With a 30 percent drop in the amount of taxes assessed in 2008 compared with 2007, Brazil’s Federal Revenue Department (FRD) on February 19 said it will sharpen its focus on large taxpayers and will increase auditing of companies within the same corporate group.
In aggregate, the amount of taxes assessed against corporate and individual taxpayers in 2008 totaled BRL 75.65 billion, far below the 2007 figure of BRL 108.04 billion. Last year was the first time since 2005 that assessed taxes for the year did not exceed the amount assessed in the preceding year.
Henrique Freitas, FRD subsecretary of audit, attributed much of the decrease to a strike by tax agents in the first half of 2008, which he says reduced tax audits during that period.
Taxes assessed on individual taxpayers in 13,869 tax proceedings totaled BRL 4.48 billion, less than 6 percent of the amount assessed in 2007. The largest numbers of individual tax assessments involved education professionals (20 percent), company owners and officers (19 percent), and public servants (14 percent).
As for corporate taxpayers, Freitas said a clear example of the FRD’s new focus on large taxpayers is the publication of Ordinance 2,521/2008 of December 31, 2008, which established criteria for the tax monitoring of large taxpayers in 2009. By auditing companies within the same corporate group, the FRD will be better able to cross-check intercompany transactions created to reduce the groups’ average tax rate, he added.
At the end of 2008 the FRD had 14,978 tax audits in progress — 9,885 against corporate taxpayers and 5,093 against individuals.
David Roberto R. Soares da Silva
Originally published in the February 27 edition of World Tax Daily (Copyrights Tax Analysts)