Greenwashing and the Brazilian Tax Reform: Green on the outside, unfair on the inside: what is the relationship between Greenwashing and the Brazilian Tax Reform?
In recent years, environmental concerns have grown exponentially, justifying the number of times various countries have met to debate the issue and come up with a plan of action in their respective jurisdictions (Kyoto Protocol, Paris Agreement, etc.).
Due to the importance of the environmental issue, the Tax Reform instituted the principle of environmental protection, including the possibility of tax benefits for companies considered to be environmentally friendly.
What many consumers (and businesspeople) have not been aware of is the practice of Greenwashng, which is much more commonplace than one might think.
What is Greenwashing?
Greenwashing is the practice of companies or organizations appropriating sustainable ecological virtues through marketing and/or public relations.
Many companies, for example, claim that they practice reforestation. However, these companies have no proof that the trees they have reforested have caused any reduction in carbon in the atmosphere, nor that the type of tree planted is compatible with the biome in which it was planted.
Because of this practice, the European Union has issued rules to regulate the inspection of ecological products and ecological companies. Unfortunately, the same care is not taken in Brazil.
Lack of monitoring of greenwashing and its tax consequences
As there is no regulation on how to monitor the occurrence of fraud arising from Greenwashing, the principle of environmental protection adopted by the Tax Reform could (and will) be distorted.
Many companies that practice greenwashing will be able to claim that they are environmentally friendly and that they are acting in defense of the environment. They will therefore be able to obtain tax benefits such as tax reductions or even tax exemptions.
How companies will obtain these benefits is still pending regulation. If these regulations don't pay attention to the practice of greenwashing, there will be many companies fraudulently obtaining tax benefits.
The major consequence is that, in addition to the misrepresentation of the principle of environmental protection in tax matters, there will be a possible drop in tax collection and this shortfall will have to be made up with revenue from other taxes. In other words: the tax burden could increase overall.
Warning about the possible regulation of greenwashing
It is not advisable to wait for regulations on tax benefits for companies considered to be green, but rather to carry out effective compliance planning in order to comply with Brazilian environmental standards, as well as tax planning in order to avoid tax evasion.
For those who want to start a business in Europe or set up offshore companies and sell in Europe (whether they are digital nomads or not), it is important to hire legal advice to carry out environmental compliance planning to comply with European standards, as well as tax planning to avoid double taxation and tax evasion.
I discuss offshore companies in this article.
Failure to comply with environmental regulations, both in Brazil and in Europe, can result in extremely heavy fines, which can exceed thousands of reais/euros.
Remember: tax evasion is not just a crime in Brazil.
If you are interested in hiring professional legal services related to tax planning, we are a law firm specializing in the subject. To do so, please contact us via WhatsApp or e-mail: thyanipuppio@gmail.com
