Originally published in the November 20 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s official gazette of November 11 published Ordinance (Portaria) 11,211/07, which introduces new regulations for a differentiated tax monitoring program for large taxpayers. The program will periodically review the level of payments of federal taxes and contributions, comparing those amounts with the taxpayer’s declared income and other economic factors.
The Special Coordination for Large Taxpayers Monitoring (Coordenação Especial de Acompanhamento dos Maiores Contribuintes, or COMAC), an office of the Federal Revenue Department, will select and appoint the taxpayers subject to the monitoring based on variables such as gross income, tax debts declared in tax returns, payroll declared for social security purposes, labor and social security payments, and importance of taxpayer’s tax payments as compared with Federal Revenue Department’s tax collections.
In addition to those variables, COMAC may include other taxpayers deemed relevant for the tax administration, such as state-owned companies; those operating in relevant economic sectors in terms of tax revenues; those that have carried out improper tax setoffs; those enjoying tax exemptions and tax incentives; and those that have been assessed in a tax audit for tax legislation violation. Other taxpayers may be included on request from local Federal Revenue Department offices.
The Federal Revenue Department office that has jurisdiction over the relevant taxpayer will conduct the program, using data available in the Revenue Department’s database systems. It will take into account the level of tax payments of the following taxes and contributions: corporate income tax; federal excise tax (IPI), except that levied on imports; withholding tax; financial operations tax (IOF); bank transactions tax (CPMF); social contribution on net income (CSL); COFINS (Contribution for the Financing of Social Security); P.I.S. (Program for Social Integration contribution); fuel tax (CIDE-Fuel); the 10 percent royalty tax (CIDE); and social security taxes.
The special monitoring has been in place since 2001, but Ordinance 11,211/07 includes social security taxes, as a result of the merger of the Social Security Revenue Department into the Federal Revenue Department.
David Roberto R. Soares da Silva