By Mariana Martins and Camila Friaça
At the beginning of 2019, the Federal Revenue Service will implement a taxpayer classification system, along the lines of the program initiated by the São Paulo State Finance Department, known as “In accordance”, established by State Complementary Law No. 1,320/2018.
Under the terms of the aforementioned program, this system will have three categories, “A”, “B” and “C” based on the combination of the following criteria: registration and maintenance of a registration status compatible with the activities carried out; submission of declarations to the Federal Revenue Service and recording of transactions with integrity and truthfulness; timely submission of tax declarations and recording; and full and timely payment of taxes due. The classification in one of the aforementioned categories will be assigned annually and informed to the taxpayer by means of a communication sent to his/her electronic mailbox.
Taxpayers classified in category “A” may enjoy the following benefits: prior information on evidence of violation found in an analysis carried out by a Federal Revenue Tax Auditor before the tax procedure is initiated, which allows the taxpayer to regularize their situation without such measure resulting in the imposition of penalties; obtaining a Tax Compliance Certificate issued by the Federal Revenue attesting to their conduct as a good payer; priority in face-to-face service and in the analysis of refund and compensation requests.
On the other hand, taxpayers classified in category “C” will be subject to differentiated tax monitoring, being included in the Special Inspection Regime (REF) provided for by Normative Instruction RFB No. 979/09 and to the priority application of coercive measures provided for in Ordinance RFB No. 1265/15, such as the cancellation of current tax benefits.
It is noted that, in this regard, the Federal Revenue Service opened Public Consultation No. 4/2018, to receive, in the period from October 16, 2018 to October 31, 2018, opinions about the program to be launched and, subsequently, will publish an Ordinance with all information about the aforementioned program, indicating the taxpayers who received the Pro-Conformity classification, as well as establishing a schedule for its effective implementation.
The undersecretary of collection, registration and service of the Federal Revenue Service, João Paulo Martins da Silva, stated that the implementation of the classification system will be done gradually on the 7.5 million taxpayers mapped throughout the national territory. In February 2019, it will begin with companies under the Simples Nacional tax regime, then in March 2019 with large taxpayers and finally, in April of the same year, with other companies. Initially, the program will be based on the fiscal years of 2016, 2017 and 2018, therefore including recent fiscal years, precisely to encourage taxpayers to remain in good standing with the Federal tax authorities.
Federal Revenue issues Normative Opinion defining criteria to qualify the export of services for the purposes of interpreting federal tax legislation
By Mariana Martins and Camila Friaça
In October of this year, the Federal Revenue Service published the Normative Opinion of the General Coordination of Taxation (COSIT) No. 1, of 2018, which establishes the concept of export of services for the purposes of interpreting federal tax legislation.
Under the terms of the aforementioned Opinion, the export of services is all “transaction carried out between someone who, as a provider, acts from the domestic market, with the means available here, to meet a demand to be satisfied in another market, abroad, in favor of a recipient who acts, as such, in that other market, except for the existence of a distinct legal definition applicable to the specific case and cases in which the legislation provides otherwise.”
To recognize a transaction as an export of services, except for legal provisions to the contrary, it is necessary to demonstrate that the recipient's demand will be met abroad, based on the following criteria:
“The service provider, as such, operates from the domestic market when the provision begins in national territory through preparatory acts prior to the material performance of the service, related to planning, the identification of indispensable expertise or the mobilization of material and intellectual resources necessary for the provision.
The service recipient, as such, operates in the foreign market when the demand for the service occurs abroad and must be satisfied outside the national territory.
If the service recipient, as such, operates in the foreign market and the services they are executed on a property or on an asset incorporated into a property, the demand is considered to be met in the territory where the property is located.
If the service recipient, as such, operates in the foreign market and the services they are executed on a movable asset not incorporated into a property, once it is demonstrated that the good will only be used abroad, the demand is considered to be met in the territory or territories where the good is to be used.
If the service recipient, as such, operates in the foreign market and the services they are executed on a movable asset without a necessary connection to a specific territory or they are executed without reference to any physical asset, the demand:
a) when a relevant part of the service must necessarily be carried out in a specific location with the physical presence of the provider, is considered to be served at that location;
b) when, although the physical presence of the provider is not required, his presence is necessary indirect presence (by subcontracting) or virtual (through compulsory access to local electronic services without which its direct or indirect physical presence would be mandatory), is considered to be served where its indirect or virtual presence is indispensable; and
w) there being no element of territorial connection related to the result of the service, it is considered to be provided at the place where the recipient has his residence or domicile.”
The concrete definition of the concept of export of services by the aforementioned Normative Opinion adds greater legal security and predictability, since there is no consensus in doctrine or jurisprudence on what constitutes export of services for the purposes of interpreting federal tax legislation.
Furthermore, the national tax legislator is silent on the subject, limiting itself to providing for the incidence, non-incidence or exemption of transactions involving international trade in services, normally without offering the interpreter of the rule parameters that guide its subsumption to specific cases of economic life.
Thus, the Normative Opinion in question is considered a reference to the uniform and cohesive interpretation of legal norms, especially federal ones, regarding the application of the concept of export of services.
The Mazzucco e Mello Advogados tax team is available to provide any clarification on the topics above.