TRF dismisses fine based on breach of bank secrecy

TRF dismisses fine based on breach of bank secrecy

TRF dismisses fine based on breach of bank secrecy

Despite there being a precedent set by the Plenary Session of the Supreme Federal Court (STF) against breach of bank secrecy without judicial authorization, the Federal Revenue of Brazil maintains this practice, pursuant to Supplementary Law no. 105 of 2011, in order to apply fines. However, based on the understanding of the judiciary, taxpayers have been able to overturn them in the Courts.

For the Federal Revenue, the issue shall only be defined at the Supreme Court upon the judgment of three direct actions of unconstitutionality (Adins) against the supplementary law. At the Regional Federal Court (TRF) of the 3rd Region, however, the precedent was sufficient for Court of Appeals, Judge Nery da Costa Junior, to overturn a R$ 1.63 million fine against Master Comércio Importação e Exportação de Cosméticos e Saneantes for omission of revenues, using an interim order (a kind of injunction).

In the appeal, the company alleged that the fine was based on information obtained licitly, by breaching bank secrecy, which could only be authorized based on a judicial decision. The taxpayer cited recent judgments at the STF and regional federal courts to support its petition for nullity of the fine.

According to Master’s attorney, the tax authorities ordered bank statements to be presented after a notification from the Council for the Control of Financial Activities (Coaf) about large financial transactions supposedly incompatible with the payment of taxes. The company responded that it would only present the statements after a court order.

“Then, on their own account, the authorities officiated financial institutions, collected statements and elaborated an infraction notice”, he stated. At the first instance, the request for an interim order was not granted, which lead Master to appeal to the TRF of the 3rd Region.

In a single-judge decision, the Court of Appeals, Judge Nery da Costa Junior, granted the injunction, which was recently confirmed by the 3rd Panel. In his judgment, he affirms that he is following the understanding of the Plenary Session of the Supreme Court that breach of bank secrecy for tax investigation purposes is unconstitutional.

The judge’s statement highlighted that the decision of the STF on December 15th 2010 though “shrouded in controversy” must prevail. The majority decision, demonstrating that not all of the judges hold the same understanding that formed the precedent, according to Nery Junior.

For the National Treasury General Attorney’s Office (PGFN), Supplementary Law no. 105 is constitutional, and the decision by the STF is merely an isolated position. Substitute attorney general, Fabrício Da Soller, expects that the Supreme Court will change its understanding during the analysis of the Adins.

The Federal Revenue Service breaches bank secrecy based on article 6 of the supplementary law. This provision states that “The tax authorities and fiscal agents of the Union, States, Federal Districts and city councils may only examine the documents, books and records of financial institutions, including those relating to deposit accounts and financial investments, when an administrative process or fiscal procedure has been instituted, and such examinations are considered indispensables by the applicable administrative authority.”

According to Da Soller, if this possibility is denied to the Federal Revenue, Brazil would be a “pariah” in the international taxation system due to the agreements it holds with other countries. “It is a model of the Organization for Economic Co-operation and Development (OECD). It states that countries shall provide taxpayer data, including financial transactions. It is based on the assumption that tax administrations have access to such data. If it [the law] is considered unconstitutional, Brazil would be placed alongside tax havens”, he affirms.

For attorney André Felix Ricotta de Oliveira, a judge at the Tax Court (TIT) of São Paulo, this possibility does not exist. “If there are strong indications of tax evasion, it is possible to request breaches of secrecy from the courts,” he states.

As the supplementary law is part of the legal system as a valid standard, the authorities follow that provided for by the law, according to Oliveira. “The majority of the decisions, however, support the unconstitutionality of breaches of bank secrecy without a court order.”

In June, for example, the 2nd Panel of the TRF of the 3rd Region considered evidence obtained by breaching bank secrecy as illegal, and shelved a criminal case. In the decision, Court of Appeals, Judge Cecília Mello, affirmed that the bank secrecy of the defendants was infringed without judicial authorization in order to constitution tax credit, “which entails a flagrant illegal constraint”.

Source: Valor Econômico-08/06/2014.

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