Major technological innovations, such as those that allow the transmission of cryptocurrencies and the establishment of blockchains, have been causing deep reflections on the organization of the State and taxation. These changes were discussed at the seminar “New Rule of Law in the digital age: CIDE consignments, IRRF and royalty deductibility”, held by the Nucleus for Fiscal Studies (NEF) of FGV’s Sao Paulo Law School (FGV Direito SP) on June 20.

According to NEF Coordinator Eurico de Santi, “the new technologies are creating not only a new environment for Law, but a new Law and a new State perspective”.

For Marcos Nóbrega, professor of Administrative Law at UFPE, the new changes put teaching and practicing Law in check. “Law schools are museums of great novelties. For the most part, we’ve yet to arrive in the 20^th century. We’re still in the 19^th century. There is a tension between the demands of the 21^st century and the concepts of the 19^th. Which path will we take?” he said.

This model also extends to tax law. “How do you tax something when you don’t even know what it is? A tax lawyer is a service provider. If you don’t understand that companies are changing, how will you provide services to them?” he said. 

For lawyer Tiago Rocha, the fundamental revolution brought about by technologies such as cryptocurrencies and blockchains is to remove the middleman. Currently, there is confidence in decentralized, antagonistic parties that do not go through a mediator. “The challenge of the professional of the future is to understand and translate the changes brought about by technology into a legal language that is understood by all”, he said.

The expert explains that today we depend on the State to validate and formalize the ownership of assets and information and substantiate the sanction and enforcement of contracts. “Technology allows this interaction directly. And this possibility directly impacts the form of democracy that we will build in the future”, he said.

José Garcez Ghirardi, a professor at Direito SP, explained that the Law is a particular form of technology derived from the technological forms of producing material value. He also warned of the danger in reducing the legal technology logic to the production logics in a material way, in forgetting that the Law cannot be reduced to this logic, at the risk of losing its social function.

“The first risk is the Law turning away from the production arrays currently in place. In this case, it becomes inefficient. The second is the Law fully embracing this logic. Then it becomes useless, because as a social organization and control technology, the heart of the Law is its specific form of regulating the production modes and the rules of attribution, protection and redistribution of wealth within a collective”, he said.

“A key feature of our current rule of law is that there is a unity of decision-making centers. In the industrial structure, there is a manager that organizes production, with the help of the board and assistance from the shareholders. In the State, there is an authority that regulates the normative structure, with the centralization of power and a monopoly on violence. This authority follows a mandate, along with the political body, and also holds the monopoly on currency”.

For lawyer Luiz Roberto Peroba, the new technologies expose the shortcomings of the Brazilian legal and tax system compared to other countries.

“Considering the investor’s perspective, we can analyze these deficiencies from the point of view of the system’s complexity; from the tax burden and lack of understanding between taxpayers and the collecting agencies, which do not trust each other”, he said.

For the lawyer, instead of the Law functioning as a technology that converses with the productive sector, it operates completely disconnected from society. “And this disconnection is more aggravated with the advancement of technology, which exposes some peculiarities that don’t exist in other countries, including taxes such as Cide, PIS/Cofins and ICMS/ISS, and become only transitional costs for investments”.