Brasilia, November 7th, 2008
The Secretariat of the Federal Revenue of Brazil (RFB) and the Federal Police (PF) are launching the OPERATION VOLCANO today, comprising 8 (eight) states of the federation: Mato Grosso, Mato Grosso do Sul, Goias, Sao Paulo, Rio de Janeiro, Minas Gerais, Parana and Santa Catarina.
About 220 (two hundred and twenty) Search & Seizure Warrants (MBA) and 100 (one hundred) Warrants of Arrest issued by the Federal Justice are being served.
The scheme may have caused losses estimated in R$ 600 million to Brazilian public assets.
It is a vast scheme that harmed the federal and state fisc through tortuous acts related mainly to foreign trade, involving import/export companies, shipping companies, customs brokers, public utility providers and other private agents.
Among these offenses were: crimes against the tax system, facilitation of smuggling and embezzlement, active and passive corruption, entry of false data in the information system, misrepresentation, racketeering, crime against the national financial system, money laundry, and others.
In one of the components of the investigation, national goods for exportation, including tires and raw materials for the production of beer were being deviated to the internal market, benefiting from tax exemption as if they were for export, thus establishing a situation of unfair competition with products legally intended for internal consumption. The following were among the main tax benefits received:
- exemption of Tax on Industrialized Products (IPI) and Social Contributions over incomes deriving from export activities, taxes administered by the RFB; and
- exemption of tax on the circulation of merchandise and on interstate and intermunicipal transportation services and communication (ICMS), foreseen in the Brazilian Federal Constitution, a state tax.
In another component of the investigation, foreign merchandise, mainly textile and food, were under invoiced as they entered the national territory, with diverging declaration of quantity and quality, as well as false declaration of origin, as Chinese and Korean products were being imported as they were Bolivian products, which allowed the use of tax benefits intended for products coming from Mercosur partners.
Ascom/ RFB Communication Coordination