Originally published in the May 8 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s House of Representatives will review a law project that would reduce from five years to two years the statute of limitations on the assessment of unpaid taxes.
Law Project (PLP) 129/2007 was presented on October 31, 2007, by lawmaker Guilherme Campos. It would revise article 150, paragraph 4 and article 173 of the National Tax Code.
Article 150 deals with the statute of limitations for tax authorities to review any tax payment arising from tax returns filed by individual and corporate taxpayers. If no formal review transpires, the tax return and corresponding tax payments are deemed definite and no longer subject to questioning or adjustment. The exception applies to cases in which wrongful misconduct or fraud is proven.
Article 173 is a general rule for tax-related statutes of limitation, especially for when article 150, paragraph 4 does not apply.
The two provisions apply to all federal, state, and municipal taxes.
According to Campos, the current five-year statute of limitations term has been in place for over 40 years. Such a long term was considered reasonable and justifiable at the time of its creation, when tools like electronic filing, cross-checking of taxpayers’ financial information, and online tax payment confirmation weren’t available.
Today, tax authorities have the most advanced methods and instruments to detect almost immediately unpaid tax liabilities. Hence, such a long statute of limitations is no longer reasonable. With the speed of modern life, taxpayers can no longer wait for five years to be sure no further taxes will be assessed in connection with their businesses. Based on this reasoning, Campos has proposed to reduce the five-year statute of limitations to two years.
PLP 129 will be reviewed by the House commissions of Finance and Taxation and of Constitution and Justice. Thereafter, it must be approved by the full House of Representatives before being submitted to the Senate for review and vote.
David Roberto R. Soares da Silva