BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior and Bruno Marques Feitosa, William Freire - Advogados Associados
6.2 Criminal Penalties Tax fraud and tax evasion are criminal offences under Brazilian law, primarily regulated by Law No 8,137/1990, which governs crimes against the tax system. Criminal liability arises where there is inten - tional conduct ( dolo ) aimed at suppressing or reduc - ing tax through fraud, concealment, falsification of documents or omission of information. Main Criminal Offences The most common offences include: • suppressing or reducing tax by omitting informa - tion or providing false statements to tax authorities; • inserting false elements in invoices or accounting records; • falsifying or altering tax documents; and • using fraudulent schemes to conceal taxable events. Failure to collect or remit tax withheld from third par - ties may also constitute a criminal offence, depending on the circumstances. Penalties The standard penalty for tax fraud or evasion is: • imprisonment from two to five years, and • a criminal fine. If the offence involves social security contributions, similar penalties apply under specific provisions. Additional crimes, such as money laundering, criminal conspiracy or document forgery, may lead to cumula - tive penalties. 6.3 Interaction Between Tax and Criminal Procedures Brazil requires a mandatory referral mechanism – the Tax Report for Criminal Purposes ( Representação Fiscal para Fins Penais ). Under Article 83 of Law No 9,430/1996, tax auditors must report evidence of fraud or tax evasion to the Public Prosecutor’s Office once a final administrative decision is rendered. Co- ordination is governed by binding jurisprudence of the STF (Binding Precedent No 24).
Criminal prosecution for material tax offences may only commence after administrative proceedings are exhausted, and the tax debt is definitively confirmed. Once the tax liability is final and remains unpaid, the tax authority transmits the evidentiary file to the public prosecutor, who has exclusive competence to institute criminal proceedings. A pivotal feature of this interac - tion is the extinction of criminal liability by payment: if the taxpayer settles the confirmed debt in full at any time, the criminal case is dismissed. This framework prioritises administrative recovery of revenue while reserving criminal prosecution as a last resort. 7. Administrative Co-Operation 7.1 Legal Framework for Administrative Co- Operation Administrative co-operation in tax matters in Brazil is primarily based on multilateral conventions, bilateral treaties and domestic legislation that authorises the exchange of information and mutual assistance. At the multilateral level, Brazil is a party to the OECD/ Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which pro - vides the legal basis for exchange of information on request, spontaneous exchange, automatic exchange of information and assistance in tax collection. Brazil also participates in the CRS framework for the auto - matic exchange of financial account information and has committed to the country-by-country reporting minimum standard under the OECD/G20 BEPS Pro - ject. At the bilateral level, Brazil’s double taxation treaties generally contain provisions based on Article 26 of the OECD Model Convention, allowing for exchange of information between competent authorities. In addi - tion, Brazil has entered into specific tax information exchange agreements (TIEAs) with certain jurisdic - tions. Domestically, the exchange of information is imple - mented through legislation and regulations issued by the RFB, which acts as the competent authority. Brazilian law authorises the tax administration to col - lect, process and share tax information in accordance
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