There will always be litigation, no matter how good the legislation or how informed taxpayers are. There are opposing interests at play, which generates litigation in tax matters and all others. We aim not only to reduce it but especially to curtail bad litigation that we can avoid,” stated the government official, concluding two days of discussion on the report by the Commission for the Review of the Tax Process and Procedure and Taxpayer Guarantees.
The document was submitted to the Government in May and was discussed on Monday and today in a conference organized by the Ministry of Finance in Lisbon.
Cláudia Reis Duarte mentioned that reducing litigation “in quantity” will help enhance the contentious process “in quality,” allowing courts to focus on cases where the interpretation margin is greater.
Doing so, she noted, will enable courts “to fulfill their role of having the final word when interpretative divergence arises, which it always will.”
“We are not going to eliminate litigation; we are going to try [to reduce it], with all the measures, which are not limited to changes in the law,” she said.
The official considered the proposals presented to the Government by the commission as “structured,” but did not specify which ones the executive wants to implement.
At the same conference, the Director General of the Tax and Customs Authority, Helena Borges, acknowledged that the tax authorities need to communicate “better” with taxpayers to prevent disputes and avoid cases going to court. “We are obligated to provide better information. The principle of cooperation, which was mentioned here, is evidently our priority. This is where a significant portion of this friction or perceived unavailability on our part plays out,” Helena Borges remarked.
The reform commission, chaired by lawyer Rogério Fernandes Ferreira, includes proposals to amend the General Tax Law, the Tax Procedure and Process Code, the Legal System of Tax Arbitration, and the General Regime of Tax Infractions, as well as norms concerning tax executions and procedural costs, among other legislation.
One suggestion from the reform commission involves penalizing the Tax Authority if it litigates in bad faith in court.
This involves adding an article to the LGT, stipulating that “the tax administration and the taxpayer can be fined and indemnified for bad-faith litigation, according to general law,” presumed as “acting in court against the contents of general guidelines or binding information previously provided” to taxpayers.
Another proposal includes setting a maximum time limit of 20 years for the prescription of tax debts, even when there are interruptions and suspensions in the counting.
For the head of the Order of Certified Accountants (OCC), Paula Franco, also present at the conference, the absence of a time limit “did not benefit the business fabric.” It is an “important measure for everyone,” she stated during the conference.
On Monday, at the same event, the Finance Minister, Joaquim Miranda Sarmento, admitted to reviewing the rules of the tax procedure to ensure a “quick resolution” of tax disputes, including international ones, enabling the country to grow and attract investment.
