The Use of Nonlegal Arguments and Art. 123 of the Brazilian Tax Code Against Tax Avoidance Measures in Brazilian Administrative Tax Court of Appeal (CARF)

Cases Involving Interests on Equity Taxation and Usufruct Reserve

Abstract

This article aims to analyze recent decisions given by Brazilian Administrative Tax Court of Appeal (CARF) regarding interests on equity taxation in corporate transactions involving the usufructu reservation of economic rights with the natural person of the shareholder, in which the tax charge was based on: (i) art. 123 of the Brazilian Tax Code, in the sense that corporate structures, as private conventions, are legally questionable by tax authorities and can therefore be disregarded for tax purposes, and (ii) nonlegal arguments, such as the “business purpose”. The authors have drawn on argumentation theory elements, used as instruments for gaining access to the arguments used to justify the surveyed decisions.