On March 2, 2017, the Brazilian Internal Revenue Service ("Internal Revenue Service") announced its tax audit program for calendar year 2017 as well as the program's results for calendar year 2016.
New for this calendar year, the tax audit program will include the following:
- An audit for tax evasion related to the exemption of paper: The Internal Revenue Service will audit the destination of exempted paper to verify that it has not been redirected for purposes others than the exemptions pursuant to the Federal Constitution.
- An audit of any set-out of operations related to the payment of social security contributions: In addition to tax evasion related to the improper choice for the simplified taxation system (the "Simples Nacional"), which was provided in the previous tax audit program, the Internal Revenue Service intends to audit: (i) retirements related to environmental risks without the corresponding payment of the contribution to RAT by the employers; (ii) legal entities that sell rural products; (iii) cases of nonpayment of social security contribution levied on gross revenue ("CPRB") by legal entities that benefit from the nonlevy of social security contribution on the payroll; (iv) offset of social security contribution debts with nonexistent tax credits; and (v) improper utilization of the grade of labor inability derived from the work environment's risks ("GILRAT") rate in the contribution return ("GFIP").
- An automatic assessment of divergences between the WHT return ("DIRF") and payment voucher ("DARF"): There will be an automatic assessment of existing divergences of Withholding Income Tax (WHT) disclosed in DIRF and paid through DARF.
The following proceedings from the tax audit program for 2016 remain in the program for 2017:
- Tax planning related to the corporate restructurings with goodwill and equity investments funds and professional image rights
- Taxation levied on incomes derived from foreign-controlled and affiliated companies
- Tax evasion regarding the exempt distribution of profits
- Tax evasion on the cigarette and beverage industries
- Nonpayment of income tax by an independent professional on a monthly basis (the "carnê-leão")
- Nontaxation of revenues based on divergences between gross revenues and electronic invoices
- Nontaxation of revenues based on evidence of inconsistent financial operations
It should be noted that the tax audit program makes reference to the extension of agreements for the exchange of tax information between countries, including the Decree No. 8,842/2016, and to the Internal Revenue Service's intention to identify the amounts not disclosed and not included in the Special Regime for Monetary and Tax Regulation ("RERCT").
Finally, the Internal Revenue Service intends to conclude ongoing audit proceedings related to the Lava Jato, Ararath and Zelotes special audit operations.
Visit us at Tauil & Chequer
Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."
© Copyright 2017. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.
This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.