Brazilian Coffee Firms Face Indictment For Alleged Tax Fraud
Authorities in the state of Minas Gerais issued multiple arrest warrants during a surpise raids as part of a probe to indict coffee companies accused of evading taxes in Brazil according to the statement issued by the prosecutor’s office. According to the government’s athorney, the state has lost a total of $178 million or 1 billion reais due to unclear tax practices by the coffee companies.
The investigation spans 39 cities in the states of Minas Gerais, Espirito Santo, Sao Paulo and Parana, the statement said.
Minas Gerais is Brazil’s No. 1 coffee producer, while Espirito Santo state leads in the production of the robusta variety widely used by the instant coffee industry.
Tiago Vicentini de Oliveira, a police officer coordinating the task force that investigated the scheme, said in a press conference that roasters in Parana benefited from buying coffee in Minas and Espirito Santo using shell companies based in Sao Paulo to avoid payment of certain state taxes.
The Brazilian tax system is complex, particularly regarding the ICMS state tax whose rate varies from state to state.
The authorities did not name the companies being investigated.
Brazilian authorities were serving 35 arrest warrants in connection with the probe, which also involves freezing assets of the suspected parties, the prosecutors said.