Tiago Aparecido da Silva
Lawyer at Marcos Martins Advogados
Much has been said about tax reform, for which there have been countless justifications, including the need to simplify our tax system and achieve more effective tax collection.
When we talk about the problems of taxation in Brazil, we are not analyzing the destination of the amounts collected, a subject that would certainly generate a lot of discussion, because what we really want is to launch some ideas that can generate a constructive debate on ways to reduce the tax burden and the unproductive amount of sparse legislation dealing with the subject.
The complexity of tax rules has long required companies to constantly improve and hire increasingly qualified tax and accounting professionals capable of finding effective solutions without losing focus on legal certainty.
However, some companies, perhaps because they consider themselves to be in sectors that don’t attract the attention of the tax authorities, ignore all the moves that have been made, mainly by the Brazilian Federal Revenue Service, to increase tax collection.
Just one example is the T-Rex, the Federal Revenue Service’s supercomputer, which has a data processing capacity three times greater than what is needed to cross-check information on Brazilian taxpayers, as well as the Harpia system, which cross-checks information available in municipal and state databases to identify tax evaders.
This is just a fraction of today’s world, where information processing is becoming increasingly important.
Following this same trend, a partnership was recently announced between the Brazilian Federal Revenue Service and the National Council of Justice (CNJ), the purpose of which is to analyze tax disputes in the administrative and judicial spheres in order to identify ways of improving the handling of cases.
Obviously, any change that improves procedures and brings greater security to taxpayers and efficiency to tax collection is always welcome, and there is no doubt that this partnership can result in efficiency in administrative and judicial judgments involving tax matters.
What is expected from movements such as the one mentioned above is that effective responses are provided in a reasonable time, which is guaranteed by the Federal Constitution, and this is the objective to be achieved.
However, some proposals bring with them a degree of insecurity and are viewed with caution, such as the proposal to create res judicata in the administrative sphere so that some tax issues could be resolved administratively, without interference from the judiciary, relieving the judiciary of tax disputes, which account for a large proportion of active cases.
It is indisputable that the judiciary is overloaded and needs to be reformulated to make it more agile and efficient, but this path cannot be built by mitigating rights expressed in the Federal Constitution, which in its article 5, XXXV states that the law shall not exclude from the appreciation of the Judiciary any injury or threat to the right.
If this proposal is actually implemented, it is necessary first of all to set some limits, otherwise what guarantees would be available to taxpayers in the event of mistaken, wrong or even abusive decisions in the administrative sphere if it is not possible for the issue to be re-discussed by the courts.
Caution is needed!
It is known that the majority of tax authorities and administrative judgment bodies are made up of highly trained and qualified people, but this does not prevent mistakes in the application of tax law, and it is not uncommon for the courts to have ruled against the tax authorities, restoring taxpayers’ rights.
It should be noted that part of the mistakes found in decisions at the administrative level are due to the fact that the inspection was carried out and the respective defense presented without the proper knowledge that the subject requires, and it is not uncommon to find statements without any legal basis.
The margin available for error, if it exists at all, is getting smaller and smaller, and mistakes in the interpretation or application of tax rules are unforgivable, resulting in assessments that make it impossible to maintain business activities.
Every day there is a greater need to improve corporate tax management , across all related sectors, so that the defensive posture practiced by most companies can be abandoned and active action can be taken to find solutions.
In the same way that the tax authorities have been improving and optimizing their tax collection, companies must seek out specialized professionals who are prepared to implement greater sophistication in their departments, because only in this way will it be possible to guarantee compliance with the rules and ensure fair and adequate taxation in complete safety.
