Brazil Sets Bonus for Tax Agents Based on Results

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By Ed Taylor

A Brazilian tax decree setting a new incentive for tax agents has put company attorneys on alert.

On Dec. 30, the government issued Provisional Measure 765, which creates a bonus for federal revenue department auditors based on their productivity. Auditors who meet department targets for tax assessments, tax collections and the seizure of assets will qualify for the bonus, the exact size of which won’t be determined until March, when the department sets its planning strategy for the year.

Attorneys, however, responded to the new bonus by warning that it gives tax agents an incentive to fine companies, which could lead to an increase in assessments.

“It is extremely provocative to allow a fiscal authority to participate in any manner in the results of the revenue department,” said attorney Leonardo Aguirra de Andrade of the law firm Andrade Maia Advogados.

Andrade added in a Jan. 4 e-mail to Bloomberg BNA that the bonus could increase tax assessments for companies, resulting in an equal increase in court cases and subsequent expenses.

This view was contested by Claudio Damasceno, president of the national association of revenue department auditors. In a statement released Jan. 3, Damasceno said that there’s no possibility the bonus would lead tax auditors to issue assessments without a legal basis.

According to Damasceno, tax agents follow the department’s regulations, and any assessment that doesn’t meet those regulations would be rejected. The bonus, he said, will only be paid if the assessment is collected.

“Eventual assessments based on arguments considered inadequate or unfounded would be questioned by the competent organs and would not be paid, which is the condition for receipt of the bonus,” the statement read.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at

To contact the editor responsible for this story: Penny Sukhraj at

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