Tiago Silva
Lawyer at Marcos Martins Advogados
The expression “Complex Tax Debt” carries a number of myths in its context, and is almost always considered to be unpayable. However, this view reveals certain limitations, be it a lack of knowledge of the legislation, procedural rules or even tools for its proper management.
It is therefore important to establish the criteria used here to classify a tax debt as complex.
Obviously, this classification does not only take into account the procedures necessary to establish the calculation basis and amount of a tax, as this would indicate that all of them are complex, given that Brazil has one of the most complicated tax systems in the world.
A tax debt is considered complex if it can no longer be supported by the company’s cash flow, if it is the result of several infraction notices with significant amounts (either due to misinterpretation of the rules or ignorance of their changes), if it cannot be settled (ordinary installment plan or simplified installment plan) together with the payment of outstanding taxes, if important assets have been seized or if debts are already being demanded from partners and directors.
Note that the complexity is linked to the level of stress that the debt causes, a situation that often leads entrepreneurs and directors to choose momentary “solutions” that end up burdening companies even more in the long term.
This is usually due to a lack of proper analysis of the problem faced, as well as a failure to consider its effects over time, disregarding the impact of that measure over the course of a day, a month, a year, five years, ten years, fifteen years or more.
Anyone who thinks that postponing the payment of this debt, or simply waiting for the statute of limitations to run, are solutions for this type of debt or any other, is mistaken.
Complex tax debts require in-depth knowledge of tax legislation, an understanding of the full extent of the problem and the execution of customized planning, with the help of tools equipped with artificial intelligence.
Any other way of combating these demands can be considered outdated, especially when you consider that, on the other side, the tax authorities (Federal, State and Municipal) are looking for ways to increase their revenue, including the use of state-of-the-art computers capable of cross-referencing data from all taxpayers.
Furthermore, it’s no surprise that many tax requirements contravene laws and the federal constitution itself – just check out the abusive interest on some charges, confiscatory fines or even the undue expansion of the tax base.
So how can taxpayers combat complex tax debts? Simple, by using experience and human and artificial intelligence.
Take a real case in which the company had accumulated a tax debt considered by the partners to be unpayable, exceeding 45% of the company’s assets, originating from several tax assessments, the payment of which in a common line did not fit into its cash flow.
After carrying out various works, it was found that a large part of the amount demanded, approximately half, was undue, authorizing the use of various judicial and administrative measures to correct it.
Subsequently, it was identified that the company had been paying some taxes using an increased calculation basis, which, once duly adjusted, led to an improvement in cash flow, as well as the possibility of recovering what it had unduly paid over the last five years.
In order to settle the debts and make it possible to issue a negative debt certificate and a positive certificate with a negative effect, the best time and form for settling the debt was identified, with discounts – all duly mapped out.
You can see that experience and human and artificial intelligence are key elements in finding solutions to complex tax debts, allowing companies to grow again and deliver the results expected by all its members.
When faced with complex tax debts, you need to go beyond tax knowledge. You need to understand the market in which the company operates, be aware of the cash flow and its variables, and know the concerns of the partners and directors. In other words, you need to be part of the whole, placing yourself as a strategic partner in the search for results for the company.
