This year, the Economic and Corporate Criminal Law Group at Fundação Getulio Vargas’ Sao Paulo Law School began a research project to draft a proposal for legislative reform regarding the criminal treatment of tax crimes. According to data from the Brazilian Tax Planning Institute (IBPT), Brazil had a tax nonpayment rate of approximately 17% in 2017.

This project, called Tax Evasion: A Legislative Proposal for Debate, starts from the belief that the current system for enforcing criminal penalties related to tax collection in Brazil is dysfunctional.

This is because the threat of criminal punishment is no longer capable of fulfilling its deterrent function and the tax-related criminal justice system encourages non-compliance as a business management option. This creates distortions that contribute to an uneven playing field, as is also the case with the country’s fiscal and economic policies themselves.

According to Heloísa Estellita, the project’s academic coordinator and a professor on the Professional Master’s in Law Program at the FGV Sao Paulo Law School, the current state of criminal enforcement of tax collection in Brazil also violates the principle of subsidiarity in criminal law, as it allows criminal prosecution to be used as a tool to pressure debtors into paying, particularly smaller and more vulnerable ones. 

“Those who, in the end, are ultimately convicted and possibly subjected to criminal penalties, feel like victims of the system, thus delegitimizing the use of such a serious criminal response,” she says.

The reform proposal to be presented will start with a diagnosis of the problems faced by taxpayers and their representatives, the institutions involved in tax collection and the entities responsible for criminal prosecution. The mapped issues will be subjected to interdisciplinary scientific treatment by members of the Economic and Corporate Criminal Law Group, professors and professionals. In the end, the proposal resulting from this research will be discussed with researchers, professors, stakeholders, legal experts and professionals.

Find out more about this project, Tax Evasion: A Legislative Proposal for Debate, at the FGV Sao Paulo Law School.

Find out more about the Economic and Corporate Criminal Law Group at the FGV Sao Paulo Law School.