Tax evasion and distortion of competition


by: Valentina Trevor

According to FGV, tax evasion in the fuel sector reaches R $ 4,8 billion per year.

Fuels, cigarettes and beverages are products that have a high tax burden in Brazil, reaching 50% of the final price.

From a competitive point of view, if all producers, distributors, resellers respected the law and worked legally, the market would remain balanced. However, the high tax burden opens up possibilities for tax evasion, which harms the market as a whole, creating a competitive distortion.

In the fuel sector alone, the states stopped collecting, in 2016, about R $ 4,8 billion in taxes, according to a study by the Getúlio Vargas Foundation (FGV) in July 2017. This figure represents only part of the taxes that are not paid to public coffers, related to ICMS.

That businessman who does not pay due taxes has a much greater margin to work, highlights Edson Vismona, Executive President of ETCO - Brazilian Institute of Ethics in Competition. According to him, there are companies structured to not pay taxes, which “push non-payment” and obtain disproportionate advantages in relation to the competition.

Ronaldo Redenschi and Julio Janolio, partners of the firm Vinhas e Redenschi Advogados also call attention to the judicial issue. With a fragmented judiciary, in a highly taxed sector such as fuel, what we see are “injunctions and injunctions that have a devastating effect on competition”, they say.

“The company that operates with an injunction has advantages over the competition by not paying the same taxes. And with the recent increases in state ICMS and PIS / Cofins by the federal government, this has become an almost daily problem, ”says Janolio.

From the point of view of the formal market, there is a concern to have respected free competition, which, according to him, does not happen with those persistent debtors, informal companies and those that operate with injunctions.

For Paulo Furquim de Azevedo, Coordinator of the Business Studies Center at Insper, “the actor most affected in this 'game' is the small businessman who wants to formalize himself. He competes directly with the one who evades ”.

The small distributor that wants to play the game honestly and wants to grow in the market is going to have a huge difficulty. It cannot put the price too low, because the tax burden is high. If a price similar to that offered by large distributors is placed, the consumer thinks it is expensive and supplies in the known. "If you do not have a consolidated brand, it is difficult to enter the market", highlights Furquim.

In addition, in the fuel sector, there is the issue of adulteration. This is perhaps an even more serious problem.

“This is a market where the consumer is not very aware of the product he buys. He gives preference to the brand that conveys more confidence. He pays for trust, even if he has to pay more for the same product, ”says Furquim.

Francisco Neves, Supply Supervision Superintendent of the National Oil and Gas Agency (ANP) highlights the importance of the consumer having an active and attentive attitude to the consumption environment. For him, it is important to know better the product he will acquire, the commercial rules, how to activate the control organs.

“Price is not the only factor that should be taken into account by the consumer. He must pay attention to the origin of the product, seek authorization for operation, see if the pumps have an Inmetro seal, request the invoice. All of this is part of the commercial relationship and brings security to the consumer. ”

In addition to the constant inspection by the ANP, other important actions that have been taken in order to avoid tax evasion and maintain a more competitive market, such as state laws to remove state registrations from irregular companies, the bill in progress in Congress to combat the stubborn debtor etc.

Source: Portal Jota (15/09)

Entities denounce that contraband causes loss of R $ 130 billion to Brazil

Minister of Justice, Osmar Serraglio / Photo: Fabio Pozzebom (Agência Brasil)
Minister of Justice, Osmar Serraglio / Photo: Fabio Pozzebom (Agência Brasil)

The Mixed Parliamentary Front to Combat Smuggling and Counterfeiting and the National Movement in Defense of the Brazilian Legal Market launched today (29) the campaign “The Brazil we want”, in partnership with the Ministry of Justice. The goal is to curb the practice of smuggling in Brazil.

According to the entities, in 2016, the illegal market generated losses of R $ 130 billion for the country, losses of productive sectors, such as tobacco and clothing and tax evasion. The campaign takes place in conjunction with more than 70 business entities and civil society organizations affected by illegal smuggling practices.

The increase in these practices results from a combination of factors: increased taxes, economic crisis and fragile borders. For this reason, "attacking contraband is an extremely effective measure for economic recovery and it works hard to end trafficking and crime in cities".

For the president of the Parliamentary Front to Combat Smuggling and Counterfeiting, federal deputy Efraim Filho (DEM / PB), fighting smuggling does not just mean curbing street vendors. "The fight against smuggling starts at the borders, with intelligence work, and advancing on an important tripod: human, financial and technological resources", he said. According to him, the costs of more than R $ 1 million per day in border operations are, in fact, investments, since the collection grows ten times more after that.

Condescending Culture

In addition, according to Efraim, it is necessary to combat the population's condescending culture with smuggling. “People consider it a less offensive potential crime because the view we have is of the CD and DVD seller, or of handbags and clothing brands. But when we break this superficial layer, we see something that is extremely aggressive and harmful to society, that deteriorates formal work, finances drug trafficking and creates a risk to the integrity and health of the consumer ”, said the deputy, referring, for example , to counterfeit and smuggled drugs, drinks and toys.

The Minister of Justice, Osmar Serraglio, signed a protocol of intentions with the main measures and actions for inspection and repression against smuggling.

Among the priority objectives of the term are to identify financial resources for investment in human and technological resources; provide technical and operational support to the execution of the National Border Plan, with special attention to economic and social actions and the inspection of the border between Brazil and Paraguay; foster international and legislative debate; and sensitize society about the impacts of illegality with the aim of generating changes in the consumption of illegal products.

For the coordinator of the National Movement in Defense of the Brazilian Legal Market, Edson Vismona, the signed protocol points out the paths and where are the resources for investment in technology and human resources.

“We want there to be practical actions, diagnoses we all already have. We suggest the creation of border offices uniting the agencies so that they identify in the thousands of inquiries who are the suppliers, we have to qualify the information so that we can go to the root of who is operating this illegal trade ”, he said.

According to the director of the Brazilian Association to Combat Counterfeiting, Rodolpho Ramazzini, the sector that loses the most from smuggling and counterfeiting is that of cigarettes, with losses of R $ 5 billion, followed by auto parts, with R $ 3 billion, in addition to other segments. “Brazil has 16 thousand kilometers of border with the bordering countries, in which we only have 24 checkpoints. In all of our ports, we do not have 3 agents to carry out container clearance. Anything enters Brazil. The few inspectors who work well, learn a lot, but it is very close to what should be done to have more fair competition in the market ”.

He pointed out that the economic crisis and the high taxes were the factors that contributed to the growth in consumption of this material, but stressed that the consumer loses twice when buying products from this source. “In the case of cigarettes, drinks, auto parts, fuel, medicine, hygiene and cleaning products, hospital surgical products, in addition to the financial loss for the government and industry, these products will always cause damage to health or for consumer safety because they are made with poor quality raw materials and without sanitary control. ”

Mobilizations throughout the day

Today, a task force is being carried out to destroy contraband products seized by the Federal Revenue Service, in São Paulo and Foz do Iguaçu. More than 12 tons of cigarettes are expected to be destroyed during the day.

As part of the campaign's activities, the entities also present until March 31, at the National Congress, the mini-exhibition “Cidade do Contrabando”, which simulates the possible improvements if the smuggling and the trade of illegal products were extinguished.

According to the entity, with R $ 130 billion, it would be possible to build more than a thousand hospitals, or 65 thousand daycare centers or 1,36 million popular homes, or even 25 thousand public schools.


* Collaborated with Flavia Albuquerque, from São Paulo 

Ftone: Agência Brasil (29/03/17)


Tax Burden Seminar in Brazil

The seminar Correio Braziliense: Tax Burden in Brazil was held on September 20 in Brasilia, a partnership between the newspaper, ETCO and the National Forum Against Piracy and Illegality (FNCP). The event was an opportunity to discuss the need to revise the tax structure as a way to boost the growth of the national economy, and brought together experts and authorities on the subject.

For the Federal Revenue Secretary, Jorge Rachid, it is necessary for the country to adopt a more rational tax model. "It is necessary to balance the rates on some products to minimize the growth of smuggling, tax evasion and other illegal practices," said the secretary.

The Brazilian tax burden, which today corresponds to 32,66% of GDP, has a harmful effect on the economy and is a source of stimulus for the unbridled growth of the illegal market. In the cigarette sector alone, the product most impacted by smuggling, the tax evasion verified in 2015 due to this crime was R $ 4,9 billion.

Edson Vismona, president of the FNCP and who this month also assumed the executive presidency of ETCO, recalled that the increase in cigarette taxes in recent years has contradicted government expectations. "The result of this policy was an 8% reduction in the market for legal products, but a 9% growth in the Paraguayan cigarette market," he said.

Vismona also recalled that the losses are not restricted only to the country's economy, but have negative effects on the health of the population, since these products do not respect the rules imposed on Brazilian companies by health authorities, and also on safety in cities, as this it is an activity dominated by criminal factions.

In 2015, Brazil recorded a loss of R $ 115 billion due to the illegal entry of illegal products into the country, which includes losses from the national industry and taxes that are no longer collected due to smuggling, among others.


Tighten the siege against the heavy debtor

debtor-contumaz -_- informative-cover

New legislation of the State of Paraná

starts to differentiate the default bad debt


Decree No. 3.864, published by the Government of Paraná on April 14, starts to differentiate the regular debtor, creating specific rules and sanctions for those who make default a business model that, according to experts, configures unfair competition and damages public accounts . The executive president of ETCO - Sindicom's partner institute on this issue -, Evandro do Carmo Guimarães, estimates that the gap caused by these debtors in the accounts of the Union and the states is at least R $ 3 billion per year.
Luciana Printim, head of the Paraná State Revenue collection sector, says that the impetus for the new legislation came from the conclusion that there were many taxpayers “who make their default not an occasional thing, a time of difficulty, but a repeated thing; persistent practice. We started to realize that this was not being fair competition with the others, who pay their taxes correctly ”, describes Luciana, adding that the tax that is not paid increases the profit margin of those who do not pay.
The state of Rio Grande do Sul was a pioneer in this differentiation and has one of the most important specific laws against the country's persistent debtor. It was created in 2011 and has since managed to recover R $ 17 million owed by these taxpayers and reduce by 26% the number of companies in this situation. Luciana clarifies, however, that the legislation of Rio Grande do Sul was studied and considered valid, but even so, there are differences between the laws of the two states. “The main difference is that they do not allow the customer of a frequent debtor to have ICMS credit. Our intention is to punish the debtor, not the client, ”he says.
Luciana also explains that there are several sanctions that apply when serious debtors are identified. They include the loss of tax benefits, in addition to the obligation to collect the tax per operation (for each sale) and not for calculation (only once a month). “The taxpayer will be notified and will have 30 days to qualify. Our main objective is for him to stop this practice, which is not sectoral ”, he concludes, counting that this month (May) the first batch of notifications will be made to regular debtors.
According to ETCO's executive chairman, long-term debtors are usually wholesale or distributor companies. “It is common for this business to be in the name of oranges, it has no equity. Thus, true partners escape punishment, ”says Evandro. The executive president also indicates that the profit margin can be increased considerably through this practice. “If it is a company that distributes fuels, it can represent up to 30% of the product's price; if it is a cigarette, up to 70% of the product price ”, he points out.
The importance of the actions developed by ETCO, together with Sindicom, to better explain the difference between the persistent debtor and the one who occasionally experiences some financial difficulty promotes the creation of legal tools to combat this practice, also emphasizes Evandro.
“We hope that the Federal and State legislatures also separate these two different types of defaulters. In a country where the active debt of the states and the union is huge, it is very important to separate the types of debtors ”, he concludes.
Source: Sindicom

Debt with tax authorities has heavy fine

I owe and don't deny, I pay when I can. Such decisions do not help companies that owe the tax authorities, let alone exempt them from fines and sanctions. Their situation is aggravated when there is a lawsuit for the collection or execution of tax debts in progress. However, the severity of the fines' punishment is not linked to the nature of the tax, but to the way the taxpayer declares it, explains Márcio da Costa, president of the FecomercioSP Tax Affairs Council and the Taxpayer Defense Council (Codecon)

Source: Valor Econômico (18/11)

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Stubborn debtor

In the midst of the economic crisis and a drop in federal government revenue, and with a balance of R $ 1, 3 trillion to be received in tax debts, the IRS establishes working groups with new strategies to redeem part of this liability. The objective is to permanently monitor the debtor's assets, in general the large companies that resort to legal tricks to protect their assets from the tax authorities.

Source: Valor Econômico (18/11)

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House approves MP that facilitates payment of disputed tax debts

Provisional measure allows the taxpayer to settle debts with the Federal Revenue due by June 30, 2015, if they are under administrative or judicial discussion
Nominal Vote MPV 685/2015
Deputies approved an opinion that reduces the value of the cash portion from 43% of the total debt to 30%, 33% or 36%. Photo by: Ananda Borges

The Plenary of the Chamber of Deputies approved on Tuesday (3) Provisional Measure 685/15, which allows the taxpayer to settle tax debts, due by June 30, 2015, with the Federal Revenue Service or the Attorney General of the National Treasury ( PGFN), if they are under administrative or judicial discussion. The matter will be voted on by the Senate.

To adhere to the Tax Litigation Reduction Program (Prorelit), instituted by the measure, the taxpayer must pay part in cash and the other part can be deducted with credits generated by the use of tax losses and the negative calculation base of Social Contribution on Net profit (CSLL).

The text approved for the MP is the opinion of Senator Tasso Jereissati (PSDB-CE), which reduces the value of the cash portion from 43% of the total debt to 30%, 33% or 36%.

If this installment is settled by November 30, 2015, it will be 30% of the consolidated debt. If the company chooses to install monthly installments, 33% (two installments) and 36% (three installments) will be used, with all installments adjusted by the Selic rate plus 1% in the month of payment.

The MP was published in July 2015 and envisaged September 30 as the last day for joining the program. The text approved by the Chamber passed to November 30th.

Already the amounts for settlement with the loss or negative base will be obtained in relation to that determined by the company until December 31, 2013 and declared until June 30, 2015.

The amount to be paid with tax debts will be determined based on the following rates:
- 25% on tax loss;
- 15% on the negative CSLL calculation base for private insurance companies, capitalization and financial institutions; and
- 9% on the negative CSLL calculation base for other companies.

The program allows companies to use their own losses and negative basis first to partially settle the consolidated debt.

If these are not sufficient, they can use those of controlled or controlling legal entities, directly or indirectly, as long as they are in this situation on December 31, 2014.

Another possibility is the use of losses and negative basis of the taxable person, usually the one responsible for collecting the tax without having any relation to the taxable event. However, the MP does not specify what types of situations of responsibility or co-responsibility are contemplated.

Among the subsidiaries that can generate credit to settle debts are those whose shares held by the parent company are less than 50% of the voting capital, but have an agreement to assign decision-making power to the other.

Giving up
Adherence to the program implies an irrevocable withdrawal from the administrative process and legal actions, as well as recognition of the debt in question.

This program will not cover debts arising from the withdrawal of objections, administrative appeals and lawsuits that have been included in previous installments, even if terminated.

Debts arising from the partial withdrawal of these funds and shares can only be paid under the rules of the MP if the respective credit to be paid off can be separated from the others.

The IRS or PGFN will have five years to approve the discharge. If approved, existing deposits linked to the debt will be automatically converted into Union income, with the remaining debt being settled in new money or with credits.

If the tax credit generated with the application of the indexes on the tax loss or negative basis of the CSLL is not validated, the taxpayer will have 30 days to pay this part in cash.

According to the Federal Revenue Service, of the more than 35,4 taxpayers with debts in administrative or judicial litigation, 28,4 (80%) have a tax loss from the Corporate Income Tax (IRPJ) or a negative calculation base of CSLL.

However, as membership is an option of the company, there is no way to estimate how many can join or how much the government should receive. The liability under judicial administrative discussion amounts to approximately R $ 860 billion, according to the agency.

Source: News Chamber Agency .

Tax evasion in the country already reaches R $ 320 billion this year, says union

The sum of all Brazilian tax debts has already reached the mark of R $ 1,1 trillion. The calculation is from the National Union of National Treasury Attorneys (Sinprofaz) and considers the position in July this year. The largest share - R $ 723,3 billion - involves large debtors, that is, companies that together represent less than 1% of all legal entities registered in Brazil, points out the union.

Source: Estadão website (20/08)


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