Public companies will take study to government to question 150% tax penalty

SÃO PAULO, SP (FOLHAPRESS) — Amid heated tax controversy, Abrasca (an association of the nation’s largest publicly traded companies) will take to authorities a new study by the FGV that shows how much tax in the past decade has qualified fines, those of up to 150% of the tax due and applied in cases of fraud or fraud.

According to the article, the share of eligible fines in the total penalties applied increased from 10% in 2011 to 17% in 2019.

Pablo Cesario, CEO of Abrasca, says the study also indicates a high degree of subjectivity on the part of the tax authorities in applying conditional fines and that the Brazilian model does not follow international standards. According to him, most of the penalties adopted by subjective criteria end in revocation when the fines are challenged by the companies in Carf (Administrative Board for Tax Appeals) and in justice.

According to the study, which was published in Brasília this week, between 2011 and 2019 the enforcement of qualifying fines grew by 70% in quantity and 112% in value, while conventional fines rose by 10% in the same period.

“The fines that are less objective, tailored with subjective criteria, which are the qualifying criteria, have grown by the largest proportion. The study shows that elsewhere in the world this subjectivity does not exist. Our tax system imposes big fines and imposes bad fines. This generates costs for companies that have to appeal, but it is It also creates a bigger problem, because the system does not penalize those who are habitual debtors and those who use non-payment of taxes as a business model, which hurts the competitiveness of other taxpayers,” says Cesario.

According to Cesário, the study should be passed on to the government and Congress. He claims that the inspector’s impression is of greater importance in Brazil than in other countries assessed by the study, whose comparison includes models from the United States, France, the United Kingdom, and others.

“In Mexico, for example, the specified fine is charged to repeat offenders who have committed this behavior for more than two years. The penalty is 100% of the tax,” says the Abrasca president.

The assessment within government is that there is a willingness to discuss the issue, but comparison with the rest of the world will have to include more criteria, including tougher penalties with jail time for fraudsters.