News

The Supreme Court Criminalizes the Non-Payment of ICMS Tax

The Supreme Court reached a majority decision to criminalize the non-payment of declared ICMS tax.

According to the court, since the ICMS is an indirect tax, the seller of goods (who pays the ICMS) is reimbursed the tax amount by transferring the charge to the buyer. Thus, the person that actually pays the tax is not the one who bears the financial burden.

For this reason, the Supreme Court held that, if the seller does not pay the ICMS tax included in the price of the goods and itemized in the tax invoice, this conduct will be considered misappropriation.

Notwithstanding, the Supreme Court held that only a seller who consistently and with intent to appropriate fails to pay the ICMS charged to the consumer who purchased the goods will be criminally punished.

Joint Project between the OECD and Brazil’s IRS Issues the First Report on Transfer Pricing in Brazil

In February of 2018, the OECD and Brazil’s IRS launched a joint project to examine the similarities and divergences between the Brazilian and the OECD transfer pricing approaches.

In December of 2019, the joint project issued its first report, which also explores options for Brazil to converge with OECD transfer pricing standards while enhancing the positive attributes of the existing framework.

Now, Brazil has identified a clear pathway for bringing its existing transfer pricing frameworks into alignment with the international consensus and is weighing two options – immediate or gradual implementation.

Brazilian Senate Discusses Bill that Reintroduces Dividend Taxation

A bill under discussion in the Senate would implement a 15% income tax on dividends distributed by Brazilian companies to their shareholders. For beneficiaries resident in tax havens or countries with favorable taxation, the tax rate would be increased to 25%.

The bill was presented to the Economic Affairs Committee of the Senate, where it must be approved. Afterwards, the bill must be approved by the Senate and the Chamber of Deputies before the presidential approval.

Brazil and Paraguay Sign an Automotive Free Trade Agreement

Brazil and Paraguay have signed an agreement that parts and vehicles sold by the two countries will have minimum or zero tariffs.

Paraguayan automotive products, parts and vehicles will have immediate free trade in Brazil. On the other hand, Brazilian products will be taxed at up to 2% in Paraguay, with this taxation being gradually reduced, through the application of preference margins, until the full release of trade at the end of 2022.

The agreement must still be ratified by the Congress and implemented via a presidential decree.

Supreme Court Held that Tax Immunity Covers Export of Products through Trading Companies

The Supreme Court decided for the tax immunity of products exported through trading companies in order to declare the impossibility of levying the PIS and COFINS taxes on these transactions.

The court held that it is not possible to make a tax differentiation between direct sales abroad and indirect exports. According to the decision, domestic sales aimed at the foreign market are, in essence, part of the export itself, and the fact that they occur within Brazil and among Brazilian trading companies does not eliminate the idea of ​​exportation from its economic purpose.

Consequently, these transactions can be equated with an export for tax purposes and are not subject to the PIS and COFINS taxes.

Transportation and Fuel Vouchers or Similar are not Subject to Social Security Contributions

The Brazilian IRS clarified that there are no social security contribution charges on the amounts paid as transportation vouchers, through fuel vouchers or similar. The non-incidence of the contribution is limited to the amount equivalent to what is strictly necessary for the cost of commuting from home to work and vice versa, in public transport.

The employer is entitled to discount only the portion that exceeds 6% of the employee’s basic salary. If the employer fails to discount this percentage of the employee’s salary, or discount a lower percentage, the difference should be considered indirect salary and will be subject to social security contributions and other taxes.

The National Treasury Attorney’s Office Launches an App to Consult Unpaid Debts with the Federal Government

The Attorney General’s Office of the National Treasury launched an application called “Unpaid Debt” that allows citizens to check the debts of companies and individuals with the federal government.

With the app, any citizen can check, through mobile devices (smartphones and tablets), which taxpayers have unpaid debts with the National Treasury and with the Service Guarantee Fund (FGTS).

In addition, the application allows consumers, from reading the QR Code of the invoices issued, to check if the company has active debts in an irregular situation.

It is important to note that debts in installments, guaranteed or with suspended liability are not shown when checking through the app.