Cisco Offices Raided, Execs Arrested In Brazil

Many readers are writing in about the raids and arrests in Brazil's Cisco operation. At least 40 people were arrested earlier today, and Brazilian authorities asked the US to issue arrest warrants for five more suspects in this country. The allegation is that Cisco brought at least $500M of equipment into Brazil without properly paying import duties, and now owes over $826M in taxes, fines, and interest.

Comments

Would have gotten away with it too if it weren't f

[cez]

those meddling kids!*(&$!#

Basically... *Shwing* emerging markets.

"Damn, imagine if we weren't direct shipping to clients and had to pay taxes on the real value of all this shit!"

How accounting didn't realize this, or who's on top of the ladder of people in the know the article doesn't begin to speculate...

Corporate World at its finest, do it until caught, then pay a fine that doesn't affect the bottom line.

FTFA:

In raids that began Tuesday, 650 police and tax agents executed 93 search warrants and arrested 40 people involved in the alleged scheme set up by Brazilian businessmen to benefit the U.S. company, the AP reported, citing a statement from Brazil's federal police.

Goods were shipped from tax havens like Panama, the Bahamas and the British Virgin islands to Brazilian clients to avoid local taxes, and the value of the products was underestimated, the AP report said.

The investigation by Brazilian authorities began two years ago, according to the AP report.

PS: This is the only text at all on Page 2.

Page 2 of 2

Cisco started operations in Brazil in 1994 and has sites in Sao Paulo, Rio de Janeiro and Brasilia.

Only the stupid pay taxes in Brazil

[mangu]

I'm a Brazilian citizen, and I don't have to post AC to state this: I only pay taxes as a last resort.

What would you do if you had to pay a sales tax of 40%?

What would you do if you had to pay import duties of 100%?

What would you do if you had to pay a total of 70 (seventy) different taxes to city, state, and federal government on a single product?

This is what happens when public servants can retire after, in some cases, eight years of "work", with full pay. Getting promotions and raises after retiring. Brazil is the paradise of public servants. Everyone I know is trying to get a job as a public servant. I know of people who have gone through five years of college to get a job as a street sweeper.

That's why the Transparency International organization states that "Some of the countries that have a significantly worse rating since 2005 include Brazil,".

If only we would shoot all public servants in the street, Brazil could be the richest country in the world, but, unfortunately, too many people are greedy, and too many Brazilians allow this situation to continue because they themselves want to get a public job...

Re:Only the stupid pay taxes in Brazil

[Anonymous Coward]

but most people do pay! brazil arguably has one of the more sophisticated tax collection systems around, and they have been breaking tax collection records year after year.

see, salary tax is collected by your employer, so no way to skip that. sales tax data is cross-reference with business income tax, so it's easy to detect who's not paying, finally there's a financial movement tax (CPMF) with takes 0.38% of all money coming out from (not into) your bank accounts, automatically. when they cross-reference CPMF, income tax and sales tax, you basically got all your bases covered. and if memory serves me right, capital gains tax is also automatically collected by your bank or broker the moment you cash in the money from the transactions.

the problem is that they charge a lot, they collect a lot and give almost nothing back. police? marginally effective, but in fact most of the population are scared of them. legal system? any cases take years to even begin being heard. public health system? don't get me started on that. is a s***hole, all capable citizens resort to private health insurance. public schools? horrible, able citizens put their kids on private schools. the military? I'm not very impressed and their budget is really small in GDP terms compared to our neighbours.

so they tax a lot but no one gets anything back and there's always a fiscal loss. the money is going somewhere and it is not into my pocket.

therefore I submit to you: why pay? at all?

Re:Would have gotten away with it too if it weren'

[rbanffy]

I am a Brazilian ./er, so I will comment.

What your friend's father did 35 years ago was possible. Some kinds of tax evasion are still possible now, but, with the advance of computing technology, it is increasingly more difficult to do so.

What the folks at Cisco are being accused of doing is a massive effort to avoid paying a whole lot of import taxes. If you consider their competitors point-of-view, they are committing fraud in order to offer their products for prices their competitors can't match, driving them out of the market.

Not pretty by any point-of-view.