Tax Whistleblowing: Fundamentals, International Practices and Legal Regime

Abstract

This article aims to discuss tax whistleblowing. First, its fundamentals and legal nature are discussed. Compared international practices in tax whistleblower programs are stated and analyzed. The objective and formal aspects of tax whistleblowing and the subjective legal elements - whistleblower, accused, and Administration - are reviewed. In the sequence, the procedure of tax whistleblowing in the Brazilian Federal Tax Administration is critically exposed. Given the growing international use of rewards in tax whistleblowing, a brief reflection is promoted on the advantages and disadvantages of offering monetary incentives to tax whistleblowers. It concludes with some recommendations for strengthening a tax whistleblower program. Encouraging tax whistleblowers by ensuring protection and, perhaps, rewards are a cost-effective and efficient alternative to obtain information on tax irregularities and tax wrongdoings that are difficult to detect by traditional tax screening and auditing methods.