Tax Break

Who said tax is boring?

Brazil gone nuts

Getting through the in-tray

Getting through the in-tray

The Circumlocution Office in ‘Little Dorrit’, where everything became bogged down in bureaucracy,  represented Dickens’s visceral satire on Government. A century and a half later, it might be time for novelist José Sarney to pick up, in his own country Brazil, where Dickens left off.

Brazil is a bureaucratic blast, nowhere more so than in the field of taxation. Over thirty types of taxes mean that 2,600 man-hours are wasted on compliance each year by an average medium-sized company, as opposed to 334 in Mexico, another country in the Lost Continent south of the Rio Grande.

Sarney is particularly qualified to write the book as his 9 to 5 job used to be President of Brazil. The Foreword might be penned by one of his successors, Fernando Henrique Cardoso, who was responsible for the plethora of taxes but, in a lecture I attended in Sao Paolo some years ago, made clear that he thought it was time for almost all of them to go.

When all else fails - its time to Carnival!

When all else fails – its time to Carnival!

Meanwhile, it was announced last week, that successive governments had been cheated of around $2 billion in tax revenue over the last decade. And, thereby, hangs a cautionary tale.

The Finance Ministry has a department that hears appeals by taxpayers who feel they have been given a rum deal by the tax authorities. As a tax advisor, this sounds to me like good bureaucracy. The problem is we are talking Brazil.

It turned out that half the  ‘arbitrators’ were drawn from government and half from industry. In many instances, by paying between 1% and 10% of the foregone revenue to a non-tax-specialist law firm for ‘consultancy’ services, it is alleged the disputed amounts were miraculously decided in favour of the taxpayers. Somewhere in the labyrinth of  Brazilian law, that is probably called ‘bribery’; ‘corruption’ and ‘fraud’ also come to mind.

Brazil 2014

Brazil 2014

So, another bunch of suspects gets lined up alongside those already facing prosecution in the State-run Petrobras Oil scandal. It would be nice to say that, at least, the fifth largest country in the world could be proud of its football – what with a record five World Cups to its name. But, after their drubbing by Germany last year, they have grown remarkably quiet on that front.

Time for a President Pelé?

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