Agreement between Haddad and businessmen to reduce fines and interest at Carf is criticized by auditors

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Agreement between Haddad and businessmen to reduce fines and interest at Carf is criticized by auditors

The agreement about to be sealed between businessmen and the Minister of Finance, Fernando Haddad (PT), to free taxpayers from paying interest and fines in the event of a tie in administrative judgments on tax collections is the target of criticism from technicians from the Federal Revenue Service and the union of the category.

For the auditors, a hit in this direction could encourage litigation as more companies would turn to the Carf (Administrative Council of Tax Appeals) in an attempt to get rid of the charges. In addition, without correction by interest on the amount charged, something provided for in the terms under negotiation, inflation will erode the real value of the debt, increasing the Union’s losses and indirectly penalizing those who paid the tax on time.

“It’s as if people who bought a financed apartment could pay for their apartment without interest and without monetary correction at the end of ten years”, exemplifies the president of the Sindifisco Nacional (Union of Tax Auditors of the Federal Revenue Service), Isac Falcão, who is against the hit. He points out that the companies themselves would not accept financing customers under these conditions.

Haddad has been negotiating the changes as a way to avoid a defeat in Congress, given the resistance to Carf’s resumption of the so-called quality vote (which ensures the maintenance of collection in case of a tie, something common in the body). The rescue of the instrument was in the minister’s measure published in January.

As the initiative faces resistance from the private sector, businessmen propose a “regulation” of the casting vote: in the event of a tie, the principal amount remains charged, but fines and interest are reduced, as long as the debt is settled within a period stipulated.

Taxpayers would still retain the prerogative to go to court — in this case, interest would be charged again, but not the fine.

The proposal, however, is displeased by tax authorities. One of the criticisms is that the Union may end up waiving the fines permanently without any guarantee that the taxes will actually be paid by the debtor companies.

Tax auditor Ricardo Fagundes da Silveira, member of the deliberative council of the IJF (Instituto Justiça Fiscal), concluded in 2019 his doctoral thesis on the effectiveness of Carf, analyzing judgments that took place between 2013 and 2017.

Of the BRL 517 billion judged favorably by the Tax Authorities over these five years, only BRL 48.7 billion had been paid, paid in installments or offset by taxpayers — the equivalent of 9.42%.

This index is decreasing in time. In 2017 alone, the Union recovered only BRL 6.7 billion of the BRL 172.2 billion judged in favor of the Treasury (3.47%).

The auditor also carried out a sectoral analysis. Banks and financial holdings have one of the lowest debt payment rates validated by Carf: only 0.32% in 2017 and 4.35% in the average of the five years analyzed.

“One of the reasons for the penalty is to increase the risk of tax evasion, to encourage spontaneous collection. [acordo] raisin. What will emerge from tax planning of all kinds…”, says Silveira.

The fines applied by the Revenue range up to 75%, in case of simple non-payment, and up to 150%, in case fraud is identified.

Without these penalties, according to the auditor, companies with good financial conditions may feel compelled not to pay the taxes on time, in the expectation of receiving the assessment, discussing it administratively and, in the end, obtaining forgiveness of the fine and interest. “This is a disaster,” he says.

Other auditors heard by the Sheet subject to reservation, they also criticize the proposed agreement presented by the businessmen. The assessment is that companies will only pay the tax if they find that resorting to Justice to get rid of the full charge, paying lawyer and procedural costs, will end up being more expensive than the amount with discounts.

There are also complaints that the agreement represents not an occasional concession, but a permanent rule change. The measure is seen by technicians as a way of “stamping with the seal of legality” the abusive tax planning practiced by companies.

Sought, the Ministry of Finance did not manifest itself. Abrasca and representatives of Grupo Esfera who attended the meeting also did not comment on the criticism.

Isac Falcão, from Sindifisco, emphasizes that the monetary correction is made through the application of interest. “That is, taking the interest is actually reducing the value of the tax itself. After nine, ten years, it is clear that the original value of the tax needs to be readjusted. If it is not, the entrepreneur will pay half of what was owed” , he says.

For the president of the union, the changes are being sought to benefit a small group of companies that use Carf as an instrument to delay tax collection and keep resources in cash more cheaply than it would cost to raise money on the market, for example.

“These companies that benefit from this system will have a huge stimulus when they stop paying the taxes they owe to start discussing them in court, because they know that, in the end, what they will pay is much less than what they would pay today”, he warns. “There can be no greater stimulus to litigiousness at the administrative level than the guarantee of non-payment of fines and interest.”

Falcão also refutes criticism from companies that, before the end of the casting vote, almost all judgments were favorable to the Tax Authorities. The Revenue says that the taxpayer’s rights are recognized, partially or totally, in more than 25% of the cases already in the first instance of contestation and in 40% in the CARF.

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