Publications

Category: Tax

One issue that is the subject of frequent debate in the administrative courts with jurisdiction to decide issues raised against infraction notices is the possibility for the administrative authority, after drawing up the infraction notice, to modify the grounds invoked by the authority or even introduce new elements of evidence to strengthen the grounds thereof.

The administrative act formalizes the tax obligation and show the authority’s understanding regarding the law applied on the case. Upon performing the act, the administrative authority reveals its interpretation of the law that is applicable to such cases and entails the collection of the tax plus a penalty. The exercise of the taxpayer's guarantee of a full defense and an adversarial proceeding is directed to a comparison between the grounds presented by the complaint, which has the effect of setting the criteria that will be subject to analysis by the court.

The Brazilian Tax Code (CTN) provides in article 146^[1] that modification of the legal criterion adopted in infraction notice, whether the result of an act by the legal authority or by virtue of a decision issued by an administrative or judicial court, may be applied only in relation to the future. This means that, after setting the new way of interpreting the provisions at stake, such new position only be binding for the next facts, not for the past.

In other words, once an infraction notice has been carried out, the legal criterion reflected therein may not be changed with respect to the facts contained in that document. Thus, even if the Public Administration itself finds that a mistaken understanding has been adopted, amendment thereof in order to justify an act already performed is prohibited.

Control of the legality of the infraction notice is carried out solely on the basis of the administrative act performed and, therefore, does not have the function of requiring the Administration to follow that understanding for subsequent periods. Modification of the legal criterion adopted on the infraction notice is forbidden. With regard to subsequent facts, the new criterion may be employed and there is no required binding effect for the past.

According to CTN in articles 145 and 149, there are specific and limited scenarios in which the infraction notice may be changed. However, there is no situation among them that authorizes a change in the interpretation of the provisions of law invoked by the agent who performed the act, nor is there the possibility of adding elements of evidence in the event of a mistake in the infraction notice.

This issue is of great relevance because, when challenging an infraction notice, taxpayers present the reasons that justify the conduct they adopted and the documents that support their allegations. Thus, after the taxpayer's answer, the administrative authority will not be able to spontaneously review the act and implement adjustments.

The Federal Administrative Court of Tax Appeals (“CARF”) has dealt with many trials on the subject and there is no uniformity among them. An example of the correct application of the obstacle imposed by article 146 of the CTN regarding changes of the infraction notice after the taxpayer's defense is found in decision 3401-005.943, when the reporting judge Lázaro Soares correctly argued that it was not possible to modify the legal reasons explained in the infraction notice. However, the reporting judge clarified that the prohibition concerns only the past, and does not prevent the Administration's activity with regard future audits. Note a clarifying passage from the appellate decision:

(...) 34. What is not allowed is that the Tax Authority may, identifying an infraction notice with the wrong legal basis, with an error of law having occurred, change that basis, replacing it with another and thus causing a worsening in the taxpayer’s situation in that same assessment, referring to the same taxable event, on the pretext of adapting the administrative act to the applicability of laws and regulations. However, nothing prevents future entries from performing such a correction, even for past triggering events. (...)

Furthermore, decision 1401-002.822 also faced a similar situation in which the infraction notice was canceled because the first instance decision relied on a basis that had not been raised by the original tax assessment notice. This circumstance, as stated by the decision, breaches taxpayer's right of defense, since the defense necessarily addresses the arguments to challenging the reasons invoked by the infraction notice, not for the new ones.

However, despite the aforementioned decisions, which applied well the emerging mandate of article 146 of the CTN, there are recent decision in which one may find mistakes of two types: i) the assessment must take as a reference a previous infraction notice; and ii) the conclusion that new arguments invoked, provided that they ratify the assessment described in the complaint, do not constitute alteration in legal criteria. The understanding reflected in decision 9303-008.195^[2], at the same time, contradicts the objective set out in article 146, since it invokes as a comparison criterion a previous infraction notice and also states that modification of the legal basis, provided that the factual description is maintained, does not constitute change of legal criterion.

Although CARF’s case law shows that the issue is not settled, we believe that there are positive signs and examples of the correct application of the prohibition on modifying the legal criterion adopted by the infraction notice. With respect of applying the guarantee of due process of law, the connection with article 146 of the CTN concerns the precise identification of the complaint, which will allow taxpayers to fully exercise their right.

It is not consistent with the guarantee of due process of law, when Administration performing its function of creating infraction notices, to change the grounds of the complaint whenever taxpayers defend themselves and present arguments and documents that demonstrate the correctness of their conduct. The accusatory body, supported by the ultimate objective of maintaining the infraction notice, is not allowed to invoke new grounds at various times. The infraction notice must be precise and contain all the elements of evidence when it is presented and, in tax matters, the limit is provided for in article 146 of the CTN, with an express rule that prohibits modification of the grounds of the infraction notice.

^[1] “Article 146. The modification introduced, ex officio or as a result of an administrative or judicial decision, in the legal criteria adopted by the administrative authority in the exercise of the entry may only be effected, in relation to the same taxable person, as to taxable events occurring after its filing.”

^[2] “The change in legal criteria that prevents the drawing up of another Assessment Notice refers to a change in the laws and regulations applicable to the same fact for the same taxpayer. Maintaining the description of the fact and the assessment imputed to it, additional arguments that lead to the same assessment do not constitute alteration of legal criteria.”

Category: Capital markets

As of October 14, mandatory publications by corporates must be carried out via the Public Digital Bookkeeping System (SPED), in the case of privately-held companies, and Empresas.NET, for publicly-held companies, in addition to the websites of these organizations themselves, and no longer in major newspapers.

Ministry of Economy Ordinance No. 529/19 and CVM Resolution No. 829/19, published in the Official Federal Gazette on September 30, regulated the new form of disclosure of publications ordered by article 289 of the Brazilian Corporations Law (Law No. 6,404/76), as amended by Executive Order No. 892/19.

According to the ordinance, "the publication of acts of privately-held companies and the disclosure of their information (...) shall be done in the Balance Sheet Center (CB) of the Public Digital Bookkeeping System (SPED)", but privately-held companies should also make this information available on their websites.

The SPED, as defined by article 2 of Decree No. 6,022/07, which institutionalized it, is “an instrument that unifies the activities of receipt, validation, storage, and authentication of books and documents that make up the accounting and tax bookkeeping of businessmen and legal entities, including those that are immune or exempt, through a single computerized flow of information.” Developed by the federal government, the system has long been known to corporate accounting departments, which use it to send tax and accounting information to the tax authorities.

With the new rules, therefore, the flow of corporate and accounting publications required by the LSA, in privately-held companies, of large-circulation newspapers and official bodies of the Federal Government, states, or the Federal District is shifted, depending on where the company's headquarters are located, to the SPED, with the simplification of the publication procedure and the elimination of the costs previously associated with publication in newspapers. In this sense, paragraph 4 of article 1 expressly states that no fees shall be charged for the aforementioned publications.

In turn, publication of the acts of publicly-held companies will take place, according to CVM Resolution No. 829/19, through the Empresas.NET System, another system long known in the market. It is used by companies registered with the CVM to send to the authority and B3 information of interest to the regulatory bodies, self-regulatory bodies, and the market in general. Under the same terms as privately-held companies, the resolution also provides that a company, when publishing its acts, must disclose them on its own website.

The use of the Empresas.NET System, in addition to maintaining the principle of publicity of corporate acts, previously exercised through mandatory publication in newspapers, reduces the cost of disclosing information, like what occurs with privately-held companies, in addition to simplifying the process.

The resolution also changed the disclosure of publications related to companies, but previously performed by third parties, such as in the case of resignation of an officer or director and public offers for acquisition of control. As provided for in item III of the standard, these publications will be done by the company itself. Accordingly, the offeror in proposals for acquisition and control (article 258 of the Brazilian Corporations Law) and officers or directors who resign from their position (article 151 of the Brazilian Corporations Law) must forward these acts to the company, which will be disclosed on Empresas.NET.

Both standards entered into effect on the date of their publication, but disclosures via SPED and Empresas.NET will only begin on October 14. Prior to this, companies should continue to publish their legal acts in widely circulated newspapers and the official gazette.

Promulgated on August 5 of this year, Executive Order (MP) 892 will be effective for a maximum of 60 days, renewable automatically for the same period. If not converted into law, it will lose its validity and, consequently, so will the normative acts of the Ministry of Economy and the CVM.

Category: Tax

Since the STF settled the theory that the ICMS tax is not included in the taxable base for the levy of the PIS and Cofins, in the judgment of Extraordinary Appeal (RE) No. 574,706, many taxpayers had a definitive resolution in their individual cases on the topic, which gave room to new controverted issues. One of the most relevant controversies, due to the cash effects found, concerns when to tax by the IRPJ and CSLL the amount of credits recognized in court and which will be subject to administrative offsetting.

The matter is controversial because it is impacted by different relevant events: (a) the final judgment on the individual lawsuit filed by the taxpayer; (b) the effective measurement of credits by the taxpayer and the accounting recognition of recoverable amounts as an asset, in consideration for revenue; (c) the qualification of credits with the Brazilian Federal Revenue (RFB) as a condition for performing the offsetting; (d) the effective offsetting of credits with other federal taxes, as regulated by the Federal Revenue Service; and (e) the ratification of the compensation by the Federal Revenue Service.

In practical terms, the levy of the IRPJ and CSLL taxes presupposes the right of the taxpayer to freely dispose of the amount of the credits, without depending on an act by a third party. For many, mere recognition of the right to a credit now discussed seems to not ensure this availability, since it represents only a right to demand of the debtor the provision of that return.

The final and unappealable decision recognizing the taxpayer's right to a credit is the first step towards the acquisition of legal availability of the income, one of the events that could trigger the taxable event of the IRPJ and CSLL taxes. The concept of a “first step” is relevant because, although the taxpayer has, with the final judgment, an absolute and unconditional right to the credit, in most cases at that time there is no quantification of the right that was recognized.

In general, the final decisions on applications for mandamus filed by taxpayers seeking to exclude the ICMS from the PIS and Cofins tax calculation bases are illiquid (they do not fix the amount to be recovered). For this reason, for the purpose of accounting for the value of the credits, their liquidity must be determined, which is normally done unilaterally by the taxpayer based on best estimates, as provided for by accounting standards.

The Federal Revenue Service has already expressed the understanding that it is at the moment of the final judicial decision that the credits become taxable IRPJ and CSLL income (resolution of consultation No. 106/10, 232/07, and 233/07). However, there is no clear indication within those rules whether the final judgments already quantified the amount of the credits, i.e., whether the decisions were fixed or unfixed amounts.

From another perspective, it is possible to argue that the final and unappealable judgment is not the appropriate moment for the levying of the IRPJ and CSLL taxes, because the party has not even defined whether it will proceed with restitution via offsetting or by court-issued registered warrant (precatório). On this subject, the case law is settled to the effect that it is the taxpayer's right to choose one way or another (STJ Precedent 461).

If the choice to obtain administrative offsetting is confirmed, it is necessary to register the credits with the Federal Revenue Service, according to the procedures regulated by Normative Instruction No. 1,717/17. At this time, the credit has been measured by the taxpayer, but the tax authorities have not yet responded. Moreover, even with the approval of the request by the tax authorities, there is no agreement on the amount of the credit (article 101, sole paragraph of Normative Instruction 1,717). Along these lines, it may be argued that this unilateral act in relation to the quantum due should not have the effect of making the final judgment reduced to a fixed amount. In fact, as provided for in the rule, the registration is closer to a formal prior verification procedure, equivalent to verifying the conditions of the cause of action, without any examination of the merits.

Specifically with respect to the ICMS credits from the PIS and Cofins tax basis, the Federal Revenue Service has presented various obstacles to refunding them to taxpayers, such as limiting the value of the ICMS to be excluded from the what is actually paid (and not what is highlighted on the invoices) and the intention to limit the understanding settled by the STF to periods prior to Law No. 12,973/14. Accordingly, there are grounds for affirming that the amounts still subject to tax authorities are not fixed and representative of increases in equity.

Another line of interpretation is that the IRPJ and CSLL taxes only apply when taxpayers actually perform the offsetting (transmission of PER/DCOMP), at which time they make use of the credits to which they believe they are entitled. This argument is based on (i) the taxpayer's choice regarding the use of the credit through offsetting and (ii) characteristics inherent to the tax credit, whose power of release is limited by law (such credits may only be used to offset debts relating to federal taxes).

The right to offset only exists when the taxpayer is both creditor and debtor of obligations to the same entity, in this case, the National Treasury. In the record of Resolution of Consultation No. 206/03, the Federal Revenue Service has even stated the understanding that legal and economic availability occurs when the taxpayer effectively receives the tax credit and, in the case of an offset, when it is effectively realized.

Although Law No. 9,430/96 itself determines that the Offset Statement is equivalent to payment, some also follow the understanding that the liquidity of the tax credit, for the purposes of characterizing the legal or economic availability of the income as a chargeable event for the IRPJ and CSLL taxes, occurs only at the time of the ratification of the offset by the RFB.

This is the scenario that entails payment of the tax more distantly from the final judgment and, therefore, it is more desired by the taxpayers and less desired by the tax authorities. And that is exactly what the 6th Court of Rio de Janeiro accepted as the relevant event for tax purposes in the judgment handed down in the record of Application for Mandamus No. 5035622-22.2019.4.02.5101. As prevailed in this case, "only with the ratification of the request for offsetting by the tax authority is it possible to speak of a fixed credit recovered by the applicant, as of the time when the taxable event for the IRPJ and CSLL occurs."

This decision has two positive effects: at the same time that it (i) avoids premature disbursement to pay taxes on the amount of the credit, it (ii) encourages the tax authorities to briefly review the offsets in question by failing to make use of the deadline of five years in that regard. However, we know that the matter is controversial and that this decision, although still subject to appeal, is one of the few that deal with the matter.

All this indicates that, after many years of discussions in the Judiciary to recognize the exclusion of the ICMS from the PIS and Cofins tax calculation bases, the taxpayers will still face extensive discussions regarding the timing of the taxation of these credits by the IRPJ and CSLL.

Category: Banking, insurance and finance

Presidential Decree No. 10,029/19, published on September 27, authorized the Central Bank of Brazil (BCB) to recognize the following as being in the interest of the Brazilian government: (i) installation in Brazil of new branches of financial institutions domiciled abroad; and (ii) increase in the percentage of equity in the capital of financial institutions headquartered in Brazil, held by individuals or legal entities resident or domiciled abroad.

Previously, the procedure for the participation of foreigners in the National Financial System (SFN) included a technical authorization proceeding before the BCB and, also later, the expression of interest by the Brazilian government through the issuance of a specific presidential decree signed by the President of Brazil.^[1]

With the issuance of Presidential Decree No. 10,029, BCB itself, upon completing the technical review proceeding for the request, will recognize the interest of the Brazilian government regarding the participation of foreigners in the SFN, making it unnecessary the issuance of a specific presidential decree for each case.^[2]

The change ends the uncertainty and the long waiting period for the President's response and allows expressions of interest based on objective requirements set forth in specific regulations to be issued by the National Monetary Council (CMN). The new rules should, where appropriate, provide for the same conditions as apply to local investors.

The need to issue specific presidential decrees resulted in delays for the entrance of foreign institutions into the SFN. Now, with a greater degree of security and agility given to authorization requests, the local market has become more attractive, which should result in the increase of competitiveness, higher quality of product offerings, and possibly a reduction in the cost of credit and service fees.

^[1] According to article 52 of the Transitional Constitutional Provisions Act (ADCT), the following is prohibited: (i) to install in Brazil new branches of financial institutions domiciled abroad; and (ii) increase the percentage of equity in the capital of financial institutions headquartered in Brazil held by individuals or legal entities resident or domiciled abroad, except when there is expression of interest from the Brazilian government. This prohibition is linked to the sensitivity and importance of financial activities for the stability and growth of Brazil, as well as the need for protection of the SFN.

^[2] Presidential Decree No. 10,029/19 contains no automatic recognition of the interest of the Brazilian government in the participation of foreigners in the SFN, but rather the transfer of the authority to recognize such an interest to the BCB itself.

Category: Banking, insurance and finance

On October 7, the Executive Branch forwarded to the National Congress Bill (PL) No. 5,387/19, which allows for implementation one of the objectives of the current management of the Central Bank of Brazil (BCB) mentioned by the president of that organization, in his inauguration ceremony in March of this year: “to make the market more open to foreigners, with a possible convertible currency^[1] that serves as a reference for the region."

Submitted by the president of the BCB and the Minister of Economy to the Office of the President of Brazil on September 12, the Bill represents an important step towards liberalization of the Brazilian exchange rate regime from the historical fetters of the Vargas legacy,^[2] already quite loosened, but partially in force since 1933.

Following the BC+ Agenda for modernization of the Brazilian financial system and in light of the diagnosis provided by the BCB's Director of Regulations that “many innovations practiced in international markets had no legal backing for implementation in Brazil,” the Bill proposes amendments to five orders for the Brazilian exchange rate regime.

First and from a formal point of view, there is a proposal for regulatory reorganization that includes the legal consolidation of 39 provisions that somehow deal with the foreign exchange rate regime. Although at least six other statutes continue to have relevant considerations on the matter and there continue to be various infra-legal rules, the National Monetary Council (CMN) and the BCB are tasked with adapting and remedying what is necessary, which is why the Bill provides for a vacatio legis of one year.

One may note that there was a change in the regulatory strategy, which bet on a tone more of principles, thus leaving a high degree of discretion to the CMN and BCB. This shows recognition that these entities are better able to adapt to changing circumstances, such as those currently witnessed by the growing influence of technology, and its trends, in the financial sector.

The table below summarizes the regulatory rules that may be amended and repealed, in whole or in part, by Bill 5,387/2019

Regulations affected by Bill 5,387/19

*Also in the amendments

From a substantive point of view, Bill 5,387/19 changes the framework, above all, for four topics. Of these, three are directly correlated with the aforementioned Vargas Era legacy, while the fourth and last refer to the recent demands of Prevention of Money Laundering and Combating Financing of Terrorism (AML) and data protection, which have had such an impact on the regulatory agenda of the financial system in recent years.

These changes are dealt with in more detail in the table below.

Main substantive changes contained in Bill 5,387/19

As may be seen from the table above, there is a greater concern regarding the proportionality of regulatory requirements, which is also the result of the repeated questions submitted by new entrants to the financial system not only regarding historically high entry barriers, but also about the rationality and reasonableness of the regulatory requirements, which are sometimes anachronistic.

But bolder goals, such as the convertibility of the Brazilian Real and the possibility for individuals to hold foreign currency accounts in Brazil, remain far from the regime proposed by the Bill, as acknowledged by the president of the BCB.

Thus, rather than being revolutionary in its content, Bill 5,387/19 focuses on giving the monetary authority the conditions to carry out the mission of liberalizing the Brazilian foreign exchange market when, and if, the necessary political and macroeconomic conditions allow it.

[1] Until the end of the gold standard in 1914, the concept of a convertible currency was related to those that could be exchanged for gold at a fixed official rate. Subsequently, the idea of convertibility was no longer related to the possibility of exchanging a particular currency for gold, but exchanging one currency for another at a par exchange rate. From 1946 to 1978, the International Monetary Fund (IMF) enshrined, in article VIII of its Articles of Agreement, the concept of convertibility, implying: (i) the absence of restrictions on payments for current transactions; (ii) non-application of discriminatory monetary practices; and (iii) the possibility of converting its currency balances in the power of monetary authorities of other countries. In 1978, however, under the floating exchange rate system, the concept of convertibility became more fluid and was replaced, in the IMF’s Articles of Agreement, by freely usable currency. Pursuant to the terms of article XXX, “f” of the Articles of Agreement, a freely usable currency is one which is widely used to make payments for international transactions and widely traded in the major organized markets. More commonly, however, the concept of a convertible currency is currently used to define a currency over which there are no restrictions on movement, trading, and use by issuing countries.

[2] In particular, one may highlight: (i) Decree No. 22,626/1933, which limited interest rates and contributed to the establishment of a financial repression regime (see footnote 4) in Brazil; (ii) Decree No. 23,258/1933, which classifies various types of foreign exchange operations as illegitimate, establishing strict foreign exchange controls; and (iii) Decree 23,501/1933 (repealed and partially replaced by Decree-Law No. 857/1969), which prohibited the indexation of contracts to foreign currency or gold, imposing a legal tender for the national currency.

[3] Partially repealed in a tacit manner, with partial removal of effectiveness.

[4]According to Edward Shaw's conception of the idea, financial repression is the phenomenon seen when the government limits the free flow of money to reduce the remuneration obtained by savers and to favor certain borrowers of funds. To this end, the government limits the possibility of investments in other jurisdictions, such that financial repression is normally accompanied by closed capital accounts and strict limits on financial investments abroad.

[5] See the appellate decisions pertaining to appeals 4,298, 4,339, 4,341, 4,380, and 4,400.

Category: Labor and employment

A law passed in September by the state of California in the United States assumes that a person providing services for consideration should be considered an employee of the contracting company unless the company demonstrates that all of the following requirements have been met:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

This verification system is known in the U.S. as the ABC test.

As stated in its article 1, Assembly Bill No. 5 is intended to expand the rights assured by the California Supreme Court in the case Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018) to ensure workers who are currently exploited by being misclassified as independent contractors instead of recognized as employees have the basic rights and protections they deserve under the law, including a minimum wage, workers’ compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family leave..

As a result, there has been much debate about the effects of this law on the business of companies that aim to connect costumers to service providers (digital platforms) and on the business model on which the shared economy (known as the gig economy) is based.

This discussion has generated repercussions even in Brazil: scholars contrary to the business model of the gig economy believe that, if applied here, the California law would make the business of digital platforms unviable, since the service providers that use them to connect with customers would automatically be considered employees of the platforms.

In our view, however, this is not true because, if introduced into the Brazilian legal system, the law passed in California would add nothing new to the Brazilian reality. In fact, Brazilian Labor Laws (CLT), in articles 2, 3, and 9, provide for, ever since they were promulgated in the 1940s, the concepts introduced by this U.S. state’s law. This is what this article proposes to address below.

A person is presumed to be an employee when not free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.. In other words, employees are those who render services to the contracting party under legal subordination, as is already the case in Brazil.

Legal subordination is essential for establishing an employment relationship. The new California law makes reference even to the importance of factual circumstances, as occurs in Brazil, based on the principle of substance over form, whereby factual reality is essential for a review of the specific case. These concepts have been widely applied by the Labor Courts for decades.

Second, an employee is presumed to be a person who performs work that is inside the usual course of the hiring entity’s business. This requirement may be interpreted from the point of view of both structural subordination and through the prohibition of outsourcing of a core activity. In other words, a person is presumed to be an employee when providing services found in the organizational structure of the contracting company, as occurs in Brazil based on the structural subordination theory, or when the person provides services related to the contracting company's core activity.

Regarding structural subordination, although this theory is a minority view, there are decisions in Brazil that recognize its applicability in conjunction with legal subordination. This theory has even been used by the Labor Courts in reviewing cases filed by service providers against digital platforms involving claims of an employment relationship. However, it has not prevailed when legal subordination is absent.

As for the prohibition on outsourcing of core activity, this interpretation also has its application softened in Brazil due to the recent decision by the Federal Supreme Court (STF) to recognize the legality of outsourcing of any type of activity, including the core activity of the contracting company.

Persons are presumed to be employees when not usually engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Regarding this point, although exclusivity is not a requirement of employment relationships in Brazil, it is considered an important factor in reviewing the specific case, in conjunction with the review of other requirements for an employment relationship, especially subordination.

Finally, the presumption that there is an employment relationship as provided for under California law is also well established by Brazilian case law, as it is the burden of the company to prove failure to meet the requirements of an employment relationship when the provision of services by the company is recognized. As established by Assembly Bill No. 5, article 9 of the CLT provides that any acts performed to prevent the application of the rights provided for in the CLT are considered fraudulent and void.

Regardless of that, Brazilian case law has consistently opposed the notion that service providers that use digital platforms to connect with customers are employees of the companies responsible for such platforms. This understanding is based on the fact that, as a general rule, (i) there is no legal subordination between service providers and their digital platforms; (ii) service providers are not included in the organizational structure of the digital platforms; and (iii) service providers provide services through various digital platforms, often competing with each other, without any exclusivity.

Of course, while the digital platforms’ business model is not exempt from labor and employment risks, and digital platforms must take a number of measures to mitigate the risk of an employment relationship with the service providers that use it, in our view, the recent Californian law would not change the current Brazilian legal scenario if applied here.