By Silvio Simonaggio, Simonaggio Certeza Técnica
Tax is an economic phenomenon requiring legal integration into the market, which distinguishes it from other economic occurrences. The need for order in taxation creates its own need for legal mechanisms of control and the application of economic measures – with the ultimate aim to protect the common good.
Market forces would otherwise supply and/or suppress state activity, which would generate a negative effect. This is why taxation systems must exist within legal standards that can be applied at the state’s discretion.
Agents are required to manage state resources, necessitating vigilance over reasonable rates of tax, efficient forms of tax collection and the effective application of the taxation system. To help preserve the state’s function – in other words, to provide the resources which enable services necessary for the common good – there must be critical analysis by tax experts.
However, such expertise is of no benefit to corporations if the effects of taxation are not balanced in favour of protecting the functions of the state. A tax specialist’s role is to maintain this balance without recourse to fraud, embezzlement or irresponsible handling of funds. The state, as a general rule, must fight against imbalances in the public accounts.
While respecting the state’s function – to collect and distribute tax revenue – a company’s main aim is to generate profit (thus generating the social benefits that derive from this profit) and protect itself from any excess of taxation that is not covered by state control. Companies must maintain a structure that is compliant with their legal obligations, and must also declare any obligations that are not compatible with their own production systems. The tax specialist therefore has a dual role: to bring the company into line with its legal obligations, and to limit the state’s advances on the company via taxation.
The tax expert’s role takes him or her through the corporate environment for administrative, judicial and arbitration discussions (the last of these is still developing in Brazil), in order to produce technical evidence of the corporation’s lawful right to pay a certain rate of tax. This means avoiding excessive taxation, the imposition of ineffective rules of control, and the deflection of the state’s function. The state’s activity regarding taxation and tax collection remains slow-paced. Additionally, it is impossible to confront state-level errors without thorough technical analysis, particularly where rights are not covered by an irrefutable legal system. That is the aim of the taxation expert and the technical witness, who act to support the productive agents of the market.
Finally, it is important to urge professionals to improve their professional training in order to deal with tax issues. This should, preferably, focus on more than one area, so that they can preserve common rights and limit any improper excess. It is only the moral authorities – facts, and the law – that can subdue the state.