Research proposed by Insper Tax Studies Center intends to identify measures necessary to reduce the volume of tax proceedings in the Brazilian Judiciary System
Insper team was placed first in a request for proposal called by the National Council of Justice (CNJ), which aimed at hiring an organization to produce a study on Brazilian tax litigation in courts and propose solutions to address the main issues found.
This topic will be investigated by Insper Tax Studies Center, which has a litigation-dedicated research department called Tax Litigation Observatory. There, researchers monitor the evolution of numbers and seek to improve data collection and analysis methodologies, by preparing tax governance proposals that tackle the causes of litigation and present more efficient solutions to reduce them.
According to Breno Ferreira Martins de Vasconcelos, professor at Insper and member of the team that prepared the proposal, tax litigation is the term used to define the universe of legal or administrative disputes between tax authorities (federal, state or municipal level) and taxpayers. “Within tax litigation, there is a whole array of processes involving the tax transactions, including the payment of taxes, the interpretation and application of tax legislation, and the fulfillment of ancillary obligations.”
Winning the bid
The winning project was based on national studies (produced by institutions such as Insper, FGV and TCU) and international studies (OECD, Oxford and IMF) on the reality of tax litigation in Brazil.
“Based on some hypotheses we formulated quantitative and qualitative surveys and with the data obtained, we were able to identify measures necessary to reduce the volume of tax proceedings, speed up trials and ensure that the Judiciary can contribute to guaranteeing legal certainty and security in the tax area”, Professor Vasconcelos explains.
For Vanessa Rahal Canado, Professor and Coordinator of Law Postgraduate Programs at Insper, this research topic was already being studied by researchers working on a tax governance project. “When this request for proposal was published, we saw a common ground with what we were already doing and understood that we would be able to carry the research in-house, at Insper, due to the approach we have with Data Science and Jurimetrics.”
The amount of tax litigation in Brazil represented, in 2019, 75% of the national GDP, according to a survey carried out by the Tax Studies Center. The complexity of the Brazilian tax system and the legal uncertainty are bottlenecks that the research intends to address, aiming to boost economic growth.
For Professor Vasconcelos, by identifying the causes of tax litigation in Brazil in a comprehensive and scientific way, the research can support the creation of public policies that help the Judiciary Power to make this system more rational and secure. “Institutional changes in this direction have the potential to provide efficiency in the allocation of public resources and faster and more equitable jurisdictional provision, and, as a result, we hope to improve the Brazilian economic environment.”
Professor Canado points out that the main objective of the research is “to reduce litigation, not only by reducing the duration of litigation, but also looking for roots to reduce this percentage, which in other countries is barely 1% of the GDP. Serious research that investigates the causes of this issue in a more scientific way, with objective methodology, is essential.”