Federal Revenue Research Articles

Transform Sustainable: Innovating for a Sustainable Future

The Transform Sustainable Program of the Federal Institute of Education, Science and Technology of the South of Minas Gerais (IFSULDEMINAS) is an example of how creativity and innovation can transform challenges into solutions. Through the transformation of donated and seized materials into high-value products, the program contributes to environmental protection, income generation and social development. The program's main focus is on sustainability, reducing material disposal, promoting reuse and recycling, and contributing to the circular economy. Technological innovation is also fundamental, with the development of innovative solutions to transform discarded materials into high-value products. The program has a partnership with several institutions, such as the Brazilian Federal Revenue Service (RFB), city halls, schools and NGOs, demonstrating the power of collaboration to generate positive social impact. By generating income for local communities, promoting environmental education and social development, the program contributes to building a fairer and more prosperous future for everyone. Transform Sustainable is an inspiring model that demonstrates the potential of sustainability, innovation and collaboration to build a greener, fairer and more prosperous future for all. Through the union of efforts between IFSULDEMINAS and several institutions, the program is transforming the present and building a more sustainable future for the next generations.

An Empirical Analysis of Tax Evasion among Companies Engaged in Stablecoin Transactions

This research investigates the relationship between stablecoin usage and tax evasion. We present a model that includes variables related to transactions such as intensity, frequency, environment on-chain (P2P) vs. off-chain (IntraVasp), and company characteristics such as age, sector, and size. Our model was empirically tested using a logistic regression based on data from the Brazilian Federal Revenue Service (Receita Federal do Brasil (RFB)) in 2021. This novel approach aims to understand the tax behaviours associated with stablecoin use in corporate financial practices. Our results indicate that the intensity, frequency, environment of transactions (specifically IntraVasp and P2P transactions), age, sector, and size are factors significantly associated with tax evasion behaviour. However, we found no evidence to suggest that firms engaging in only P2P transactions have a higher propensity for tax evasion than those engaging only in IntraVasp transactions. Our findings reveal that younger and medium-sized companies with intensive use of stablecoin, with high stablecoin transaction frequency, engaging in IntraVasp and P2P transactions, and belonging to the service sector are more likely to evade tax. Therefore, our research provides a detailed understanding of how digital financial practices with crypto assets (blockchain-based technology) intersect with corporate tax strategies, which can offer valuable insights for regulators, industry practitioners, and policymakers.

Accountability or Austerity? Examining the Practice of K–12 Early Fiscal Intervention During Periods of Economic Crisis

Little research has examined how K–12 fiscal accountability policies and practices intersect with district finances and student outcomes during periods of economic crises. Employing a critical policy analysis perspective that distinguishes between the concepts of fiscal accountability and fiscal austerity and differences-in-differences and event studies approaches, this study examines the practice of early fiscal intervention in California’s AB 1200 fiscal accountability system during and after the 2008 financial crisis and recession. In particular, the study estimates the relationship between early fiscal intervention, district finances, and student academic outcomes in mathematics and reading and language arts. Findings suggest that intervention led to significant cuts in per-pupil expenditures, resulted in no increase in state or federal revenues and an increase in local revenues through property taxes, and was negatively associated with student outcomes, especially in reading and language arts and for Hispanic/Latinx students. When taken together, the findings imply K–12 fiscal accountability in California was leveraged to promote fiscal austerity in educational spending during and after the 2008 financial crisis. Implications and policy recommendations are discussed.

Taxing Firearms Like Alcohol or Tobacco

Abstract Despite recent calls for increased taxation of firearms, there has been little quantification of the impact that this would have on the market. Using tax receipts and recent estimates of supply and demand elasticities, this paper measures the size of the U.S. gun market at equilibrium, and the effects of current and higher tax rates. Baseline estimates indicate that market equilibrium is $14.11 billion and current taxes reduce sales by 14.5 percent. Taxing firearms at rates comparable to taxes on alcohol would cut sales to roughly three-quarters of equilibrium and increase tax revenue by 58 percent; raising gun taxes to the rate on tobacco would reduce sales to about half of the equilibrium level and double federal tax revenue.

Tax Compliance Actions by Tax Authorities and Voluntary Compliance with Tax Obligations by Individual Taxpayers

Research objective: Tax compliance actions aim to improve the relationship between the tax authorities and taxpayers, increasing voluntary compliance with tax obligations and reducing administrative and judicial litigation. In this sense, the defined objective was to analyze whether tax compliance actions increase voluntary compliance with tax obligations. Methodology: Thus, a quantitative approach was used, through analysis of latent classes, carried out on the baseed on longitudinal data from the Federal Revenue, with 531 individual taxpayers, related to compliance action. Results: After the action, it was found that the taxes owed had a statistically significant increase and the tax gap was increasingly reduced between 2015 and 2018, indicating that the implemented tax compliance actions were effective in promoting voluntary compliance with tax obligations by taxpayers. In addition, the action also presented advantages to taxpayers, since, when there is a spontaneous regularization, there is less possibility of facing a tax procedure, as well as a reduction in administrative costs and the amount of litigation. Practical and theoretical contributions: The practical contributions are aimed at enhancing future tax compliance initiatives carried out by Federated Entities. Furthermore, the theoretical contribution utilizes the Slippery Slope Model, which illustrates an upsurge in voluntary compliance with tax obligations following a compliance action, attributed to heightened authority and confidence in the tax regulatory body. As a result, this theoretical contribution underscores the significance of the Slippery Slope Model in comprehending taxpayer behavior and in devising more efficient tax compliance strategies.

Democracy out-of-the-box: analysis of compliance with constitutional principles in tax policies that use Artificial Intelligence

The Democratic State of Law emerged with the objective of improving everyone’s life, restricting the power of tyrants, who, among other arbitrary acts, unfairly taxed the people. While taxes remain crucial for the State’s upkeep, modern rules prevent individuals from enduring excessive burdens. Although new technologies leveraging Artificial Intelligence (AI) hold the promise of enhancing lives, the extent of this improvement raises questions. This study delves into the relationship between individuals and the State, specifically exploring the use of AI in tax-related scenarios. Conducting a comprehensive three-stage investigation, the first stage involved surveying the reasons behind State-imposed limitations on taxation. The second stage identified criteria from computer literature addressing potential AI challenges and strategies for achieving explainability. Additionally, a discussion emphasized the importance of technological models aligning with principles that underpin our society. Then, to understand how actions have been carried out in Public Administration, a Systematic Mapping Study (SMS) was carried out, analyzing works from the ACM Digital Library, SBC OpenLib (SOL) and the ENAP (National School of Public Administration)’s repository (a Gray Literature repository). On the ENAP website, works relating to the Creativity and Innovation Award from the Federal Revenue of Brazil were specifically consulted. In the end, 10 works that met the inclusion criteria were selected. It was concluded that none of them has an AI explainable model, considering the interpretability criteria of models (Rules and logic, Data visualization, and Model documentation). In light of this, it is recommended that studies addressing the use of AI in Public Administration incorporate a dedicated section discussing the explainability of models.

Innovation of the customs value management process in imports between related parties

This technological article presented a solution that considers a procedure of monitoring and controling in the price, for a problem related to the Customs Valuation (CV) criterion in import operations between related parties, carried out by Siemens Energy (SE) Brasil Ltda, in order to structure an innovative control procedure in this customs criterion. The methodology used was the practical and applied work by Marcondes, Miguel, Franklin, and Perez (2017), in addition to qualitative research, with the use of the technique of interviews with Siemens Energy executives and a Brazilian Federal Revenue Office – RFB server. The proposed application of the solution deals with an incremental innovation in process, which considers a procedure focused on the governance and management of operational risks in the CV criterion in intercompany imports of SE. The complexity lies in the development of the solution proposal because it is a fully technical and decentralized issue.

Artificial intelligence adoption in public organizations: a case study

Purpose: The study explores the key factors influencing AI adoption by public organizations, and sought to understand the dynamics of AI adoption, aiming to identify the potential challenges of integrating AI with ESG considerations.
 Originality/value: This research addresses the gap in understanding AI adoption in the public sector at the firm level, emphasizing the challenges and risks of technology integration. The study discuss how AI can be used effectively, contributing to societal appropriation of technological progress.
 Methods: Methodology employs a multi-stage analysis of literature, followed by ten interviews and a case study on Brazil's Federal Revenue Service. Empirical data was probed through rigorous coding and thematic analysis, selecting the most impactful factors influencing AI adoption.
 Results: The conclusions highlight the role of AI in elevating public services performance and reach. However, the deployment of AI calls for vigilant oversight to mitigate adverse effects and inequalities and demands a multidisciplinary strategy addressing an interplay of challenges.
 Conclusion: The study provides a framework for effective AI adoption, offering insights for decision-makers on strategizing AI adoption, emphasizing the importance of factoring ESG concerns into de decision to adopt this technology.

“Loss distribution”: the accounting treatment, corporate and tax ramifications, in Brazil

This study describes the accounting treatment and underlying basis of the allocation of losses to partners, not of dividends, but within intra-corporate transactions, according to the IFRS. The study takes into account the fact that there is not always a specific legal requirement for implementation in other countries, as is the case in Brazil, although in the legal literature such treatment is acknowledged internationally. The assumption of accounting loss to a partner's account was originally introduced in the Brazilian Income Tax legislation of 1977. That accounting technique was determined by the Federal Revenue Service. Although Congress was responsible in this period for the accounting discipline, specifically for Corporation Law, they remained silent in this regard. Consequently, the lack of specific legal provisions for corporate accounting standards may have led, in oblique ways, to a small exploration of this topic and its little practical use in the real world. Considering such factors, this research investigates the accounting treatment options currently applicable to this type of transaction in Brazil, under the influence of common law, and various tax and corporate ramifications stemming from its adoption; this paper also aims to publicize possible grounds for propagating the practice, based on the guidelines laid down by the International Accounting Standards Board (IASB). Applying the qualitative research method, it was possible to conclude that the assumption of loss to the partner account is equivalent to a capital contribution, in the form of contributions made by supporting shareholders. For this reason, shareholders record it as investments and the investee company does not record any revenue, although there is an effective equity increase. Due to being a non-onerous act, given the absence of issuance of shares, there is no change in existing equity interests, nor taxation on the agents involved. The allocation of losses to partners is practical in its contractual form, dispensing with the need for share capital to be increased by the partners and later reduced, commonly referred to in European Law as coup d’accordéon and operação harmónio, which simplifies the transaction and corporate records. This work considers the accounting treatment according to the IFRS, while at all times taking into account the legal framework applied to the transaction, locally and according to international corporate literature, with a view to encourage more extensive use and its resultant benefits.

Análise de perfis de vínculos organizacionais entre servidores públicos

Abstract The aim of this article is to outline the organizational commitment and entrenchment profiles of civil servants from the Brazilian Federal Revenue Office, comparing sociodemographic and occupational variables in the identified profiles. A quantitative, descriptive, cross-sectional study was carried out, collecting data via an online survey responded by 1,126 civil servants. Latent profile analysis was used to study the data, revealing four distinct organizational attachment profiles: i) moderately attached; ii) low attachment (predominantly uncommitted); iii) low attachment; iv) attached (predominantly committed). Most of the participants belonged to profiles with moderate and high levels of affective commitment. A shorter length of service and younger age predicted low attachment profiles, while senior positions were associated with profiles with higher levels of commitment and adjustment to social position (a dimension of entrenchment). Identifying these differences in profiles is a relevant contribution to more personalized and focused management of people and relationships.

The relationship between performance and the dimensions of the Brazilian Federal Revenue Service’s procurement structure

Resumo Este artigo investiga os fatores referentes ao desempenho da função de compras da Receita Federal do Brasil (RFB), sob a perspectiva de dimensões de sua estrutura organizacional. Para tanto, a estratégia metodológica consistiu no levantamento de dados da RFB. Por meio de técnicas de sumarização e regressão, identificaram-se variáveis associadas à centralização, à formalização e à especialização da estrutura de compras, bem como suas relações com o desempenho da função na instituição. Os resultados indicaram relações significativas e positivas entre centralização e medidas de desempenho relativas ao tempo. Em contraste, a especialização ocupacional, em níveis intermediários, se associou de forma negativa com a competição, enquanto a experiência acumulada na área de compras se associou positivamente com os prazos de licitação. A formalização, por sua vez, apresentou associações que indicam um trade-off entre recursos financeiros e tempo. Consectuvamente, a pesquisa contribui para o campo da administração pública ao investigar a estrutura e o desempenho em compras numa instituição brasileira com atuação nacional, perscrutando hiatos identificados em artigos nacionais e internacionais, como os relativos ao país, à abrangência e à diversidade das compras analisadas, interpretando aspectos causais dessas associações.

Sustainable Tourism Development Index: A Scientifically Practical Proposal

Sustainable tourism development requires self-limitation and the delimitation on national or regional development, within the frame of Carrying Capacity (CC), while maximizing economic benefits evaluated in the Tourist Satellite Account (TSA). Sustainable Tourism should be determined by Carrying Capacity while Development level should be depicted on Tourism Satellite Account, at national or at local level. The research question of this study is to define where the “golden ratio” is located between sustainability and economic benefits maximization. Tourism experts and academics evaluated the sub-criteria, based on the Analytic Hierarchy Process (AHP), which form the Sustainable Tourism Index, within the framework of environmental protection, natural sources savings, eco-friendly practices, green investments, and of the highest contribution to GDP, to employment, to local income and to local and federal tax revenues. The results will support local and federal policy makers to design and apply tourism development ensuring sustainability.

A relação entre as políticas de gênero e a criação de empresas por mulheres

Objective: to analyze the effects of gender policies on women's business creation. Methodology/approach: quantitative approach, with secondary data extracted from the Municipal Basic Information Survey (MUNIC); and public CNPJ data from the Federal Revenue Service. The level of analysis was restricted to the 246 municipalities in the state of Goiás. From this, tests were performed with two negative binomial regression models. Main results: for women entrepreneurs who created their businesses alone, gender policies showed a positive relationship; on the other hand, for those who created companies in partnership, no influence was identified. With these results, it is possible to understand that the same support measures may not have similar effects to all types of business creation by women. Theoretical-methodological contributions: this study showed that, when analyzing public policies as a means of promoting entrepreneurship by women, one should consider the existing differences between them, either in the contextual aspects in which they are inserted, or as the specificity of each group, bearing in mind that needs different require different support actions. Relevance/originality: especially for women who are self-employed, according to this research, the existence of gender policies proves to be an important factor, since difficulties, such as those generated by discrimination, can be faced, thus meeting the needs of access to education, equality, health and safety.

Federal government tax independence, statutory quota and capital investment

The enquiry arose from the necessity for a reevaluation of Nigeria's budgetary system. The current fiscal structure does not appear to be fair enough to foster social development in all of its ramifications. As a result, there is a void in infrastructure development in favor of citizens. The current study investigates the effect of federal government tax autonomy and statutory income on capital investment. The analysis spans the years 1990–2021 and using the ARDL, ECM and compound relapse method, revealing that the federal government's exclusive tax revenues have a large and beneficial influence on capital investment. The statutory allocation to the federal government, in divergence, has an insubstantial destructive impression on capital project spending. These findings suggest that statutory revenue at the federal level has little effect on capital project funding. There is also an existence of a long run relationship between federal government capital investment and the classes of earning applied in this investigation. The policy implication is that if the government does not expand its earning capacity, in the near future, the statutory income will be incapacitated in outlaying capital projects necessary to expand the economy. Study recommends outsourcing of more revenue avenues including foreign direct investment avenues. Study noveltyThe study's originality is that it employs ARDL approaches to give an unbiased justification for the government's growth of income sources. Above all, this is a pioneering work that expressly highlights the efficacy, or lack thereof, of the federal government's tax autonomy, therefore demonstrating the short and long term link between capital outlay on infrastructure and independent proceeds of the central administration.

The looming fiscal reckoning: Tax distortions, top earners, and revenues

How should the U.S. confront the growing revenue needs driven by higher spending requirements? We investigate the mix of potential tax increases that generate a given revenue need at the minimum welfare cost and evaluate its macroeconomic impact. We do so in the context of a life-cycle growth model that captures key aspects of the earnings and wealth distributions and the non-linear shape of taxes and transfers in place. Our findings show that a proportional consumption tax combined with a lump-sum transfer to all households and a reduction in income tax progressivity consistently emerges as the best alternative to minimize welfare costs associated with a given increase in revenue. A 30% long-run increase in Federal tax revenue requires a consumption tax rate of 27.8%, a transfer of about 12% of mean household income to all households, and a reduction of top marginal income tax rates of more than 5 percentage points—output declines by 7.9% in the long run. While transfers are substantial, smaller transfers can accomplish most of the reduction in welfare costs. We find no role for wealth taxes in increasing revenues or minimizing welfare costs.

Decentralisation, Local Governance and Nation Building in Nigeria

The paper examines the logic of decentralization and local governance in Nigeria with a hint on its constitutionality and contributions to nation building. Emerging facts reveals that Nigeria operates a centralized and decentralized system of governance and state administration. This is confirmed by its federal nature, division of state administration into federal, state and local government, state power into exclusive (federal), concurrent (federal and state) and residual powers (local government), and the allocation and distribution of fiscal responsibilities and benefits along vertical and horizontal lines by the Fiscal Responsibility Act 2007 and the 1999 constitution. Data generated from the Federal Responsibility Act 2007 shows that the federal government gets 52.68%, the 36 state governments get 26.72% and the 774 local government councils get 20.60% fund allocation from the pool of distributive resources domiciled in the Consolidated Federal Revenue Account of Nigeria. Analytical evidences are also drawn from other secondary sources of information to confirm the abuse of the tenets of political and administrative decentralization through the instrumentality of the State-Joint-Local Government Account and the Caretaker Committee System. The dialectics of undue political interference in the management of local government affairs by the state government and the use of the Caretaker Committee system as a governing structure at the local government level reveals the threat it poses to leadership development, liberal democratic growth, local governance and nation building. These conclusively undermine the tenets of true federalism, decentralization, local government autonomy and the statutory powers and authority of elected local government councils to initiate and manage local development visions and initiatives. The need to place a balance between avoidable political control and local government autonomy as pathways to promoting genuine decentralization, participatory local governance and grass root development is strongly advocated.

Vertical migration externalities

State income taxes affect federal income tax revenue by shifting the spatial distribution of households between high- and low-productivity states, thereby changing household incomes and tax payments. We derive an expression for these fiscal externalities of state taxes in terms of estimable statistics. An empirical quantification using American Community Survey data reveals that the externalities range from large and negative in some states, to large and positive in others. In California, an increase in the state income tax rate and the resulting change in the distribution of households across states lead to a decrease in federal income tax revenue of 39 cents for every dollar of California tax revenue raised. The externality amounts to a 0.27% decrease in total federal income tax revenue for a 1 pp increase in California’s state tax rate. Our results raise the possibility that state taxes may be set too high in high-productivity states, and set too low in low-productivity states.

CRYPTOACTIVES TAXATION AND LEGAL LIMITATIONS OF THE ECONOMIC POWER

This paper has as its goal to analyze taxation of cryptoactives and the legal limits of the economic power. The paper proposition consists in pointing out the main questions about this problematic, aiming to pin point how the lack of regulation on cryptoactives can undermine the rule of law, as well as legality, neutrality and tax equality. Therefore, in the first topic, are regarded a bundle of decisions from the regulatory agencies, namely, the Economy Ministry – Ministério da Economia - branches, as well as the Central Bank – Banco Central - from the legal perspective to extract concrete and objective definitions. In the second topic, an exposition about the rationale of the Federal Revenue Office of Brazil – Receita Federal- about the topic was made, in order to highlight that despite the lack of regulation, Cryptoactives have a tax outcome defined by this Economy Ministry branch. In the third topic, two academic manifestations about Cryptoactives taxation are analyzed, showing the schism between the legal dogmatic and the rationale built by the Federal Revenue Office. Finally, in the fourth topic, is shown that the lack of legal definitions suited for cryptoactives can be harmful both for the State and tax payers.

The Nexus between Federal Revenue and Spending in Canada: A Time-Frequency Perspective

Abstract The theoretical literature on the revenue-spending nexus suggests four possible relationships. They are tax-and-spend, negative tax-and-spend, spend-and-tax, and fiscal synchronization. Despite their homogenous research design, the empirical studies of Canada have provided mixed and inconclusive results. This study re-examines the topic from a time-frequency perspective. Specifically, it applies continuous wavelet analysis to the period 1867–2017 to delineate a complete picture of the revenue-spending nexus in Canada. Although results show the existence of all relationships suggested by theory at different time-frequency combinations, the spend-and-tax pattern is the most striking one and dominates the nexus in the long run. Theoretical, methodological, and policy-wise implications of this study are discussed at the end.

Os efeitos espaciais são fatores determinantes dos preços das terras agrícolas no Brasil

Abstract This study aims to determine whether spatial effects are determinants of agricultural land prices in Brazil. For this purpose, data on the value of the bare land in municipalities in Brazil for 2020, provided by the Federal Revenue Service, were used. Although this database has national coverage, the contiguous data necessary for the application of spatial econometric models allowed us to cover the central-south region of the country. An exploratory spatial data analysis was performed, and the spatial Durbin econometric model was applied. Based on our results, there is a strong spatial dependence on land price, manifested both in the dependent variable, spatially lagged, and through the spillover effects of the independent variables. In addition, it was found that the degree of urbanization of a municipality, the municipal gross domestic product per capita, the average size of properties, the agricultural productivity, and the area dedicated to soybean planting in a rural property are also important determining factors in the pricing of agricultural land. Accordingly, it is possible to conclude that spatial effects influence the determination of agricultural land prices in Brazil.