Originally published in the May 25 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s new Federal Revenue Department, which resulted from the merger of the Social Security Revenue Service with the Federal Revenue Department, became operational on May 2, as provided by Law 11,457/2007 of March 19. However, the creation of the new “super” tax department has brought bad news to nearly 5,000 employees of both former revenue services.
On May 2 a 61-page document discharging 4,990 revenue employees — 3,512 from the former Federal Revenue Department and 1,478 from the Social Security Revenue Service — was published in Brazil’s official gazette. The employees were civil servants who had been politically appointed as the heads of various departments and sections of the revenue services.
The affected employees now will return to their original public service positions, mostly as tax auditors or assistant tax agents and many with reduced compensation. A few of the appointees have been retained in management positions in the new revenue service, but the executive branch has not disclosed the number.
The new Federal Revenue Department has 31,800 employees, including 12,900 tax auditors and 13,000 assistant tax agents, according to the National Union of Revenue Department Tax Auditors (UNAFISCO).
UNAFISCO and other tax agents’ unions have opposed the merger, arguing that collection and audit services will become understaffed and overloaded with work, jeopardizing tax collections. They have also expressed concern that social security collection services will be adversely affected, as the new Federal Revenue Department’s chief commissioner, Jorge Rachid, now is in charge of all federal revenue services. A lack of resources may cause an “administrative blackout” with adverse consequences to taxpayers in need of services such as the provision of tax clearance certificates, tax refunds, and so on, the workers’ unions say.
Rachid has discredited those claims and said the new Federal Revenue Department is closely monitoring its activities to prevent or quickly respond to any administrative problems.
David Roberto R. Soares da Silva