Articles - 24/08/20

Criminal liability for the default of taxes in the context of the COVID-19 pandemic in Brazil

The economic impacts caused by the COVID-19 pandemic in Brazil are already well known. A recent survey made by the Brazilian Institute of Geography and Statistics (IBGE, in Portuguese), points out that 522,000 companies have already closed their doors since the beginning of the pandemic. The same survey, updated on August 18, also points out that 46.8% of the still operating companies reported that the pandemic had a negative effect on their business, which can be exemplified by the fact that 47.3% of the same operating companies indicate problems of making routine payments.

Unfortunately, the Brazilian future scenario is not the best. The pandemic is far from over, while the federal and the state governments do little to create aid channels for companies that are still in operation, which creates enormous insecurity for Brazilian businessmen. In this sense, entrepreneurs from all over the country will increasingly have to deal with a default scenario.

Default, although it is a common fact in private relations, can give rise to criminal offenses, especially when such fact are observed in the context of tax obligations.

In this sense, in a very evident and natural way, the economic crises caused by the COVID-19 pandemic brings the debate on whether or not non-payment of taxes will lead to the drawing up of tax records infractions and a subsequent remittances of tax representations for criminal purposes to Federal and State prosecutors.

The tax criminal offenses are established in two provisions of Brazilian law: (i) Law no. 8,137/1990, which institutes tax offenses, crimes against the economic order and consumer relations; and, (ii) the Penal Code, a diploma that provides for three crimes on the subject.

In Law no. 8,137/1990, tax offenses are foreseen in articles 1 and 2. In article 1, material crimes are predicted – those crimes which its occurrence depends on the existence of an identifiable result of the conduct-; in the other hand, article 2 establishes crimes of mere conduct – those crimes in which the occurrence does not depend on the existence of a result, in which case the conduct must be practiced with specific purpose of evading tax.

The Penal Code sets out the following crimes: social security misappropriation (article 168-A), evasion of social security contributions (article 337-A), and the crime of tax embezzlement (article 334), although in the latter there is a discussion if it is a crime whose nature is only tax related.

As a general rule, tax crimes require a conduct linked to the default (or its attempt) for its configuration, a conduct that generally involves a kind of falsehood, so that the simple default would have no criminal relevance. However, there are two exceptions to this general rule.

The first exception is established in article 2, item II, of Law no. 8,137/1990, which describes as a crime the act of “failing to collect, within the legal term, a tax or social contribution amount, discounted or charged, as taxable person of the obligation and who should collect from public coffers”. The second exception constitutes the offense of social security misappropriation, provided for in article 168-A of the Penal Code, which consists in the act of “failing to pass social security contributions collected from taxpayers, within the term legal or conventional way”.

The offense established in Law no. 8,137/1990 also had a recent change of understanding regarding its application according to the Brazilian Supreme Court jurisprudence, in the context of the judgement of the RHC no. 163.334/SC. The outdated understanding held that the businessman who failed to collect ICMS[1], but confessed the debt by recording the tax in his books, did not have an impact on the aforementioned crime, since it was a mere default. After the understanding swift made by the Brazilian Supreme Court, however, now even that businessman who confess his tax debt can incur in the predict crime, if he/she fails to collect the tax.

In this way, we can conclude that the non-compliance with tax obligations may give rise to the practice of tax crimes, even if due to the economic crises caused by the COVID-19 pandemic, which should get the attention of the businessman across the country.

Besides that, Brazilian jurisprudence and doctrine provide certain circumstances that mischaracterize the crimes described above, even in the event of taxpayment default.

The first hypothesis concerns the atypical nature of the conduct, whereby, if the taxpayer proves that he/she did not have the necessary amount of money to collect the tax on the payment date, this taxpayer did not practice the crimes outlined above. That is explained by the fact that in omissive crimes – crimes in which the conduct consists in failing to do something – the concrete impossibility of practicing the conduct generates the atypicality of the conduct[2].

However, this hypothesis is rarely recognized by the Brazilian courts, since it is a consolidated understanding in the jurisprudence the fact that, if the tax is collected by the taxpayer and he fails to pass it to the public authorities in the form and within the legal term, the agent cannot claim the lack of money in the moment of the payment, since he/she collected the tax previously. Likewise, the jurisprudence understands that the presence of specific intent is not necessary for the configuration of the crime, so that the consummation of the crime occurs with the act of the non-transfer of the tax collected in the legal form and within the legal term.

The second hypothesis, which is most recognized in the Brazilian courts, concerns the unenforceability of a different conduct, which focuses on the guilt analysis of the agent. This is the hypothesis in which the taxpayer has the money for the tax payment, but chooses to use this money for the payment of a most urgent and necessary debt to the continuity of the company’s operation.

In this context, it is understood that the conduct of the taxpayer, who chooses to act against the law due the factual circumstances that put him in that position, does not deserve the legal censorship, since these circumstances make it impossible for him to follow the law.

On this subject, the Tribunal Regional Federal da 3ª região made a recent precedent, which declares “As is known, the unenforceability of different conduct excludes guilt in cases where the agent is not able to behave in accordance with the law, in such a way that his action is not considered reprehensible in that specific situation. It is, therefore, an exclusive cause of an exceptional nature, insofar as the hypothesis of requiring different conduct are already typified in the Penal Code. Thus, for the recognition of the excuse in reference, it is essential to provide unequivocal proof of the facts – which should be exceptional – that support it, not seeming sufficient, for reasons of an intuitive nature, mere statements provided by the defendant and defense witness”. (TRF 3ª Região, 5ª Turma, ApCrim 0002501-36.2013.4.03.6115, Rel. Des. Fed. Paulo Fontes, j. 04/05/2020, e-DJF3 Judicial 1 DATA:29/05/2020).

For the legal doctrine[3], to characterize the guilt exclusion by the unenforceability of a different conduct, some requirements are necessary, such as the existence of a conflict situation and the attempt to obtain an adequate solution, which, in normal situations, can only be demonstrated in the course of the legal criminal procedure.

Anyway, “in any case, what is unreasonable is to equate the conduct of whose who fail to pay due to financial difficulties that jeopardize the company’s continuity, to those who fail to pay out of greed[4].

That is exactly why it is said that the discussion of defaults in times of crises can create more conflicts (and defaults) than solutions.

In any case, if in times of normal economic activities the argument of unenforceability was already admitted by the courts, the courts should consider the economic crises caused by the COVID-19 pandemic scenario as an unenforceability of different conduct cause to judge new cases of taxpayer default.

As much as the intense economic crisis was felt by a large portion of the business community, it was generated from an absolutely exceptional situation, with a drastic drop in revenues and an astonishing attempt to maintain minimal structures so that a productive resumption happens when possible (employees, machinery maintenance, among others).

It is a drastic conflict, which courts will have to be sensitive to when they come to analyze cases in this regard.



[1] ICMS is the Brazilian state tax on services and circulation of goods.

[2] SANTOS, Juarez Cirino Dos. Direito Penal: parte geral. – 8ª ed. – Florianópolis: Tirant lo Blanch, 2018, pág. 226.

[3] JAKOBS, Günther. Derecho Penal: parte general. 2ª ed. Madri: Marcial Pons, 1997.

[4] MACHADO, Hugo de Brito. Inexigibilidade de outra conduta nos crimes contra a ordem tributário.