• The end of banking secrecy in Brazil

    By Gabriel Quintanilha


    Since the enactment of Complementary Law 105/2001, the Internal Revenue Service of Brazil has adopted an expedient at least absurd in its oversight acts: the breach of bank secrecy taxpayer without prior judicial authorization.

    In a superficial analysis, the law could be interpreted as a guarantor of rights, but in fact, it is a law that directly contravenes the fundamental rights of the taxpayer.

    This rule provides that Financial Institutions are required to report financial transactions to the tax authorities, without judicial decision, sealing a flagrant violation of fundamental rights.

    Many institutions are required to provide such information, among them banks, exchange brokers, credit companies, credit card companies, leasing companies, credit unions, savings and loan associations and stock exchanges, for example. It should be stressed that the concept is so dilated that even factoring companies are included in the law.

    As I said, distracted reading, can generate the illusion that the supplementary law in question is favorable to the taxpayer, forbidding the disclosure of information obtained by the tax authorities.

    We do not want to get into the harvest field of criminal law, since it is not the object of this article, but the legislator did not merely mitigate confidentiality only in cases of crime practices, extending this mitigation to any contributors.

    It should be stressed, that even with regard to criminal practice, the judicial activity is critical to the effectiveness of the constitutional principle of privacy.

    As you can see, through this device, the tax authority shall have access to the financial transaction information of the taxpayer, without the prior permission of the Judiciary. This situation clearly violates the fundamental right to bank secrecy.

    The sending of information by banks to the IRS indiscriminately, without judicial authorization, violates the privacy of the individual. Even in the face of a criminal offense, in Brazil, it is mandatory that a judicial decision determines the breach of banking secrecy, as provided for in the Constitution.

    It is indisputable that the revenues obtained by the taxpayer are part of intimacy and privacy, as they represent the wishes of each individual.

    Moreover, in this article there is no defense of absolute secrecy, but only secrecy as a fundamental right of the individual, being fully possible such breach, with permission of the judiciary. It is necessary to get banking information to avoid criminal practices, like tax evasion and international drug dealing, for example, but the constitutional rights must be protected.

    In other words, if there is confrontation between the right to confidentiality and other fundamental guarantee also important, it is up to the judge to ponder preponderência the principle to be applied.

    Therefore, it is necessary to recognize the unconstitutionality of sending information about financial transactions of taxpayers to the IRS, without judicial authorization, because it violates the security, privacy, intimacy and trust of the taxpayer.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Gabriel Quintanilha

Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.

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