sestdiena, 2022. gada 12. februāris

Tax Stories E23 - Ana Utumi on USD 6bn tax fraud in Brasil

 

Ana ClaudiaAkie Utumi is a PhD in Tax Law, MBA in Finance. She teaches at MBA courses for 20 years. Ana has an intense academic activity with lectures, seminars, conferences. Ana was a member of the IFA Permanent Scientific Committee for 8 years. She has about 30 years’ experience in tax consulting and litigation, 17 of which as tax head of one of the largest Brazilian full-service law firms. Now she is a name partner of law firm Utumi Avogados, located in Sao Paulo, Brasil. The Firm was awarded as the Best Newcomer in the Americas by ITR in 2020. Ana is highly regarded by ITR’s World Tax rankings and Legal500 places her among the Leading individuals in Brasil.

Brasil and leisure

We started our chat with the travel destinations in Brasil, and especially one of my favourites – Porto Seguro. Ana said that after 2 Caipirinha[1] cocktails anyone can speak Portuguese. Although thinking of Brasil samba may be the first music style that comes in mind, the fact is that Bosa Nova is much more popular worldwide. Brasil remains in a strong position as one of the world leaders in exporting agriculture production and the products of an extraction industry. Ana also explained how gardening is her meditation. If you at any time are wondering what flowers Ana likes – here is the answer – orchids.  

Moving to Ana’s owe firm

After 17 years if a large law firm she decided to establish her own. One of the reasons was – too much administrative work as a partner of a large law firm and coordination of others, rather than a professional development. After the move Ana thought she would not have work on transactions anymore, as those normally go to larger firms, but she was invited as a counsel on the most interesting part of it – structuring.

Taxes as a passion

Ana explained that it means to be much more than being just a tax professional. One must understand the implications and the business itself. Ana tries to differentiate its firm with a secure, conservative advice, not the one to please the client. Ana also kindly explained her line of thinking behind using different social media for business purposes.  

How Operation Zealotis caused the tax dispute system reform

Around USD 6bn was defrauded over 15 years! Anna gave more details on the public info of that story. Tax disputes after the audit investigation go to a tax court that is established with the Ministry of Economics, of which 50% are elected by the authorities, and the other 50% - by taxpayers. If a taxpayer wins the tax court, the dispute ends there. If the taxpayer loses that stage, it is possible to appeal to the administrative court. Administrative court then suspends the tax assessment. Out of 200 administrative court judges there were about 10 who were bribed influence the other judges to vote in favour of certain companies. Following the scandal there was a serious reform of tax dispute resolution system.

Pillar 1 & 2 predictions

The plan is that the digital economy pays tax on profits (25% of the residual part of it, over 10% margin) in the country of consumption. However, the digital economy businesses often work with small or no margin, but their market value and share grows enormously. So, they rather need to be taxed on capital gains. They also measure value creation by a number of users or otherwise, not necessarily by a volume of profits. May of the unicorns, for example, never see accounting profits in their financial statements. So, most of the countries may never get anything material out of this. Finally, not necessarily all the countries may agree to the OECD proposed global minimum 15% CIT model as well, even if they have agreed to the principle itself.


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