Ano: 2020

Moment of ethics and union

We are at a time when social contact with people is not recommended. We cannot hug, kiss, hold hands. However, more than ever, it is necessary to be supportive and understand the importance of unity in order to make the best of this period of social confinement that aims to control the pandemic of the new coronavirus. People and companies need to have this attitude. It is not the time to collect fines for those who cannot travel, to increase prices without justification, to take advantage of high demand or to have any other attitude that runs away from ethics, solidarity and gestures of humanity. In fact, individually and corporately, we need to assume our responsibilities were for the collective and, especially, the most vulnerable.

We will expand the positive initiatives of industry, commerce and services, which are maintaining the employment of their employees, supporting the efforts of governments, assisting in social projects - such as donations from private companies in the expansion of hospital beds in São Paulo or companies that produced and donated alcohol gel and supplies to hospitals and health institutions. Without forgetting the countless initiatives of groups of volunteers collecting and distributing food to the poorest population.

Solidarity actions make us “more” human and must infect everyone. These examples, at the time of a war effort, should guide us in the future by strengthening our coexistence.

But, all this will pass and the question remains: how will we react later? What will be left? How will we be able to resume the economy? There are many uncertainties that afflict us at that moment.

Difficult decisions are being made, many unpopular. May this courageous stance encourage us and, once this tragedy is overcome, awaken in our leaders the effective commitment to carry out structural reforms, so that Brazil faces and overcomes its historic challenges.

We have to stop thinking about the next election, but about the fate of our society. This is the path we must follow. The moment calls for calm, yes, but urgency in the humanitarian aspects, in the convergence of purposes and a lot of discernment to make the country react as quickly as possible and can continue with the necessary changes.

Edson Vismona is a lawyer, president of  (ETCO), was Secretary of Justice and Defense of Citizenship of the State of São Paulo (2000/2002).

The tributary well

For decades, we identified the so-called “Custo Brasil” as a factor of loss of competitiveness in comparison with other countries. Companies demonstrate that “from the door to the inside” are competitive, the problem would be in the costs “from the door to the outside” and, in this context, the tax issue is always pointed out as one of the causes.

 

 

 

 

Public authorities increase spending and constantly seek ways to increase tax revenues. The taxpayer is unable to afford the size of the state, but mandatory and related expenses are growing. The budgetary margin narrows and tax creativity has been stimulated, with the introduction of new taxes and ancillary obligations, generating a tangle of laws, decrees, normative instructions that challenge the understanding of our tax system.

The result of this equation is the tax burden that consumes 35% of GDP and investments and the quality of services provided are not proportional to public spending. The account does not close.

With this panorama, tax reform is always remembered. However, what tax reform? Should it be more restricted or more comprehensive? Which account and who will pay more? We do not have the answers, which causes great apprehension in the productive segments and in the taxpayer in general that pays for everything.

On the other hand, lawyers, lawyers and market specialists point to another point that has not been discussed and is of great importance, the size of Brazil's tax litigation. What is the amount of the Union's tax liability?

With the objective of determining the amount of the Union's litigation (under discussion in the administrative and judicial spheres), comparing it with other countries and indicating ways for the solution, ETCO hired the consultancy EY to carry out a study.

The result showed that, analyzing the data from the Federal Treasury, the tax liability is R $ 3.4 trillion (half of GDP). This amount grows every year and more, there was an increase in tax representations for criminal purposes of 5% in one year (2017 to 2018) and the value of credits launched increased by 68% (2016 to 2017. The process, if linear, until the last judicial instance, the average time is 19 years and two months.

In the comparison with the United States, Mexico, Germany, Portugal, India and Australia, analyzed by the work, none comes close to the Brazilian reality, that is, we completely failed in the treatment given to the collection of taxes.

These data demonstrate that we are in a well and that instead of looking for a ladder to get out of this desperate situation, we are, in fact, with a shovel, deepening and increasing this liability. The tax authorities need resources and the taxpayer, the vast majority, wants to keep up with their obligations, that is, one needs to receive, the other wants to pay, but the existing mechanism does not allow a quick and effective exit.

Through the study, it appears that in Brazil, the taxpayer is often punished with a fine increased by 150% and tax representations for criminal purposes, criminalizing their acts. In a chaotic system, which many times not even the tax authorities understand, it is evident that divergences are common and in case of error in the inspection, instead of a reassessment, the taxpayer is taken to defense in administrative and judicial instances. Result, the litigation grows.

This situation, as absurd as it may seem, does not serve the tax authorities nor the regular taxpayer, but it is great for the so-called regular debtor, one who structures himself to never pay taxes and who uses all the procedural possibilities to do so, and thus greatly increase its profit margins, eroding competitiveness and damaging tax revenue by billions.

The way out to reduce the long and costly litigation processes must first consider the reversal of the order that exists today in Brazil, enabling the possibility of an agreement before or at the beginning of the assessment. The United States, Australia, Germany, Portugal and Mexico adopt this stance and in India there is a solution to conflicts in more complex cases. The US tax authorities, for example, recognized for their rigor, adopt fast mediation and arbitration procedures. The goal is to set the amount due and receive.

Second, for the existing passive trillionaire, the possibility of agreements that speed up the effective payment, regularizing the situation of most taxpayers, finally regulating articles 171 and 156, item III of the National Tax Code. Law 13.988 / 2020 indicates this direction. The estimate is that R $ 900 billion could be collected. With the payment in installments, for example, in ten years, the federal tax authorities would have R $ 90 billion per year, more than was predicted by the pension reform.

Finally, to combat the nefarious action of persistent debtors, who should not be confused with occasional or even repeated debtors - they fail to pay taxes due to economic difficulties - the former never pays taxes, in fact, evasion makes up his disproportionate profit, is that we defend the approval of PLS ​​284/17, which is currently being processed in the Federal Senate, specifying who should be considered as a debtor, with the exact classification by the judiciary.

In short, it is urgent that we discuss the taxpayer - taxpayer relationship, valuing those who act in good faith and punishing those who intentionally do everything to not comply with their obligations. We can no longer remain in that well that brings the financial resources of the tax authorities and taxpayers.

 

* President of the Brazilian Institute of Ethics in Competition - ETCO, he was secretary of justice and defense of citizenship in the State of São Paulo (2000/2002).

ETHICS as a tool to combat COVID-19

ETCO is a Civil Society Organization, which acts with the purpose of promoting integrity in the business environment. We believe in the practice of fair competition as one of the main foundations of economic development and the construction of a stronger and more just nation.

With the pandemic of COVID19, we live in an unprecedented moment in world history, with devastating effects on the global and Brazilian economy. The OECD estimates that each month of confinement will take 2 points of GDP from major economies and the World Trade Organization (WTO) predicts that global trade will decline by up to 32% this year.

In order to combat the harmful effects on the economy and on the public health system, we have witnessed an enormous effort by the executive (in all its spheres), the legislature, the judiciary and civil society, in order to alleviate the effects of the crisis mainly with vulnerable populations and groups at risk. And it is mainly at times like this, that the ethical behavior of companies and civil society can make all the difference.

ETCO advocates social isolation, as the most effective way to fight the epidemic, respecting the guidelines of health authorities and municipal and state governments. It is a moment that demands the full exercise of citizenship, respect for the laws and for others.

It is not the time to raise prices or make unnecessary stocks. This is no time for layoffs, which will result in immediate and unnecessary costs. It is necessary to seek dialogue, to negotiate fairly and loyally with suppliers, employees, employees and customers.

ETCO remains firm and supportive of all actions that strengthen the fight against COVID-19 and help preserve lives.

Support too. The way you can, how you can.

#STAY AT HOME

 

“Brazil's tax litigation is equivalent to half a GDP”, says Edson Vismona to Istoé Dinheiro

“If you join the Union, states and municipalities, the tax litigation is over R $ 5 trillion” - Edson Vismona, president of ETCO.

Only at the federal level, the lack of agreement between the tax authorities and taxpayers leaves the equivalent of half of the Brazilian GDP at a standstill. The amount reached R $ 3,4 trillion in 2019. It is something unparalleled in the world. Part of that money could migrate to public coffers and become State investment. For that, it is necessary to establish a new relationship with the Revenue. According to the president of the Brazilian Institute of Ethics in Competition, “the current one has broken”.

De Osvaldo, honesty. From Alice, humility. The pillars that guide Edson Vismona's daily life came from his parents. Paulistano do Brás, 60 years old, graduated from Largo de São Francisco Law School (University of São Paulo), the executive president of the Brazilian Institute of Competitive Ethics (Etco) has just started conducting his biggest crusade: building a new relationship between taxpayers, especially large ones, and the tax authorities. "The one that exists no longer serves," he says. Etco's struggles so far were not small. Maintained by companies in the beverage, cigarette and fuel sectors, which face piracy, fraud and persistent debtors - only the cigarette segment collected R $ 11,8 billion in 2019, but evasion totaled R $ 12,2 billion -, the entity hired the consultancy EY to prepare the most detailed study on tax litigation in Brazil. Money equivalent to half a GDP (R $ 3,4 trillion) stopped in court and could be injected into the purse. “The fight now is for the whole of society. It is our contribution to the country ”,

MONEY - Etco prepared a robust study on the issue of tax litigation in Brazil and found something frightening, that the volume of resources under litigation is equivalent to half of GDP, R $ 3,4 trillion. How did that come about?
EDSON VISMONA - Our associates brought this concern, that there is a lot of money being discussed at administrative levels, or judicial levels. We hired EY not only to check the situation, but also to compare it to other countries, to see if Brazil is out of the curve or not. What was a comment translated into numbers: R $ 3,4 trillion in 2019, which is equivalent to 50,4% of GDP.
Through the study, this data has grown. In 2013 it was R $ 2,2 trillion (42% of GDP). Nominally, there was an increase of 54% in seven years, to R $ 3,4 trillion. Yes, in addition to an already dramatic scenario, the bias is high. It's scary.

What happens in the other countries surveyed in comparison with Brazil?
We chose six countries, all better placed than Brazil (80th) in the Global Competitiveness Report 2017-2018: United States (2nd), Germany (5th), Australia (21st), India (40th), Portugal (42nd) and Mexico (51st). The selection sought different legal systems that would function as benchmarking [the first three], nations of direct influence, such as Portugal, or of economic similarities with Brazil [India and Mexico].

And what did they discover?
Nowhere is litigation similar to ours. In other countries, it barely exceeds 2% of GDP.

Does this have to do with the complexity of the Brazilian tax system?A complex tax system is that of every country. Ours does not escape. But in addition to being complex, ours is chaotic. Why?
There was an insane production of tax rules. From 1988 [Constitution] to 2018, more than 390 thousand rules were edited. This shows the state's voracity in wanting to regulate.

In that period (1988-2018) it gives almost 20 thousand standards per year.
What causes the opposite of the intended [which is to collect]. Because the more you regulate the more discussion alternatives you create. We lost the whole idea of ​​a rational collection structure.

A collecting machine is not only voracious, as you define, but irrational. But the appetite has apparently not changed.
But it hits its limit. We have a 35% tax burden in a country that offers very little to society. Where does that money go? It goes to pay Social Security. It goes to pay salary. It is not to invest. The value of the Union's investment budget is ridiculous. It is not a question of asking whether the State should spend or not. You must spend, but spend well. What is important. In particular, I defend a strong presence on the social issue, especially in a country as unequal as ours. But I do not advocate a staff. And there was no discussion in previous governments to contain the size of that state.

It bloated and still growing makes the money get smaller.
There was a very crazy idea that money appears. I've heard it from [public] managers: 'Ah, one hour the money comes'. Where? It appears because it is not yours. The relationship of the public administrator with public money is often an irresponsible one.

One hour the bill arrives.
Yes, the bill and the nightmare. A state that traditionally came in a process of increasing spending will want to increase revenue in every possible way, creating all the pendants to collect, no matter how. The account does not close, litigation increases, the deficit increases. Here comes the madness.

With so much norm, the environment to discuss with the Treasury is fertile.
I'll give you an example. The tax authorities declare the following: you did not pay such a tax, this is a crime and you, or your director, will be reported to the Public Ministry. You answer: 'Wait a minute, what went wrong ?, where did I go wrong ?, we had a different interpretation than yours, this is not a crime'. The answer is: 'I'm going to act anyway, then you turn around, go and defend yourself'. This impacts any serious business. Only the percentage of tax representations for criminal purposes grows from 25,4% of the total (2017) to 29,4% of the total (2018). Do you mean that in a year the companies decided to become criminals? Companies with shares on the stock exchange, who pay billions of taxes, who have equity ...

What can be done so that this fiscally at war environment is undone?
We need a DR, to discuss the relationship. Let's discuss the Tax-Taxpayer relationship. Because the one that exists has broken. The state wants to receive and the taxpayer wants to pay. I read in a news article that litigation is good for companies because they don't pay and push with their bellies for 19 years. Is not true. Because this 'not paying' is recorded in the balance sheet.

And it brings impacts.
It impacts on the stock exchange, in the evaluation of that company, it harms rating. This is nothing good for the taxpayer.

Is there a culture of the Revenue in not seeking the solution, the agreement, right away?
Then we discuss the relationship. In comparison with the other countries, this attracted a lot of attention. They all try to define the tax debt, how much is due, in the beginning. Even the American tax authorities, famous for being extremely tough, try to resolve the dispute at the beginning, using the mechanisms of mediation, arbitration. This goes for the United States, Germany, Australia, for Mexico, for Portugal… Even in India it works better.

Here ...
Here we are stuck. In a process in which you are fined, do not agree with that amount, the answer often comes in the form of aggravating with a 100% fine, 150% on top and still with a threat of receiving a tax representation and being taken to the MP as criminal. It happens a lot. Often at first, the tax authorities say 'oh, I was wrong'. Then you ask for the correction to be corrected, but you hear as an answer 'no, no, take it to discuss'. It does not correct the error that he himself admits. Such a process if it is linear takes almost 19 years. It remains open, without the tax authorities receiving it.

What could a change in that culture mean?
An estimate of ours, clearing fines and reaching a more feasible value in this litigation of R $ 3,4 trillion, shows that something around R $ 900 billion could turn into taxpayer contributions from large taxpayers. We will divide this in ten years, it is R $ 90 billion a year [the public deficit of the central government in 2019 was R $ 95 billion]. And it is doable.

Where does this litigious stance come from?
Talking to a supervisor he said that they do not have this freedom to, in the face of a situation, not to sue. In part it is true. But there is the possibility, in the National Tax Code [articles 156 and 171], to regulate an agreement. It is in the Code, all that is needed is the law to regulate. But it is also necessary for administrators to seek this interpretation. There are already those who work in this direction. In São Paulo we have a 2018 law, which led to the Nos Conformes Program [in force since 2019], which goes in this direction of the agreement, of transparent communication.

These are still isolated initiatives and while the scenario does not change, it gets worse.
Because this litigation increases every year. We are in a tax ditch and instead of a ladder we were thrown a shovel. I don't want a shovel, I want a ladder.

And what has Etco effectively done to make the change happen?
Based on this study, we will conduct a roadshow, taking authorities, political leaders. We want to spark the discussion. We have data that if we join states and municipalities the litigation will exceed R $ 5 trillion. Because it is a logic that does not apply only to the federal tax authorities. It is valid for the state and municipal.

Can this debate be confused with that of tax reform?
The issue of tax reform concerns us a lot because we don't have figures on it. We do not know what will come. Who has the numbers is the federal government, which has not yet entered the game. So we are not clear. And then everyone says something. Sometimes frightening, like the fact that on top of services, taxes will increase by 300% ... Anyway, what our experience shows is that every tax reform has increased litigation.

So there will be more fighting around?
Yes. It will increase litigation. In other words, we are exchanging the shovel in the tax litigation pit for an excavator.

The discussion of the Tax-Taxpayer relationship, proposed by Etco, cannot hinder the tax reform?
Our tax attorneys are unanimous in seeing the issue of litigation as something more important than the tax reform itself. Because we would give a breath of cash to the State. Resolving the dispute would be something prior to the tax reform, because it would be carried out at another level, not in despair.

But society, including practically all business, financial and economic leaders from all walks of life, everyone expects reform.
Yes, society wants an answer, but it does not want to enter a swamp. Not knowing what will come out of there.

About this inertia of the Executive. Does not a considerable part of it originate from the lack of pressure from the business elite, who spent the first year of Bolsonaro's term saying that it is possible to shield the economic agenda from political issues, which did not contaminate the other?
They are absolutely connected themes. A statement by a president or a minister, a mere statement, can topple the stock market or raise the stock market. That is why our market is so volatile. Take the issue of coronavirus, which is not a political issue in itself. Political statements can make the situation even worse, for example, if they convey the perception that our politicians are not taking the situation as seriously as it deserves. Things are all connected. There is no way to separate them.

And are the themes contaminated?
Yes. Everything is connected. The Brazilian productive sector is very competitive, from the door to the inside. But from the door out, things get difficult. We bear the burden of our situation.

The conduct of the economic agenda of Minister Paulo Guedes began to receive harsh criticism, including from economists of his own conceptual spectrum, such as Armínio Fraga and André Lara Resende, who even called Guedes's liberalism primitive. And the business sector?
The business sector is always concerned with how to optimize its earnings, but also that this process happens in balance. There is an increasing maturity that profit at any cost is no use. And a concern of the business sector has always been in relation to the size of the state. Ours has grown a lot. This burdened society too much, it burdened the productive sectors a lot. It is a heavy and inefficient state.

And the minister's speech addresses this concern.
He [Guedes] is clearly talking about reducing the state. This is good, so the business community supports it. But it gets to the point where you don't see the consequences, even considering all the difficulties that this agenda has in Congress. Here again comes the relationship with politics. The economy does not talk to politics, there is clearly no dialogue ... This worries us a lot.

The exit…
What we want is for there to be a convergence. And we have our contribution to this debate.

Tax policy must be based on the concept of a broad moratorium

The very exceptional circumstance that humanity is experiencing is an obstacle to reflections that allow us to understand the present time and produce some type of contribution. Our ignorance, impotence, anguish and fear prevail.

Apparently eating a wild animal infected by a virus was able to stop the world and cause suffering on a global scale. The real expression of an allegory of the Butterfly Effect, extracted from Chaos Theory, has never been so painful: “a butterfly flaps its wings in Beijing and produces an earthquake in San Francisco”.

Exploring the origins and spread of Covid-19 should only serve to understand the pandemic and support the development of prevention theories. Blaming people or governments is completely useless, if not a symptom of mental alienation. It would also promote unforgivable injustices.

The pandemic has complex and probably unverifiable causality, in the light of current science. The virus has no nationality. The problem is with humanity.

This picture brings out the intrinsically contradictory human nature, in which the selfishness associated with the survival instinct and solidarity, generosity and opportunism - often, delinquent - coexist, good and evil coexist. The hope is that the spirits of people of good will prevail.

I participated actively in the face of serious international and domestic economic crises, in the FHC Government. I know how much serenity, determination and creativity were required to overcome them. Well, none of them even touches the intensity, scope, unpredictability and persistence of the crisis arising from Covid-19.

From this confrontation, I extracted some lessons that can be of some use, even though punctual and modest in the face of a cyclopic crisis.

I risk, by imposition of solidarity, humbly subjecting them to debate. I do not intend to be right, but help in the limit of my knowledge and experience.

We are facing a catastrophe with equivalent consequences, mutatis mutandis, collision with an asteroid, a natural disaster on a planetary scale or a nuclear accident. It is not reasonable to deny the scale of the catastrophe. What is needed is to hope for the best, but prepare for the worst.

The suggestions are limited to the tax field, which, in the context, is merely subsidiary, since what counts as a priority, at the moment, is to save people, especially the sick, the vulnerable and the poor.

The first lesson to be observed is the flexibility of recommendation, creativity and collaboration.

I collect Charles Darwin's praise for flexibility in nature, translated into the ability to adapt, and which, at least in circumstances of extreme crisis, also applies to public management, including taxation: “It is not the strongest that survives, not the most intelligent, but the one that best adapts to changes ”.

Those responsible for tax policy cannot become prisoners of manuals, of no use in crisis situations. It is necessary to use creativity at the limit.

It would be tedious and useless to enumerate the creativity exercises practiced in crisis coping experiences that I lived. What was done was often unprecedented, not even raised in literature.

In the current crisis, the need for creativity is much higher. Dialogue, discuss problems thoroughly and do not stick to pre-existing models. It is the advice I can give to those on the front lines.

Collaboration is also an indispensable ingredient. Not only among federal entities, it is necessary to reach out to private tax professionals and taxpayers.

The second lesson concerns the imperative need to segregate the initiatives to face the crisis from those that will be adopted in the post-crisis. Trying to articulate these two classes of initiatives is to flirt with crucial mistakes.

Although it seems unsubstantiated, from the perspective of physics, the crisis has paralyzed time. This is fundamental evidence. It is as if there is only the present. Nothing more is known about the future.

Anyone who projects the future is wrong, based on pre-existing knowledge about interest rates, foreign exchange, GDP, fiscal balance, asset values, prices, etc.

What if an effective vaccine or treatment comes along? What if, in a scenario of greater misfortune, new waves of the virus or its mutation appear?

Since there is a minimum of civilization, humanity has never been compelled to social isolation for a period that no one can estimate.

When we leave these caves, as are we, physically and psychically? How will the world be? Will we renegotiate relations with the environment worldwide, including in terms of urban occupation and prevention of natural disasters? Will we come to understand that tackling poverty requires everyone's competition, regardless of the jurisdictions of the states? Will severe health barriers be put in place for the transit of people and goods, to the detriment of globalization? Will the current consumption patterns yield to the essentiality thesis? Will limits on growth be imposed, as the Club of Rome has been advocating since 1972? Will there be a digital revolution in work and service provision, with repercussions on urban mobility, international transport, entertainment, tourism? How will the public health policies?

There are many questions, the answers of which, however, no one knows. Most likely, we have a new normal.

In how long and for how long, however, will the new normal prevail, considering the atavistic tendency of the human being to erase from memory everything that is pain and interdiction of pleasure?

The only certainty we have is that these are times of complete uncertainty. In this context, absolute caution is the only rational option.

In a wise lesson, John Maynard Keynes pointed out, in the “Treaty on Monetary Reform” (1923): “The long term is a misleading guide to current affairs. In the long run, we will all be dead. Economists put themselves in a comfort zone, totally useless, if in stormy seasons they can only say that when the storm passes, the ocean will calm down again ”.

It is, therefore, imperative to concentrate all efforts to overcome the crisis at the present time, removing deviations in concentration resulting from speculations about the future.

If the demand for flexibility, creativity and collaboration prevails and if there is a conviction for mindfulness in the present, tax policy must be based on the concept of a broad moratorium, provided for in our legal system.

The National Tax Code (CTN), arts. 151-155, provides the moratorium hypothesis, with ample operational flexibility: general or individual, specification or not taxes or sectors, federal or national scope, applicability or not to certain regions, etc.

Anyway, it is a proper instrument for calamity situations, whose flexibility, however, does not exclude the imposition of penalties for cases of fraud or simulation, in its own favor or that of third parties.

The choice of terms, sectors or taxes includes discretionary acts based on tax morality, which requires firmness and discernment.

The moratorium establishes the rule of law, as opposed to a scenario, not unfeasible, of civil disobedience.

The moratorium must, however, go further to achieve processes and procedures as well. For them, time also stopped.

Should be suspended, while the pandemic lasts, administrative judgments, official releases, losses (except for cases of contraband or practices that tend to make sanitary policies unfeasible), collection of active debt, requirement of accessory obligations, procedural deadlines, etc. Negative certificates must be extended for an equal period.

The Union must set an example and call for the adoption of measures by all federal entities. In this movement there can be no concession to bureaucratic mentalities, which do not see the scale of the catastrophe.

Ordinance No. 543, dated 20.03.2020, of the Federal Revenue of Brazil partially accepts the recommendations regarding the procedural and procedural moratorium. However, more boldness is needed, including regarding the moratorium on taxes. Also, remove the pretension of launches regarding the controversial prevention of decay and the presumption of fraudulent interposition of people.

It is not the time for controversy. Nor is it the time to harass taxpayers in the midst of economic debate. At least, for humanitarian reasons. It is now up to us to fight for survival.

Brazil loses R $ 291,4 billion to the illegal market

Brazil lost R $ 291,4 billion reais to the illegal market in 2019, according to a survey that has been carried out since 2014 by the National Forum Against Piracy and Illegality (FNCP). The value is the sum of the losses recorded by 15 industrial sectors and the estimate of taxes that are no longer collected due to this illegality.

The amount increases much more than the national Gross Domestic Product (GDP). While Brazil's GDP increased by 2019% in 1,1, the illegality market is growing. The loss of the sectors was R $ 199,6 billion, which added to an average of the tax evasion (R $ 91,8 billion) reached R $ 291,4 billion. This average was made with the percentage of 46%, but there are products, such as cigarettes, where the tax can reach 90%.

An estimate by the Latin American Smuggling Alliance (ALAC) also points out that, on average, the illegal market corresponds to 2% of the GDP of Latin American countries. In Brazil, this percentage is at least 7.85%. “The GDP does not grow significantly, it is stabilized, but illegality is increasing more and more”, says Edson Vismona, president of the FNCP.

For the entity, this annual survey is very important for the productive sectors, which thus demonstrate the billion dollar losses to the illegal market. “This action attests that the illegal economy is growing, the damage only increases and it is important to alert society and public authorities to the extent of this gap, emphasizing the need for coordinated and permanent actions to combat illegality, both in the physical and digital markets. , which erodes our development and makes it difficult to attract investments and generate jobs ”, says Vismona.

57% of cigarettes in Brazil are illegal

Cigarettes, the sector most affected by contraband, for example, lost R $ 15,9 billion last year. In 2018, it was R $ 14,4 billion. According to Ibope data, 57% of cigarettes sold in the country are illegal. The latest survey conducted by the institute showed growth in the illegal tobacco market for the sixth consecutive year: of the 57% illegal, 49% were smuggled (mainly from Paraguay). As a result, 63,4 billion criminal cigarettes flooded Brazilian cities - it is known that this product is used to finance militias and drug trafficking.

A study by Oxford Economics also found that the operations of legitimate cigarette manufacturers support 25,9 jobs in Brazil. The illegal cigarette market has stopped the tobacco industry from generating 27 jobs.

Another example of the expression of illegality is seen in the fuel sector, which reached the amount of R $ 23 billion. According to Vismona, this significant value occurred because the segment improved the data. "They added, in addition to losses due to fraud, also theft and fuel diversion in the pipelines", says the president of FNCP.

The FNCP survey has been carried out since 2014 and is based on data pointed out by the productive sectors themselves, which have their own metrics (research, market evaluation). The 15 segments covered by the FNCP study are clothing; glasses; cigarette; Cable TV; personal hygiene, perfumery and cosmetics; alcoholic beverages; fuels; audio-visual; pesticides; cell phones; imported perfumes; sports equipment; toys; software; and electronics (PCs, Servers, Networking, Printers / Toners / Ink Cartridges and Security Equipment).

 

ETCO presents its 2019 Activity Report

ETCO launched on March 20 its 2019 Activity Report. The publication summarizes the projects carried out by the Institute last year to contribute to the promotion of competitive ethics and the strengthening of the business environment in the country.

In 2019, ETCO acted intensively in debates related to the tax theme. “The time is right,” explains the Institute's executive president, Edson Vismona, in the letter introducing the Report. "After the approval of the pension reform, the focus is on other fundamental issues to unlock the economy, attract investments and boost the country's development. Tax reform is one of the most discussed initiatives."

In June, the Institute held a seminar on tax legal security, which was coordinated by the chairman of its Advisory Board, Everardo Maciel, and was attended by big names in tax law. The following month, he supported a seminar on tax reform held by the newspaper Valor Econômico.

ETCO also sponsored a study by the EY consultancy on Brazilian tax litigation, which was presented at an event followed by a debate with experts.

Another important topic was the defense of the legal market. In partnership with the newspaper People's Gazette, from Paraná, the Institute carried out the project #Dentro da Lei, which lasted seven months. The work included a forum for debates, in-depth reports and other journalistic actions on the damage of practices such as smuggling, piracy and counterfeiting of products.

The 2019 Activity Report also shows how ETCO expanded its participation in international events, with its presence at the Fifth Meeting of the Latin American Anti-Smuggling Alliance (ALAC), in Costa Rica, at the 13th Parliamentary Forum on Intelligence and Security, in Paraguay, and at the meeting of the Organization for Economic Cooperation and Development (OECD) Task Force to Combat Illicit Market, in France.

The publication can be read on the internet or in PDF format from this link.

Agenda 2019: main events

These were the main activities developed by ETCO throughout 2019:

JANUARY 2019
• Participation in the 13th Parliamentary Meeting on Intelligence and Border Security, in Paraguay. (see here)
• Audience with the Minister of Justice and Public Security, Sérgio Moro.
• Audience with the Secretary of National Sovereignty and Citizenship, Fabio Marzano.
• Lecture by the president of ETCO for police officers in Rio de Janeiro.
• Audience with Adriano Marcos Furtado, general director of the Federal Highway Police.
• ETCO Board of Directors meeting.
• Meeting at Fiesp on traceability.

FEBRUARY 2019
• Meeting with Angélica Garcia, Industrial Property attaché at the British Consulate.
Participation in a meeting of the Foreign Trade Council of Fiesp.
• Meeting with authorities of the Municipal Secretariat for Urban Security and the Executive Secretariat for Combating Illicit Trade of the Municipality of São Paulo.
• Participation in a meeting of the board of the National Forum against Piracy and Illegality (FNCP)
• Meeting with an economic advisor at the American Embassy on a report by the American government on intellectual property infringement (Special Report 301).
• Audience with the vice-governor of São Paulo, Rodrigo Garcia.
• Audience with Minister Ernesto Araújo, from the Ministry of Foreign Affairs (MRE).
• Audience with General Decílio de Medeiros Alves, director of the Department of Science, Technology and Innovation of the Ministry of Defense.
• Meeting with the Deputy Chief of Legal Affairs of the Civil House, Jorge Antônio de Oliveira Francisco.
• Meeting with André Veras Guimarães, director of the MRE's Department of Security and Justice.
• Participation in a meeting of the National Council to Combat Piracy (CNCP).
• ETCO Board of Directors meeting.

MARCH 2019
• Meeting on data protection with representatives of the Government of the State of São Paulo.
• Participation in the scientific table of the Center for the Study of Economic and Social Law (CEDES) on taxation and competition.
• Participation in a meeting of the OECD's Anti-Illegal Market Task Force in Paris.
• ETCO Advisory Board meeting.
• Meeting with Caio Megale, Secretary for Development of Industry, Commerce, Services and Innovation at the Ministry of Economy.
• Meeting with Rosalvo Ferreira Franco, from the Ministry of Justice's Integrated Operations secretariat.
• Hearing with Senator Rodrigo Pacheco (DEM-MG) on PL 284/17 to combat the persistent tax debtor.
• Sponsorship and participation in the 66th National Meeting of State Tax Coordinators and Administrators (Encat), in Brasília.

APRIL 2019
• Participation in a meeting of the FNCP council.
• Participation in seminar of the Americas Society and Council of The Americas.
• Participation in the VEJA EXAME 100 Days of Government Forum.
• Lecture at Folha Seminar: Challenges and opportunities for the fuel sector.
• Lecture at the event The Challenges of Consumer Protection in the Digital Era, from the Ministry of Justice and Public Security with the Fundação Getulio Vargas / SP.
• ETCO Board of Directors meeting.

MAY 2019
• Meeting with Marcos Cintra, RFB secretary.
• Lecture at the XNUMXth Meeting of the Latin American Anti-Smuggling Alliance (ALAC), in Costa Rica. (Here)
• Audience with Senator Esperidião Amin (Progressistas-SC).
• Audience with the PSL leader in the Chamber of Deputies, Deputy Deputy Valdir.
• Audience with Senator Jorginho Mello (PL-SC).
• Participation in the National Competition and Regulation Forum (Fonacre).
• Audience with Senator Major Olímpio (PSL-SP).
• ETCO Fiscal Council meeting.
• ETCO Board of Directors meeting.
• CNCP meeting.
• Meeting with the Paraná Finance Department and the PRF Superintendence, in the South region.
• Audience with the General Delegate of the Civil Police of São Paulo.
• Pro-Ethics meeting.
• Meeting with the president of the Association of Federal Delegates.
• Participation in an event at Casa do Saber with Delfim Netto, Caco Barcellos and Rogério Checker.
• Audience with Carlos da Costa, special secretary for Productivity, Employment and Competitiveness at the Ministry of Economy.
• Meeting of the CNCP Special Commissions on E-Commerce, Fight against Smuggling and Online Payment and Advertising.
• Participation in Casa do Saber event with Rodrigo Pimentel and José Vicente, from Instituto Sou da Paz.

JUNE 2019
• Meeting with state deputy Issur Koch (PP-RS).
• Lecture at CNCP seminar on Illegal Digital Market.
• Lecture at the launch event of the book 30 years of the Federal Constitution, at the Center for the Study of Economic and Social Law (Cedes).
• Meeting at the Finance Department of the State of Rio de Janeiro.
• Meeting at the Secretary of State for the Civil House of Rio de Janeiro.
• Audience with General João Camilo Pires de Campos, Secretary of Public Security of the State of São Paulo.
• Audience with the governor of São Paulo, João Dória
• Audience with Fábio Lepique, executive secretary of the Municipality of São Paulo.
• Launch of the Parliamentary Front to Combat Smuggling.
• Audience with the general delegate of the Civil Police of SP.
• ETCO Ordinary General Meeting.
• ETCO-Taxation and Legal Security Seminar. (Here)
• ETCO Board of Directors meeting.
• Ordinary CNCP meeting.

JULY 2019
• Realization of the Taxation seminar in Brazil in partnership with Valor Econômico newspaper. (Here)
• Sponsorship and participation in the 67th National Meeting of State Tax Coordinators and Administrators (Encat), in Manaus.
• Holding of the #Dentro da Lei Forum, in partnership with Gazeta do Povo, from Paraná. (Here)

AUGUST 2019
• ETCO Board of Directors meeting.

SEPTEMBER 2019
• Lecture at the launch of the Front to Combat Smuggling, at the Legislative Assembly of São Paulo.
• Public hearing with federal deputy Tadeu Alencar (PSB-CE), from the Special Commission responsible for PL 1646/19 to combat the persistent tax debtor.
• Meeting with the delegate of the Federal Revenue of Foz do Iguaçu, Mozart Fuchs.
• Participation in the presentation of the new regulatory model of Inmetro, with Carlos da Costa, special secretary of Productivity, Employment and Competitiveness of the Ministry of Economy.
• ETCO Board of Directors meeting.

OCTOBER 2019
• Public hearing on Tax Reform, with Senator Paulo Paim (PT-RS).
• Meeting with Mayor Bruno Covas, from São Paulo.
• Lecture on defense of the legal market at the Commercial Association of Santa Cruz do Sul (RS).
• Meeting with Daniel Ackerman, from the US Department of Justice.
• Meeting of the Fiesp Traceability Committee.
• Meeting with Fábio Lepique, PMSP executive secretary.
• Meeting with Marcelo Ivo, regional delegate for the Investigation and Combat of Organized Crime of the Regional Superintendence of the Federal Police in São Paulo.
• Lecture at the Institute of Weights and Measures (Ipem).
• Lecture at the National Congress of Municipal Guards, in Niterói (RJ).
• ETCO Board of Directors meeting.

NOVEMBER 2019
• Lecture on cigarette smuggling to the Integrated Command Committee of the São Paulo Department of Public Security.
• Lecture on the Integrated Border Protection Program at the Institutional Security Office of the Presidency of the Republic.
• Participation in the Interparliamentary Security Forum, in the Federal Senate.
• Conducting a seminar on Challenges in Brazilian Tax Litigation. (Here)
• Launch of the book Taxation and legal security. (Here)
• ETCO Advisory Board meeting.
• ETCO Board of Directors meeting.
• ETCO Extraordinary General Meeting.

DECEMBER 2019
• CNCP meeting.
• Meeting with the City of São Paulo and the Federal Revenue Service about the destruction of seized products.
• Presentation of the Panorama of the Legal Market to students.
• FNCP Assembly.
• Participation in the 1st International Conference for the Promotion of Integrity and in the Award for the Pro-Ethical Company 2018/2019 program.
• Participation in the installation event of the Integrated Operation Center in Foz do Iguaçu, with Minister Sérgio Moro and other authorities.
• Lecture at the 12th Seminar on the Triple Border and 2nd National Forum on Border Security.