Monday, August 30, 2004

Roberto Greco De Souza Ferreira has published Form Versus Substance: A Comparison of Brazil’s Tax System to the Tax System of the United States of America, 35 U. Miami Inter-Am. L. Rev. 311 (2004). Here is part of the conclusion:

Although both Brazil and the United States have developed a mechanism against tax avoidance, or the substance-over-form doctrine, such development clearly was influenced by the characteristics of the legal tradition of each country. Therefore, there is a substantial difference concerning the circumstances in which the substance-over-form doctrines developed by both countries may come into play.

Due to the differences of both legal traditions, the circumstances in which the taxpayer has the right of arranging his affairs to pay less tax is much more accepted in the Brazilian legal system than in the U.S. legal system. In addition, while the U.S. tax authorities may successfully invoke the substance-over-form doctrine to disregard the form of a transaction structured by the taxpayer with the sole purpose of tax avoidance, the Brazilian tax authorities may only invoke this doctrine when the taxpayer evades taxes by means of fraudulent or simulated behavior.