Originally published in the June 24 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s Federal Revenue Department (FRD) on June 23 launched a massive tax audit operation to fight social security tax evasion.
The tax audits take place under the Tax Action National Strategy (Estratégia Nacional de Autuação Fiscal, or ENAF) for 2008, announced on June 20 by FRD Subcommissioner Paulo Ricardo de Souza Cardoso and Tax Audit General Coordinator Marcelo Fisch. (For related coverage, see Doc 2008-5509 [PDF] or 2008 WTD 51-4 .)
As of this week, tax auditors will review and audit the social security taxes of 1,700 corporate taxpayers suspected of tax evasion. This is the first stage of ENAF, which will investigate 6,455 corporate taxpayers suspected of social security tax evasion or fraud. According to the FRD, cross-checking of information revealed inconsistencies and errors in social security tax payments of approximately BRL 15 billion (approximately $9.3 billion). This cross-checking was first made possible in 2007 by the merger of the Social Security Revenue Department with the FRD.
The cross-checking included electronic review of a series of tax returns filed by corporate taxpayers, such as the Social Security & FGTS1 Information and Payment Form (Guia de Recolhimento do FGTS e Informações à Previdência Social, or GFIP), the Withholding Tax Information Return (Declaração do Imposto de Renda Retido na Fonte, or DIRF), and the Corporate Income Tax Return (Declaração de Informações Econômico-Fiscais da Pessoa Jurídica, or DIPJ).
Taxpayers wishing to avoid tax assessments have one last chance to correct any errors. They may voluntarily pay unpaid social security taxes with interest and delay penalties until they receive a tax audit notice. After the notice is received, no voluntary payment is possible and the taxpayer may be subject to assessed penalties and criminal charges (if tax fraud is confirmed) in addition to payment of the relevant taxes and interest.
- FOOTNOTE
1 FGTS is an 8 percent Severance Payment Fund due from corporate employers and deposited in a special bank account in the name of each individual working under an employment contract.
- END OF FOOTNOTE
David Roberto R. Soares da Silva