission (CCJ), where it awaits the appointment of rapporteur.

Source: Agência Senado (20/01)

ETCO participates in tax simplification project

Tax SimplificationGroup that brings together large companies and associations has prepared 13 proposals that are being taken to Encat


Today, Brazilian companies spend 2.600 hours of work per year to comply with thousands of tax requirements. The world average is only 264 hours. To help reverse this situation, which generates unnecessary costs and risks, the ETCO-Brazilian Institute of Ethics in Competition is participating in a project that brings together major contributors to suggest concrete tax simplification measures to the sector authorities. The project has the support of Encat (National Meeting of State Tax Coordinators and Administrators).

According to Wermeson Santos, Indirect Tax Manager at Souza Cruz, one of the companies involved in the initiative through ETCO, "the objective is to address the needs of companies and society, as the complexity of the tax system affects everyone".

The project incorporates contributions from 15 companies and associations, including Ambev, Sindicom, Souza Cruz and Pernod Ricard Brasil, which are associated with ETCO.

In December, the group members completed the discussions and prepared a document with 13 suggestions for changes considered to be a priority, such as the use of the Public Digital Bookkeeping System (SPED) as the only channel of information related to the companies' tax and accounting deeds.

The work is being sent to Encat, which will analyze the proposals and take them to Cotepe (Permanent Technical Commission) and, later, to Confaz (National Council for Farm Policy).

Passive renegotiation is crisis strategy

Some specialists in financial restructuring believe that the postponement of the payment of the Treasury serves as a "survival insurance" to circumvent the weak economic activity and the increase in costs, which hinder the generation of cash. To remedy the tax debt, they suggest that there are many benefits to awaiting the appearance of a new Tax Recovery Program, from the Federal Revenue, (Refis), whose cycle is renewed on average every four years.

Source: Valor Econômico (18/11)

To read the story straight from the source, please click here.

The results of X ENAT

Tax administrators signed 12 protocols and a resolution to reduce tax evasion and simplify the tax collection system

Tax administration is the area of ​​governments that takes care of the intelligence and procedures that guide the collection of taxes. Little publicized in the country, the work of professionals in this area of ​​public power has a huge impact both on tax collection and bureaucracy for taxpayers and on the competitive environment. In October, tax administrators from the three spheres of the federation - federal, state and municipal - met in São Paulo, for four days, to share experiences and develop joint action projects.

The X ENAT-National Meeting of Tax Administrators was held from October 20 to 23 at the São Paulo headquarters of the Ministry of Finance, located in the center of the capital. The event was supported by ETCO-Brazilian Institute of Ethics in Competition, which also set up a stand on the site to publicize its work and seek opportunities for partnership with the participants. About 280 professionals from the Federal Revenue Service, from the state finance departments and the municipal finance departments from all over the country participated in the meeting.

Signed protocols

Tax administrators divided into thematic groups that prepared 12 cooperation protocols and a resolution, which were signed by the main representatives of the revenue agencies. The list includes projects for tax simplification, foreign trade, tax education, standardization of electronic invoices for services and improvement of inspection. The event website features a summary of protocols.

The closure of the X ENAT was attended by the Minister of Finance, Joaquim Levy, who praised the work and spoke about its impacts on the country's economy.

At the same ceremony, the Secretary of Federal Revenue, Jorge Rachid, spoke of the importance of the event, which has been held since 2003. “It is good that we always remember the results that meetings of this nature have provided for the business environment”, he said, citing as example the creation of the Nota Fiscal Eletrônica, a project that was supported by ETCO.

Partnership with the Institute

Before the event, Rachid spoke about the importance of ETCO's support: “Partnerships with institutions and entities that act according to the constitutional principles that govern the work of public administration and also the values ​​that guide the work of the Federal Revenue are important , such as respect for the citizen, integrity, professionalism and transparency ”.

The Finance Secretary of the State of São Paulo, Renato Villela, emphasized the role of ENAT in improving the Brazilian business environment. "We understand our responsibility as fiscal and financial authorities in the sense of the need and obligation to provide resources to support the public policies of the Union, the states and the municipalities," he said. "But we also have to be careful to do this in a less intrusive, less invasive way and with less obligations and friction with taxpayers."

Villela also commented on the partnership with ETCO: “The Institute has always positioned itself as a partner in initiatives to strengthen the Brazilian tax administration. By supporting X ENAT, ETCO promotes the development of administrations and brings Brazilian practice closer to those adopted on the international stage, which contributes to state activity and the whole of society ”.

During a break from the event, ETCO's executive president, Evandro Guimarães, made a presentation to tax administrators interested in learning more about the Institute's work. "We are open to partnerships that aim to reduce tax evasion, simplify the tax system and improve the business environment", he summarized.


Closing plenary of X ENAT, with Joaquim Levy, Jorge Rachid and Renato Villela
Closing plenary of X ENAT, with Joaquim Levy, Jorge Rachid and Renato Villela
The ETCO booth at the event: partnership with tax administrators
The ETCO booth at the event: partnership with tax administrators