Brazil’s Administrative Council of Tax Appeals (CARF) recently issued a relevant decision for the foreign trade sector and companies operating in Brazil. The administrative tribunal dismissed the claim of interlocutory statute of limitations in a proceeding addressing fraudulent interposition.
In the ruling, the Council upheld the forfeiture penalty fine against Microsoft do Brasil. Tax authorities identified the company as the actual purchaser of the imported goods, which formed the basis for the tax assessment and the penalty imposed by fiscal authorities.
What is fraudulent interposition?
In foreign trade, fraudulent interposition occurs when an import transaction is conducted through third parties to conceal the identity of the true purchaser of the products. Brazilian regulations require the actual purchaser of the goods to be clearly identified in customs declarations.
When tax authorities determine that the importing entity on paper is not the true recipient and financier of the operation, the concealment of the actual purchaser is established. This practice is strictly audited by Brazilian customs authorities.
The forfeiture penalty fine
The penalty for concealing the actual purchaser is forfeiture (pena de perdimento), which consists of the loss of the imported goods to the State. However, when the goods cannot be seized or have already been distributed, this penalty is converted into a fine equal to the value of the goods. This was the penalty upheld by CARF in the case analyzed.
Dismissal of the interlocutory statute of limitations
Another central point of the decision was the rejection of the interlocutory statute of limitations (prescrição intercorrente). This legal concept refers to the loss of the State’s right to penalize or collect an amount due to unjustified administrative inactivity over a prolonged period.
By dismissing this argument, CARF validated the continuation of the administrative proceeding and the resulting maintenance of the fine, indicating that the processing of the case did not justify canceling the assessment due to the lapse of time.
Attention to import operations
The decision illustrates the importance of structuring import operations with full transparency. Foreign investors and multinational companies operating in Brazil must ensure that import processes accurately reflect the economic reality of the transaction, correctly identifying all parties involved before customs authorities to avoid significant tax liabilities.
This content is for informational purposes only and does not constitute legal advice. For guidance on specific matters, consult a qualified lawyer.
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