Higher taxes in Brazil

Brazilian government collected US$ 37,039 million in taxes last January. This is 20 percent more than it was in January 2007.

Although tax authorities affirm this increase is a result of economic growth, economists say that every year more money from private sector is taken by the state.

According to Veja Magazine, in 2007, tax burden reached more than 36 percent of GDP (Gross Domestic Product). In 2006, it was 34,23 percent.

Understanding Brazilian law

Brazil is a civil law country. This means abstract rules are created by the Legislative - and, sometimes, by the Executive. When a person files a case, judges apply abstract rules to a specific situation.

In most of the times, a case decision just matters to the people involved in it. But there are exceptions, such as some actions to argue unconstitutionality. These actions - named "ADIns" and "ADCs" - create abstract rules by changing ordinary laws to adapt them to constitutional command.

So why is it important to know about general court decisions in this system? Because decision made by the court are usually reached the same way, although they are not obliged to do it forever.


CODES

As many civil law countries, Brazil also has several codes.

The civil code contains 5 parts: general part, law of obligations, property law, family law and law of succession. Together they reach more than two thousand articles.

Other Brazilian legal codes: tax code, criminal code, labor code and others.


CONSTITUTION

Constitution is the most important law, as in Kelsen's theory. If other laws are not in accordance with it, the Constitutional Court can declare them out of the legal system. In this case, nobody would be allowed to follow such rule and lower courts would not judge based on it.



Further reading:

Civil Law (click here)
Comparative Law (click here)
Curpus Juris Civilis (click here)

Inheritance cases

The Brazilian law determines local jurisdiction for inheritance matters when the decedent owned property in Brazil.

In order to receive their share, heirs must file a case in Brazil, even if they or decedent are foreigners.

Of course, these rules may be applied only to property in Brazilian soil.


CASE: SEC 843-LB.

Making movies with Germany

On February, 20th, it was ratified and enacted in Brazil a treaty that creates special conditions to make feasible the partnership with Germany to produce movies.

Some agreed clauses are:

1) A movie made by both German and Brazilian companies will have the same benefits that a national movie would have in each home country;

2) Before start shooting, the projects must be approved by each countries' authorities.

3) It is possible to allow other countries to participate.

To read the text in Portuguese (Decree 6.375), click here.

Trade in local currency

Decree 6.374, published in Brazil on February 19, established a payment system in local currency for commercial transactions among Brazil, Argentina, Uruguay and Paraguay.

The idea is to increase trade in Mercosul.

New system's rules will be defined through bilateral agreements signed up by countries' central banks. Until there, the US Dollar will still be currency for all trade.


To read Decree 6.374, click here (in Portuguese)

Deforestation prohibition maintained

Brazilian highest court for Federal Law (third degree court) decided that is illegal to allow deforestation of riparian forest.

The action was filled against a municipality which had given permission to a land owner to start cutting off vegetation. Riparian forests are protected by a Federal Law.

It was proved that the land owner's attitude would cause low environmental impact; therefore, it would be reasonable to authorize deforestation.

Even so, Ministers ruled that no exceptions should be made upon such sensitive issue.



Case: RESP 176.753-SC

Laws (in Portuguese)

Federal Constitution (Article 225, § 1°, IV);
Law 4.771/1965 (Article 2°, a, I);
Decree 750/1993 (Articles 1º and 10).

TAXES: New law

Some issues of a Brazilian special tax, cambial and administrative Law were changed last Friday (February, 15).

The new rules modified the previous regime of “Export Processing Zones”. These are places in Brazil that provide with tax benefits companies which there produce goods for export.

Pacaraima and Bonfim cities, specially, will be affected.



Laws that were changed: numbers 8.032, 8.256 and 11.508.
To read the new legal text click here (only in Portuguese).

Disease without taxes

There is an interesting article about income tax reduction for people with some disabilities in Justiça Magazine (click here – only in Portuguese). At least 16 different illnesses allow a person to pay fewer taxes in Brazil. The list includes AIDS, Parkinson’s and blindness.

Alcoholics at workplace

As alcoholism is a disease, it may not be considered cause to terminate labor contract.

The main Brazilian labor law was written in early 1940s. In that time, alcohol dependents were not treated as ill persons, but weak-minded.

Today the disease is recognized as a health problem in most of Labor Highest Court's decisions (third degree court). However, the same does not happen in all Appeal Courts (second degree courts), therefore, some people have to wait years until they have their rights guaranteed. Even so, in the end, workers suffering from substance addiction usually win their cases.

Company's administrators must be aware that terminating labor contract because of alcoholism is not a good solution in Brazil. This decision may end up causing considerable loss of money in mid term.


Case: RR-1864/2004-092-03-00.2 (TST).

Contractual fine for soccer athletes

Soccer athletes have to receive contractual fine when their labor contracts are prematurely terminated by their employer (clubs). This is how some Brazilian Ministers from the highest labor court interpret Article 28 of the Law 9.615.

Other ministers believe that only the athletes are obliged to pay fines. The idea consists in that Article 28 would have been written in order to protect the clubs, not the athletes. There are decisions accordingly.

Minister Aloysio Corrêa da Veiga, in a vote, expressed his point of view: to believe that the contractual fine only obliges the athlete is not considering its natural bilateral obligations; it is to impose harder conditions to worker than club.

Minister Lélio Bentes has the same opinion: the contract fine is due by who terminates the contract early.

The controversy will probably be solved in favor of the athletes; fines shall be paid by both clubs and athletes. But nobody knows when a consensus will be reached by the court.

Cases: RR-3/2005-202-04-00.3 and RR 581/2002-093-09-00.5 (TST).