The National Tax Code (“CTN”) provides that the tax law that defines infractions, or that conditions the application of infractions in the event of non-compliance, is to be interpreted in the most favorable manner to the accused, if there is doubt as to the nature or material circumstances of the fact, as well as the extent of its effects, among others.
This is the in dubio pro taxpayer, an interpretative rule that serves precisely to protect taxpayers against the increasingly frequent attacks of tax authorities who, not infrequently, disregard acts performed, contracts, corporate structures and businesses to gloss over expenses, reject the application of legal provisions with more beneficial tax effects, and require taxpayers to pay taxes, plus heavy fines and interest.
In the context of the judgment of tax proceedings in the federal administrative sphere, the principle of in dubio pro taxpayer only began to be respected with the advent of Law No. 13,988/2020, which amended Law No. 10,522/2002, determining that, in the event of a tie in the judgment of the administrative process for determining and demanding taxes, the casting vote would not be applied, with the resolution being favorable to the taxpayer.
Now, the recent Provisional Measure No. 1,160/2023 once again mandates the application of the casting vote in administrative proceedings within the scope of CARF (Administrative Council of Tax Appeals). If approved and enacted into law as it stands, taxpayers will lose an important defense, which allowed them to resolve tax disputes in a less costly manner (without offering collateral) and less aggressive to taxpayers (subject to seizure, etc.).
