Guedes admits that offshore was used to evade taxes in the United States

Minister Paulo Guedes (Economy) admitted this Tuesday (23) that he sent funds to his company headquartered in a tax haven (offshore) to escape taxes levied in the United States and confirmed that relatives remain linked to the company. The strategy also avoids taxes in Brazil.

According to the minister, the funds were sent to the company between 2014 and 2015 for investment in American shares. Guedes stated that he received the suggestion of advisers at the time, as a way to avoid taxes in the United States in the event of his death.

American legislation taxes in almost 50% the resources of individuals transferred to heirs. In Brazil, the states charge a similar amount through the ITCMD (Transmission Tax on Cause Mortis and Donation) – which reaches up to 8%.

“If you have a lawsuit in the name of the individual and they die, 46% is expropriated by the US government […]. So if you use offshore you can make that investment. If you die, instead of going to the US government, you’re going to the succession,” he said.

The offshore of Guedes, of his wife and daughter in the British Virgin Islands, known as a tax haven, was revealed by reports published by vehicles such as Piauí magazine and the newspaper El País, which participate in the project of the International Consortium of Investigative Journalists (the ICIJ).

The use of tax havens is a global problem that has been discussed for years by bodies such as the OECD (Organization for Economic Development Cooperation) and Oxfam. According to specialists on the subject, the strategy fuels inequality around the world by withdrawing resources from public coffers that could be used for policies such as health, education and social benefits.

The minister’s statements come at a time when Brazil has accumulated eight years of accounts in the red, has debts of over R$ 5.4 trillion and is looking to increase the amount foreseen for Auxílio Brasil (a substitute for Bolsa Família).

The disclosure of the offshore created by Guedes opened legal and ethical questions on fronts such as payment of taxes, correct communication of information to the authorities and conflict of interest with the position of minister.

Guedes confirmed that, although he left offshore, his relatives remained linked to the company. “I will reaffirm that all data [foram] delivered, whether I leave the company or the permanence of a family member as owner of the resources, which is absolutely obvious [pois] they are resources that belong to the family,” he said.

As minister, Guedes participated in decisions that affect offshores. Article 5 of the Conflict of Interests Law prevents the occupant of federal office from “performing an act in the interest of a legal entity in which the public agent, their spouse, partner or relatives, consanguineous or similar, directly or collaterally, participates, up to the third degree, and who can benefit from it or influence their management actions”.

The minister also acknowledged that he did not declare to the Ethics Committee of the Presidency of the Republic information about relatives offshore, saying that this would not be required by the so-called DCI (Confidential Information Declaration) — a document required by the agency to assess measures to avoid conflicts of interest. “They’re saying ‘ah, you didn’t report.’ Political narrative, cowardice, disrespect for facts,” he said.

“[A pergunta da DCI era se] the declarant has a spouse or relative up to the third degree who works in an area or matter related to the professional competence or position I exercise as a minister. The answer is no. No, no and no,” he said. “Is there any conflict of interest? The answer is no and it will be a thousand times no,” he said.

“Now, it is informed, yes, to Organs competent bodies, because it is there in the company’s registry,” he said. “That’s why I didn’t need to declare [na DCI] if my wife or daughter is in this company, because it’s obvious,” he said.

The Ethics Committee analyzed Guedes’ DCI and released the minister, saying that it recommended actions to mitigate and avoid conflicts of interest (but without disclosing what these measures were).

Among the measures usually recommended by the Ethics Committee is that of keeping investment positions unchanged during the exercise of the position. Guedes did not clarify whether the company’s portfolio is frozen.

The deputies also recalled that the bill to amend the Income Tax, which was drawn up by the Executive, bringing a package with great influence from the Federal Revenue and which was signed by Guedes himself, originally had a provision for taxing the resources of individuals in tax havens. . But the rule was removed after meetings between the minister and the rapporteur, Celso Sabino (PSL-PA).

Guedes even defended the removal of the rule publicly in July. “Ah, ‘because you have to take the offshores’ and I don’t know what. Has it started to complicate things? Either it takes it away or it simplifies it. It takes it away. We are following this rule,” said the minister at the time, before the reports that revealed his company.

This Tuesday, Guedes highlighted that the original proposal presented by him contained the forecast and suggested that the withdrawal occurred under pressure via Congress.

“I think it’s correct, I think it’s fair [ter a tributação]”he said. “He entered here [no Congresso], apparently the bankers had friends out there. Or apparently Brazilians who have offshore also had friends here. Because it didn’t progress, the proposal signed by me has taxes on offshores,” he said.

In any case, contrary to this point, Guedes strongly defended the maintenance of other items in the proposal — such as the taxation of dividends, which also encountered resistance (including in the private sector).

Deputies also asked at the session about the fact that Guedes had taken decisions related to offshores in the CMN (National Monetary Council), the body in which he has one of the three votes. The second is from a subordinate of Guedes and the third is from the president of the Central Bank, Roberto Campos Neto.

Guedes said that one of the CMN’s decisions, which relaxed the requirement to declare resources abroad to the authorities, did not affect him because his equity in the company exceeds the new established limits. Another CMN measure under Guedes, however, also expanded offshore investment possibilities.

The minister gave the statements to the Chamber’s Committee on Work, Administration and Public Service, which called him to clarify his financial transactions in a tax haven. When authority is summoned, it cannot fail to be committed.

The minister’s summons was requested by deputies Kim Kataguiri (DEM-SP), Leo de Brito (PT-AC), Elias Vaz (PSB-GO) and Paulo Ramos (PDT-RJ). His participation lasted about 3:30 am.