Brazil: “Cisco Is Not the Only Firm in Boiling Crisco With the Fisco”

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“Exemption from IPI for independent cabbies buying cars manufactured in Brazil after having suffered a UFO-related amputation of at least one finger” –the list of Brazilian tax forms available for download (in the Open Document Format) is longer than War and Peace. It sometimes seems like.

The preliminary findings show the gross tax gap — which is the difference between what taxpayers should pay and what they actually pay on a timely basis — exceeds $300 billion per year. The results indicate the nation’s tax gap increased slightly to between $312 billion and $353 billion in tax year 2001. –IRS, 2005

“The Stalinist dictatorship of the tax man is coming, just you wait and see” –slightly scary drunk guy in recent NMM boteco conversation, São Paulo, Brazil

Don’t ask me what I want it for (ah-ah, Mister Wilson)
If you don’t want to pay some more (ah-ah, Mister Heath)
‘Cause I’m the taxman,
Yeah, I’m the taxman.

–The Beatles, “Taxman”

Receita inicia devassa no uso de cartões corporativos: “Crackdown on use of corporate credit cards.”

And a merry Christmas to you, too, Brazilian IRS!

Em uma ofensiva à sonegação envolvendo benefícios indiretos pagos por corporações (os chamados “fringe benefits”), a Receita Federal iniciou uma devassa em grandes empresas de São Paulo, Rio de Janeiro e Distrito Federal para investigar o uso indevido de cartões corporativos.

In an offensive against tax evasion involving “fringe benefits” paid by corporations, the Brazilian federal tax authority is launching a wave of audits of large corporations in São Paulo, Rio de Janeiro and the Federal District in order to investigate the improper use of corporate credit cards.

Free beer for the first reader to discover a comment from a Brazilian reader claiming that “in civilized nations, like the United States, this sort of thing is not criminalized.”

Oh, but it is. And fringe benefits are taxed, too.

It sucks, it really does.

But what sucks even more is when a federal administration comes in from a party that constantly promised radical tax relief, and a good, thorough trimming of the bloated, inefficient federal bureaucracy — and then your taxes actually go up, in part to pay for the installation of a pointless Homeland Security bureaucracy.

We already have a Department of Defense, for crying out loud. What is it supposed to be defending, if not the patria amada?

Which is part of the reasons why the genuine, principled paleoconservatives — they are a pain in the ass, these people, but they do occasionally have a valid point — now want to impeach Cheney, among other things.
See also

No Estado de São Paulo, 38 estabelecimentos -inclusive multinacionais- já estão sob ação fiscal. No Distrito Federal, mais de 150 empresas estão sendo investigadas.

In São Paulo State, 38 business establishments — including multinationals — are being [audited without mercy.] In the federal district, 150 firms are being investigated.

And in Rio?

O uso do cartão corporativo para pagamento de salário indireto vem se disseminando entre os empregadores porque permite a redução de encargos e sonegação de impostos. A Receita não informa os setores e os nomes das empresas, sob o argumento de que estão protegidos pelo sigilo fiscal.

The use of a corporate credit card to pay indirect salary has become widespread recently among emploers, because it enables them to avoid mandatory contributions and taxes. The tax author did not report what sectors the companies are from, or their names, arguing this information is protected by banking privacy.

Who knows? Some might even come up clean.

Headline: “Gringo blogger eyed by federal police as drug mule!”

My picture in all the papers. One of those really sinister pictures, taken before I have had my coffee, while needing a good beard trim.

Old acquaintances come forward and testify to seeing me sucking down a big fat doober once in my college days. Reefer-legalization groups organized candlelight rallies in my defense. I am burned in effigy by drug-warrior xenophobes.

Now, it is true that the feds once invited me into the back there at the airport to look at my bags.

“No problem, officer.” I was traveling back and forth a lot in those days for no apparent good reason (I was in love, but then they all say that. But I really was).

Understandable. They did not know who I was.

They found nothing, of course — I have not so much as toked off of a roach clip in years now, and have not snuffled up a line in, literally, decades (never much of a druggie, really) — and were perfectly pleasant about the whole thing. I have never been pulled over again.

They seem to have made a note in my file that I am legit and innocuous. I appreciate that.

Embora a fiscalização recaia sobre as empresas, os funcionários beneficiados com a remuneração indireta via cartão corporativo também serão alvo da Receita. Em entrevista à Folha, o secretário-adjunto da Receita Paulo Ricardo de Souza Cardoso disse que essas pessoas físicas serão obrigadas a recolher os impostos devidos, multa e juros sobre essa renda. Ou seja, Imposto de Renda e contribuição previdenciária.

Though the burden of oversight is on the firms themselves, employees benefiting from indirect salary using corporate credit cards will also be targeted by the tax man. In an interview with this newspaper, assistant secretary de Souza Cardoso said that private individuals will be obliged to pay the taxes, fines and accumulated interst on this income. That is, the income tax and social security contribution.

Na maioria dos casos, os beneficiados são altos executivos ou funcionários mais graduados. “Não queremos acabar com o cartão corporativo. Agora, aquelas situações que caracterizam perfeitamente um benefício, um salário indireto, isso a pessoa tem de receber e declarar como se fosse um salário”, disse. “E aí temos de cobrar Imposto de Renda e contribuição previdenciária, que incidem sobre esses valores.”

In most cases, those benefited are senior executives or higher-ranking employees. “We do not want to put an end to the corporate credit card. But in those situations that are clearly a benefit, an indirect salary, this the person has to receive and declare as if it were a salary,” he said. “And so we have to collect income tax and the social security contribution on those amounts.

Os contribuintes que se anteciparem e apresentarem declaração retificadora de IR, com os rendimentos omitidos, pagam multas menores. Se esperar a autuação da Receita, a multa pode chegar a 225%.

Taxpayers who voluntarily file an amended return, reflecting the income omitted, will receive lighter fines. If they wait to be audited and cited, the fine could go as high as 225%.

Já a empresa será multada, pois deveria ter feito a retenção dos tributos.

The firm, meanwhile, will be fined, for having failed to withhold the taxes as required.

Cardoso informou que há casos de multinacionais envolvidas nesse tipo de irregularidade. “Algumas, inclusive, não têm sede no Brasil, ou seja, o faturamento está lá fora. Mas há funcionários aqui, e parte do salário dessas pessoas é paga com esses cartões”, afirma.Para chegar às empresas com irregularidades, a Receita usa as informações encaminhadas pelas operadoras de cartão de crédito ao fisco. A lei complementar 105, de 2001, abriu a possibilidade de a Receita ter acesso a essas informações, além de outros dados bancários dos contribuintes.

Cardoso said there are cases of multinationals involved in this type of irregularity.”

When in Brazil, do as the Brazilians do.

“Some are not even headquartered in Brazil, that is to say, their revenues are earned abroad. But they have employees here, and part of the salaries of those employees is paid with corporate cards,” he says. To uncover the firms at which irregularities are being practiced, the tax man used information provided by credit card companies. Supplementary Law No. 101, of 2001, made it possible for the Receita to access this information, as well as other banking data on taxpayers.

Ouch. Can’t blame President Squid for that one, though. Or can you? Someone will try.

As declarações fornecidas pelas operadoras de cartão de crédito são cruzadas com os dados de contabilidade das empresas. De acordo com a Receita Federal, não é comum que empresas paguem despesas correntes e operacionais com cartões de crédito. “Na análise da contabilidade das empresas, é possível identificar a irregularidade porque os gastos desses cartões são registrados lá”, afirma Cardoso.

The declarations furnished by credit card operators are compared with corporate accounting records. According to the RF, it is not common to see firms paying current and operating expenses with credit cards. “In analyzing accounting records, it is possibile to detect the irregularity because spending on those cars are reflected there,” Cardoso. said.

O rastreamento dos beneficiados é simples porque todos os cartões têm a identificação do usuário, não podendo ser usado por terceiros, detalha o fisco. “A empresa dá o cartão para fulano. Então só fulano pode usar, e, na nossa percepção, esses benefícios caracterizam remuneração indireta”, conclui o secretário-adjunto.

“Tracing the beneficiaries is simple, because all the cards carry the name of their user, and cannot be used by third-parties,” the [alpha beanconter] relates. “The company issues the card to Joe Schmoe, so only Joe can use it. In our view, these benefits count as indirect remuneration,” he concluded.

Well, surely some are legitimate business expenses and some are not, right?

Paying your kid’s college tuition: Not.

Buying a new electrical pencil sharpener for your desk at work — “That’s it right there, officer! [demonstrates, with whizzing sound effects]” –: Legit.

In political terms, the dispute boils down to something like:

“We will stop using doleiros to send money to Zurich and the Caymans illegally when you reduce this ridiculous tax burden!”

“We would like to take your word for that, but we cannot, practically speaking, reduce this ridiculous tax burden until you stop sending money to the Caymans illegally. Which is why my friend here is handcuffing you and reading you your rights.”

There’s a certain chicken-egg circularity to the argument that makes it confusing, but there also seems to be politicial will to take the most direct approach to untying the Gordian Knot.


White-collar perp walks: “The people like it that way.” The Caros Amigos cover story seems more and more like an astute piece of political analysis.

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