The proposed legislation establishes a Taxpayer Defence Code, sets out taxpayer rights and duties, promotes cooperative compliance through programmes such as Confia and Sintonia, and imposes strict penalties on habitual tax defaulters.
Brazil’s Chamber of Deputies has approved Complementary Bill 125/2022, which creates the Taxpayer Defence Code. This framework sets out the general rights, guarantees, and responsibilities of taxpayers, as well as the procedures governing their interactions with the tax administration.
The latest legislative proposal outlines a fundamental restructuring of the relationship between the federal government and taxpayers, introducing codified rights, robust compliance incentive programmes, and severe measures to curb persistent tax evasion.
This overhaul, rooted in the establishment of a Taxpayers Defence Code, emphasises cooperation while setting clear parameters for classifying and penalising those deemed habitually non-compliant.
Taxpayer Defence Code
A central aspect of this reform is the formal establishment of rules governing the legal relationship between taxpayers (or responsible parties) and the tax administration at all levels of government—federal, state, district, and municipal. The Tax Administration is required to promote security and good faith, minimise litigation, and observe essential formalities to protect taxpayer rights. Its key responsibilities include presuming the taxpayer’s good faith, justifying all actions with supporting facts and legal basis, and ensuring ample defence and due process.
The administration must also facilitate compliance by providing clear, understandable communications and guiding taxpayers to correct any inconsistencies, preferably through automated processes.
In return, taxpayers are expected to act in good faith, with diligence and cooperation, provide requested information, and comply with administrative and judicial decisions.
Taxpayers also have the right to receive clear explanations of tax laws, access their own information held by the administration, and obtain copies of administrative documents.
Compliance programmes
The proposal establishes three major conformity programmes under the Special Secretariat of the Federal Revenue of Brazil (RFB) to reward and stimulate adherence:
The Confia programme (Cooperative Fiscal Compliance)
Confia is a voluntary programme for companies with strong tax governance, offering benefits such as personalised support, faster issuance of tax certificates, and preferential handling of refunds. Corporate taxpayers with the Confia Seal can receive a Fiscal Adherence Bonus, providing a discount of up to 3% on CSLL payments, subject to annual caps.
Corporate taxpayers with the Confia Seal can receive a Fiscal Adherence Bonus of 1% on CSLL payments, increasing by 1% each year up to 3%, with annual caps starting at BRL 250,000 in the first year and reaching BRL 1,000,000 from the third year.
2. The Sintonia programme (Stimulus to Tax Compliance)
Sintonia classifies contributors based on criteria such as cadastral regularity, timely tax payments, and the accuracy of declared information. Those achieving higher classifications are prioritised in the analysis of tax restitution and reimbursement requests and receive preferred access to RFB services and events.
Under Sintonia, compliant taxpayers with temporary payment difficulties can self-regularise debts, receiving up to a 70% reduction in fines and interest. They may use tax loss credits and negative CSLL bases to offset up to 30% of the remaining debt.
3. OEA Programme: Customs and Excise Benefits
The Brazilian Authorised Economic Operator (AEO) Programme promotes voluntary compliance with customs rules and strengthens supply chain security. Certified participants benefit from:
- Reduced customs inspections.
- Faster release of imported goods.
- Deferred payment of import-related taxes, including Import Tax (II), Industrialised Products Tax (IPI), PIS/Pasep-Importation, Cofins-Importation, Cide-Combustíveis, and the Siscomex fee.
Deferred taxes can be paid by the 20th of the month following the import declaration.
Habitual Tax Defaulter
To deter deliberate evasion, the legislation meticulously defines the characteristics of the Habitual Tax Defaulter as a taxpayer whose fiscal behaviour is marked by substantial, repeated, and unjustified tax delinquency.
For federal purposes, a debt is considered substantial if it amounts to BRL 15,000,000 or more in irregular tax credits and is equivalent to more than 100% of the debtor’s known equity. The debt is considered repeated if tax credits remain irregular for at least four consecutive or six alternate assessment periods within 12 months.
Being classified as a Habitual Tax Defaulter carries severe and cumulative consequences:
- Loss of tax benefits: They are ineligible for any fiscal incentives, including remission, amnesty, or the use of tax loss credits to settle debts.
- Restrictions on public contracts: They cannot participate in public tenders (licitações) or formalise agreements with the public administration, such as obtaining licenses or concessions.
- Judicial consequences: The public treasury may request that a judicial reorganisation proceeding be converted into bankruptcy.
- Exclusion from compliance programmes: Habitual Debtors are automatically ineligible for the OEA programme and do not receive the protections offered by the Confia programme.
