Piracy in focus

House of Representatives Debates the Fiscal Impacts of Counterfeiting and the Illegal Market

A hearing in the House of Representatives discusses the negative effects of counterfeiting, smuggling, and the illegal market on tax revenue, competition, and legitimate businesses.

The Chamber of Deputies’ Committee on Industry, Commerce, and Services held a public hearing on Wednesday (8) to discuss the fiscal and tax impacts caused by piracy, smuggling, counterfeiting, and other practices linked to the illegal market. The debate brought together representatives from the business sector, experts, and government agencies to assess the damage caused to tax revenue, competition, and the business environment in the country.

The hearing was requested by Representative Júlio Lopes (PP-RJ), who advocates for expanding measures to combat illegal trade. According to the representative, the spread of these practices undermines the competitiveness of companies operating within the law, reduces tax revenue, and benefits criminal organizations.

Illegal Market Causes Billions in Losses
According to data presented during the debate, the illegal market generates billions of reais annually in Brazil and causes significant losses to the public coffers. In addition to tax evasion, the sale of products without paying taxes affects companies that comply with their tax obligations and face unfair competition.

These losses also affect consumers, who are more exposed to purchasing counterfeit goods or products without quality control, especially in sectors such as pharmaceuticals, cigarettes, beverages, electronics, apparel, and auto parts.

Impact on Businesses and Tax Revenue
During the hearing, experts are expected to discuss how the growth of the informal economy reduces the tax base and makes it difficult to sustain tax-funded public policies.

Another point of debate will be the impact of unfair competition on businesses operating within the formal sector. According to representatives from the business sector, businesses that comply with tax laws end up facing a competitive disadvantage compared to merchants who operate outside the law and are able to offer artificially lower prices.

For business owners, the situation can also discourage investment, job creation, and the expansion of economic activities.

Tax Reform Also Comes Up for Discussion
Participants in the hearing are expected to assess whether the implementation of tax reform could help reduce some of the economic incentives for informality.

The expectation is that simplifying the tax system—by replacing various consumption taxes with the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS)—will help reduce distortions and make it easier for companies to comply with their tax obligations.

However, experts emphasize that combating the illegal market depends not only on tax changes but also on strengthening enforcement, fostering coordination among public agencies, and cracking down on organizations involved in smuggling, counterfeiting, and embezzlement.

Debate May Lead to New Measures
The discussions held in the Chamber of Deputies may serve as a basis for future legislative proposals aimed at strengthening the fight against the illegal market and improving tax and customs legislation.

It is expected that the contributions presented by representatives of the government, the business sector, and specialized entities will help shape public policies capable of reducing tax evasion, protecting fair competition, and increasing legal certainty for companies operating within the law.

Source: https://www.contabeis.com.br/noticias/77990/camara-debate-impactos-fiscais-da-pirataria/