In view of the political and economic context that has been developing in Brazil in the last years, with several corruption scandals, society is increasingly pressuring to strengthen the fight against corruption with evermore less tolerance of conduct deviations.
Whereas before attention was focused only on the corrupt governmental official, now, pursuant to the introduction of the Anticorruption Act, the international market's appeal – as well as the Brazilian society's (public manifestations and outcries in 2013 and 2015, concerning the role of companies involved in corruption practices) – have been answered.
Consequently, Law 12.846/2013 (regulated by Decree 8.420/2015) was enacted, addressing the administrative and civil liability of the Brazilian and foreign company for acts committed against the Administration.
The new Brazilian anti-corruption legislation, aligned with the commitments that the Brazilian government undertook in adhering to the OECD Convention, establishes the direct responsibility of the company for corruption practices committed by its employees or agents (in addition to other harmful conducts, emphasizing fraud of public bids).
The violating company is subject to substantial penalties that may reach fines of up to 20% of the company's gross sales in the year preceding the illegal conduct, as well as ranging from 6 thousand to 60 million Reais.
Irrespective of the new legislation, many Brazilian companies, internationally engaged, and many incorporated in Brazil that comprise multinational companies, were already subject to the strict regulations that have an extraterritorial reach, such as the FCPA and the UK Bribery Act.
In this scenario where the fight against corruption become stricter and the possible consequences for the violation reach very high levels, the implementation of the Integrity Plan is an almost inevitable necessity.
Although it is not compulsory, the adoption of an effective Integrity Plan allows, firstly, to sharply mitigate the risk of illegal conducts.
On the other hand, if any violation of the anti-corruption law is committed, notwithstanding the prevention efforts that were adopted, the effective Integrity Plan increases the chances that (i) the company itself detects it and may swiftly act to investigate and correct it; (ii) the company elects to cooperate with the relevant authorities as a measure to mitigate penalization; and (iiii) the fact that the company, by adopting an effective Integrity Plan, can show that it proceeded diligently and in good faith, is important to mitigate the penalty of even exempt it from penalization.
The companies that prove to have proceeded diligently to prevent violations shall receive a treatment different from those that acted in bad faith or negligently in regard to the conduct of their employees or agents to secure a business opportunity or other commercial advantages.
In addition to encouraging socially desirable conduct, the different treatment afforded to companies that invest in prevention measures and measures that promote corporate integrity will serve to mitigate competition disadvantages and decrease market distortions that benefit those that did nothing to prevent illegal conducts.
By rule, the implementation of an effective Integrity Plan must cover five main points: (i) management support and leadership; (ii) risk mapping and analysis; (iii) policies, controls and procedures; (iv) communication and training; and (v) monitoring, audit and corrective action.
The General Accounting Department of the Federal Government (CGU) also published, in May, Ordinance 909 stipulating the evaluation criteria of the Integrity Plans, standing out: on one hand, the profile report and, on the other, the conformity report.
The first must indicate which market segments the company evaluated is engaged, its organizational structure and its relations with the Administration, whether it is a Brazilian or foreign company.
In the conformity report the company must demonstrate whether its Integrity Plan was effectively implemented by presenting solid proof, being essential the management's participation in the plan.
According to Article 42 of Decree 8,420/2015, the authority in charge of the investigation must focus on the number of periodical training, on the transparency of certain acts that are considered "sensitive zones", among others, donations to political parties, gifts given and received, entertaining, payment of commissions, licenses and authorizations, grant and receipt of sponsorship, etc.
Furthermore, the CGU provides, via internet, the Pro-Ethics Registration through which the interested companies that have already implemented an Integrity Plan may annually candidate themselves for an evaluation and, if approved, will receive a "Pro-Ethics" label, having as main benefits: (i) the public recognition of the commitment with the prevention and fight against corruption; (ii) positive publicity for the company; (iii) evaluation of the integrity plan, with a detailed analysis of the measures that were adopted.
It should be pointed out that, in 2015, the deadline to enlist in the Pro-Ethics Registration expires on July 31st.
Challenging the tax base of the ICMS due over electric power consumption
In 2009 the Superior Court of Appeals (STJ) consolidated the understanding in the sense that the ICMS over the electric power that is offered, but not effectively consumed, is unacceptable, through the STJ's Binding Precedent 391: The ICMS tax applies over the value of the electric power tariff corresponding to the demand of power effectively consumed.
This understanding derives from the dispute raised by the ICMS taxpayers that consume a high level of electric power and usually contract a fixed reserve of power, i.e. the so-called contracted demand.
The contracted demand consists in a quantity of power offered to the contracting company by the electric power concessionaire company and it is paid regardless of whether consumed or not.
The ICMS tax applies over the amount paid as contracted demand. However, some companies challenged this billing on the grounds that the plain offering of the power to the consumer does not characterize the tax triggering event of the ICMS tax. The result of the discussion of the matter before the STJ was favorable to the taxpayer. At the Supreme Court (STF) level, the general repercussion of the Appeal RE 593.824 case, which involves the matter, was recognized.
Ruled the matter concerning the contracted demand, there is also the possibility of challenging the applying of the ICMS over the Transmission and Distribution of electric power surcharge – "TUST' and "TUSD".
According to Article 1, Paragraph 2 of Law 10,848/2004, Article 10 of Law 9,648/98 and Article 16 of Law 9,074/95, consumers attended in any tension where the load is equal or above 3,000 kW may freely negotiate the purchase and sale of electric power with generators, sellers and importers of electric power.
Such demand is contracted by executing a Use of the Transmission System Agreement ("CUST") or Use of the Distribution System Agreement (CUSD), and several States find that ICMS is due over the remuneration stipulated in such agreements (TUST and TUSD).
According to Resolution ANEEL 456/2000, the TUST and the TUSD "pursue solely from the installation and maintenance of the connection equipment, not from the effective consumption of electric power". Therefore, the aforesaid surcharge cannot comprise the ICMS tax base. While the TUST and the TUSD are calculated proportionally to the connection, transmission and distribution of power expenses, the ICMS applies over the effective consumption, which is found through the outflow of the merchandise and subsequent inflow and consumption at the contracting party's facility.
The STJ has already specifically addressed the matter in Appeal EDcl lodged in Appeal AgRg in REsp 1.359.399):
CIVIL PROCEDURAL AND TAX LAW MATTER – ICMS – CONCESSIONAIRE OF ELECTRIC POWER COMPANY – NO STANDING – PRECEDENTS – END CONSUMER – LEGAL RIGHT TO STAND AS PLAINTIFF – SPECIAL BINDING EFFECT OF THE RULING OF RESP 1.299.303/SC – TRANSMISSION AND DISTRIBUTION OF ELECTRIC POWER (TUST AND TUSD) – APPLYING OF BINDING PRECEDENT 166/STJ - PRECEDENTS
1. This case involves the discussion of the possibility of the ICMS taxpayer to pay ICMS over the sums charged for the transmission and distribution of electric power, designated in the State of Minas Gerais as TUST (Fee for the Use of the Electric Power Transmission System) and TUSD (Fee for the Use of the Electric Power Distribution System).
2. The STJ has consolidated its understanding under the appeals (REsp 1.299.303-SC, published in the DJe of 8/14/2012) that the end consumer of electric power has the right to stand as plaintiff to file a declaration claim coupled with a repayment of the undue debt that aims at repealing the applying of ICMS over the contracted demand not used of electric power.
3. The precedents of the STJ have consolidated the understanding that, in the suits involving the charge of ICMS, it is the State that must stand as defendant and not the electric power concessionaire company. Existence of precedents.
4. Binding Precedent 166/STJ recognizes that "the plain dislocation of merchandise from one to another facility of the same taxpayer is not an ICMS tax triggering event". Therefore, evidently the TUST (Fee for the Use of the Electric Power Transmission System) and the TUSD (Fee of the Use of the Electric Power Distribution System) do not comprise the ICMS tax base. Existence of precedents. The Appeal for Clarification (EDcl) is hereby partially granted, without generating reconsideration effects, solely to recognize the end consumer's legal right to stand as plaintiff.
Accordingly, based on the analysis of the regulations, as well as the STJ's positions, the taxpayer that uses a substantial demand of electric power may challenge in court the applying of the ICMS tax over the contracted demand, as well as the computation of the TUST and of the TUSD in the ICMS tax base.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.