Originally published in the October 18 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s federal police on October 16 conducted a major police raid against many Brazilian individuals and companies connected with computer giant Cisco Systems in Brazil for an alleged multimillion-dollar tax and customs fraud.
The police raid, named Persona Operation, comprised hundreds of federal police agents, tax agents, and members of the Federal Attorney General Office. The authorities arrested 44 people in six cities in four different states, including some current and former employees and executives of Cisco Systems in Brazil and Cisco’s distributors, and four tax agents. Brazilian authorities have asked U.S. authorities to assist in searching and arresting five Brazilian individuals living in the United States.
According to Brazil’s Federal Revenue Department, the tax fraud scheme was created by Brazilian businessmen to benefit Cisco on imports of high-tech network equipment and services. Using offshore companies in the British Virgin Islands, the Cayman Islands, and Panama, the scheme altered sales prices of Cisco products and services imported into Brazil, worth approximately $500 million, leading to millions in unpaid taxes. The average volume of imports was 50 tons per month, and assessments may reach BRL 1.5 billion (approximately $830 million) in unpaid taxes, penalties, and interest.
During the raid, the authorities seized a commercial jet, $10 million in merchandise, vehicles, and the equivalent of approximately $433,000 in U.S. and Brazilian cash. Cisco has announced that its offices in São Paulo and Rio de Janeiro were shut down during the police raid.
Cisco also stated that it is fully cooperating with the authorities and that so far, no formal charges have been made against any of the company’s employees or executives.
David Roberto R. Soares da Silva