Taxation, tax benefits and competition distortion in Brazil

Abstract

This research addresses the relationship between taxation and competition in Brazil. As taxation influences decision on resource allocation by economic agents, the article will focus on two kinds of tax benefits: the Manaus Free Trade Zone and the fiscal. Established the way in which they can affect competition, the mechanisms present in the Brazilian legal system to prevent or correct competitive asymmetries caused by the granting of tax incentives will be evaluated. In order to better illustrate this scenario a parallel with Article 107 of the TFEU will be drawn. Considering that the Brazilian legal system does not have a similar prohibition, alternatives will be considered, such as Article 146-A of the Constitution of the Republic of Brazil, which provides for the possibility of editing a law establishing special criteria for taxation with the aim of preventing competition balances, and the possibility of competition advocacy exercised by the Brazilian Competition Defense System.

Keywords

• Taxation
• Competition
• Tax benefits