The shame of asking for NF leads the country to lose at least R$400 billion in taxes per year

The resident of Vila Laís, on the east side of the city of São Paulo, did not have many intentions when he asked an electrician for the invoice. The objective was to obtain reimbursement from the real estate agency for the repair of R$250, carried out on a rented property. But, on December 6th, the resident discovered that his invoice gave rise to a prize of R$ 2 million, as part of the Nota do Milhão program, by the São Paulo City Hall.

Every month, since 2017, the city of São Paulo raffles R$ 1 million among consumers registered in the program — in December, the prize doubles. All bills issued by service providers in São Paulo are eligible to be drawn, regardless of whether the consumer is a resident of the capital.

The list includes beauty salons, barber shops, pet shop services, gyms, parking lots, amusement parks, schools, colleges, real estate services, among others. The objective is to increase the collection of ISS (Tax on Services) which, in the accumulated from January to November of this year, brought R$ 21 billion to São Paulo’s coffers. The problem is that almost no one asks for an invoice.

Of the 12.3 million residents of the city of São Paulo, for example, only 645,000 are registered in the city’s program — the equivalent of 5.2% of the population.

The Nota Fiscal Paulista, created 14 years ago by the government of the state of São Paulo to encourage the collection of ICMS (Tax on Circulation of Goods and Services), has a greater adherence: 52.5% of the 44 million people in São Paulo are registered in the program, which entitles you to credit redemption (for expenses above R$25), a reduction in the amount of IPVA or monthly drawings (for those who spent at least R$100 in the month).

Even so, the number of new consumers registered in both the Nota Fiscal Paulista and the Nota do Milhão has been falling year after year. In the case of the São Paulo note, there was an increase in 2021, but it was still below the level of 2019, before the pandemic.

Like the City Hall and the State of São Paulo, dozens of other state and municipal bodies in the country promote programs to encourage tax collection. But unless the consumer needs the note for exchange or warranty purposes, he rarely asks for the document, which contributes to the increase in tax evasion in Brazil.

“In many cases, Brazilians consider it rude to ask for the invoice, especially when it comes to services”, says Ricardo Teixeira, coordinator of the MBA course in financial management at FGV (Fundação Getúlio Vargas). According to him, the behavior is the result of our friendly culture, based more on a relationship of trust than on mere commercial exchange — in which one party provides a service and the other pays for it.

In this sense, it is even embarrassing to ask for an invoice at the barber, manicurist or pet shop that bathed the dog, for example. Hairdresser Cláudia (fictitious name), 57, with nearly 40 years of experience, works at a salon in Santa Cecília, in the center of São Paulo. She says she has never given an invoice for her services — and no one has ever asked her.

“No one should be ashamed to ask for an invoice, because in the price of products and services the cost of the tax is already built in”, says Teixeira. “Many consumers have the idea that they would harm a particular service provider if they asked for a note, but they are not aware that this money stops coming to public infrastructure, such as lighting and sanitation, or services such as education and health,” he says.

The specialist points out that MEIs (Individual Micro-entrepreneurs) are also benefited by specific legislation, with payment of the Simple tax, at a lower rate. “Nobody wants to penalize the professional”.

According to Teixeira, informality in the Brazilian economy is estimated at one third of the GDP (Gross Domestic Product), which in 2020 was R$7.4 trillion. “Of these R$ 2 trillion in informal trade, between R$ 400 billion and R$ 600 billion were not collected last year, considering the average of municipal, state and federal taxes,” he said.

“It’s money that turns into cash for companies”, says André Marques, coordinator of the Center for Public Policy Management at Insper. As a result, the government receives less than it should, but the public accounts need to close —​a situation that leads to the creation of more taxes for those who act legally, whether individuals or legal entities.

“Those who suffer from this evasion are mainly the poorest, who will be left without housing, transport, education and health, services for which the middle class ends up paying”, says Marques. “Many times, we think that this is a small collection, for the amounts involved, but they are services rendered millions of times a year, which generate a significant amount”.

For Marques, in addition to the issue of tax evasion, there are more serious problems, such as cargo theft. “If someone offers me a chocolate that costs R$ 2 on average for R$ 0.50, there is something very wrong with this bill”, he says. “This trade only exists because there are people who buy”.

In Ricardo Teixeira’s opinion, the digitization of operations will increasingly contribute to increased inspection. “The simple act of using a debit or credit card leads the machine, linked to a CNPJ, to register the movement at the bank, which facilitates the tracking of transactions”, he says.

“Invoice freaks” do not feel constrained to ask for a document

While most consumers shy away from asking for an invoice, there are people who stand out as the exception to the rule. This is the case of psychologist Ingrid Ferreira, 45 years old. “Whenever an attendant asks me if I want to keep the proof of the card, I say: ‘No, the Invoice alone is enough'”, says she, a resident of Indaiatuba, about 100 kilometers from São Paulo.

“I notice some looks of censure or impatience, but I’m not going to give up my right, which can even benefit me in some cases, such as the IPVA discount,” she says, referring to the Nota Fiscal Paulista. “I know that companies pay a lot of taxes, but that’s not why I’m not going to ask for an invoice. As a professional, I also issue invoices and pay taxes,” he says.

The auditor Francelino Valença is another one who does not fail to ask for an NF on all occasions. “Whenever I see any hesitation in issuing invoices, I’m already saying: ‘I don’t believe that an establishment as recognized as this one doesn’t issue invoices'”, he says.

“We have to change the game: we are not the ones who are constrained to ask, but they are to provide the document”, says Valença, director of Fenafisco (National Federation of State and District Tax Authorities) and resident of Brasília, where the Notary is in force. Legal — Federal District government program that allows consumers who apply for an invoice to receive cash credits or deduct the amount from IPTU or IPVA.

For Valença, it is wrong for Brazilian legislation to consider a small company opting for Simples Nacional, which earns up to R$ 4.8 million a year. “That’s too high,” he says. The rates on Simples vary from 4% to 19% on sales, depending on gross revenue. “The less the company declares that it receives, the less it will pay taxes, which ends up generating situations in which a large company is divided into small ones, each with a different CNPJ”, he says. “It’s an invitation to tax evasion.”

Thus, in Brazil, tax crime is not seen with the same rigor as property crime, he says. “It is a biased concept of citizenship, because the non-payment of taxes steals the population’s rights”, says Valença. “People have to feel that they own the public thing”.

In the opinion of economic consultant and public finance specialist Raul Velloso, the tax evasion is the result of the lack of progressiveness of taxes. The practice is strongly related to the taxpayer’s perception that he is paying more than he thinks he should, he says.

“The most important thing would be to try to collect less taxes from the greatest number of people. That way, they would pay without cheating and this would not reduce economic activity”, says the expert, former secretary of Economic Affairs at the Ministry of Planning. “Increasing taxes, or just tightening inspections in a country like Brazil, ends up being an invitation to tax evasion,” says Velloso, for whom the low credibility of governments encourages Brazilians not to ask for an invoice.

“As much as the uncollected tax takes resources from important public areas, the consumer does not see justice in a large part of the collection of taxes. Will he ask the poor plumber for a note so that the government can later make a secret budget with his taxes? I don’t think so. “