Tax auditors to report Brazil to the OECD over budget cuts

oecd tax auditors
Photo: Marcello Casal Jr./ABr

A union representing employees of the Federal Revenue Service said on Friday it will report the government to the OECD and the Financial Action Task Force (FATF). They complain about the “serious consequences Brazil will bear with the significant reduction in the budget allocated to the Federal Revenue Service” in 2022.

The money earmarked to the agency in 2022 is about one-third of what it was three years ago — down from BRL 3.8 billion (USD 740 million) in 2019 to BRL 1.2 billion in 2022. 

The union says the reduced budget severely hampers the Federal Revenue Service’s ability to enforce customs inspections, prevent tax evasion, and enforce money-laundering regulations. “The government’s interest in disrupting the body responsible for combating evasion and money laundering is clear,” reads a statement from the Unafisco union.

Setbacks to Brazil’s anti-corruption plan are the primary obstacle to the country’s bid to join the OECD. A year ago, the organization’s Anti-Bribery Working Group decided to create a monitoring sub-group to assess the situation in Brazil, following a report from Transparency International denouncing significant problems in the country.

The threats of reporting Brazil to the OECD come as tax auditors try to pressure the government for higher wages — which has led to multiple regional supervisors resigning from their posts. That has halted activities within Brazil’s tax appeals court (Carf) due to a lack of active members.

Auditors have also slowed the pace of customs clearance procedures, and could go on strike in March.