Brazilian Coffee Production Region News - Brazilian Coffee Company Allegedly Evaded Taxes and Profited
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Brazilian Authorities Crack Down on Coffee Tax Evasion Scheme
According to Reuters in São Paulo, prosecutors in Minas Gerais state announced on Tuesday (March 16) that Brazilian authorities have launched surprise raids on coffee trading companies suspected of tax evasion, issuing multiple arrest warrants to combat these companies' tax avoidance practices.
The Minas Gerais Prosecutor's Office stated in a declaration that coffee cooperatives, wholesalers, distributors, and roasters from Minas Gerais, São Paulo, Bahia, and Espírito Santo states were involved in this fraud scheme. Their tax evasion operation amounted to 1 billion reais (equivalent to $178.75 million).
These four states account for over 90% of Brazil's total coffee production. Minas Gerais is Brazil's largest coffee-producing region, mainly producing high-quality Brazilian Arabica coffee beans, while Espírito Santo is the main producer of the Robusta variety, which is widely used in the instant coffee industry.
Officer Tiago Vicentini de Oliveira, who coordinates the special task force investigating this scheme, stated at a press conference on Tuesday (March 16): "Roasters in Bahia state used shell companies established in São Paulo state to purchase coffee beans in Minas Gerais and Espírito Santo states, thereby avoiding payment of certain state taxes and profiting from the price differences."
Brazil's tax system is extremely complex, particularly because the rates of the Brazilian Circulation Tax (ICMS) vary by state, with each state having its own ICMS regulations. This complex system has enabled many companies to exploit loopholes for tax evasion and profit from it.
Brazilian authorities did not disclose the names of the companies under investigation in this announcement. Court prosecutors stated that authorities are executing 35 arrest warrants related to this investigation, and assets of suspects involved in this fraud scheme will be frozen.
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