Cooperative Compliance and the CONFIA Program

For centuries, the relationship between tax authorities and taxpayers has been difficult and conflicting. Mistrust between the parties has produced constant tensions, raising costs for the state and the taxpayers. The imposition of taxes provoked uprisings in various parts of the world and on different occasions, the most noteworthy being the Mineira Conspiracy, a rebellion in Brazil that, in 1789, was triggered by the rigorous collection of taxes on gold by the Portuguese Crown. Even today, companies and tax authorities have routine disagreements, which often end up in disputes in administrative and judicial courts.

This relationship could be more productive if the parties would change their attitude. Fortunately, there is a light at the end of the tunnel so that the painful tax authority-taxpayer relationship can finally change for the better. Thanks to the perception that cooperation can be beneficial to companies, tax authorities and taxpayers, some countries are implementing Cooperative Compliance Programs, which presuppose the existence of a transparent relationship based on good faith, trust and a spirit of collaboration. For taxpayers, it provides greater legal security and reduces the cost of compliance with tax obligations. The State must ensure greater predictability for tax collection and reduce the tax gap. (Tax gap). This is a bold and challenging change for the tax authorities and companies, but it is gaining momentum. In Brazil, experiences of this kind proliferate, highlighting the launch of the Confia Project by the Federal Revenue Service of Brazil last year, in addition to other experiences initiated within the scope of state tax administrations (TAs).

Paradigm break

The traditional model of the tax relationship is based on the voluntary compliance of tax obligations by the taxpayer and subsequent control by the tax authorities. The taxpayer must be aware of the tax legislation, interpret it, calculate and pay the taxes it considers due, as well as present the accessory obligations determined by the tax administration (TA). Later, during the tax period, the TA analyzes the information submitted and verifies the taxes paid, using the information it obtains from taxpayers and third parties. Upon finding irregularities, the tax authorities select the taxpayers for audit and make the tax assessment of debts identified in the course of the inspection, accompanied by sanctions for non-compliance with the tax legislation. This model of self-compliance by the taxpayer and subsequent control by the TA was vital when transactions were less complex, and the tax authorities did not have information. Today the scenario changes rapidly and the traditional model is unable to reduce the high rate of litigation in Brazil.

In fact, today’s complexity of the economic relations brings great challenges to compliance with the tax normative. Interpreting and applying the tax normative depends on specialized knowledge. For businesses, this means higher compliance costs and higher tax risks. In another angle, the technological advances of the Fourth Industrial Revolution[1], internet transactions and the large volume of networked data increase the ability of tax authorities to act close to the tax generating event. Today companies issue electronic tax documents, which are deposited in real time in the databases of the tax authorities. Supported the exchange of information, the massive crossing of data and the techniques of data analytics and artificial intelligence, the TAs increase their powers of surveillance over economic transactions, without having to create obligations to taxpayers. This is how the innovations produced by digital technologies have promoted profound changes in the way tax administrations operate.

The opportunity thus arises for a revision of the traditional control model to a cooperative relationship, which, unlike confrontation, is based on transparency, good faith, justified trust, and a spirit of collaboration. It is advantageous for taxpayers because:

  • it increases legal certainty with closer and faster guidance and clarification services by TA;
  • it reduces the possibilities of litigation and the emergence of unnecessary administrative and judicial disputes;
  • it reduces the indirect costs of compliance with tax obligations and
  • it can contribute to strengthening the image of companies certified in the program.

Companies can focus on their core business. For tax authorities, the main benefits are:

  • the increase in the degree of voluntary compliance with tax obligations provided by the change in taxpayers ‘ behavior and the consequent reduction of the tax loophole;
  • the reduction of tax litigation;
  • the guarantee of speed and predictability in the inflow of revenues into the public coffers and
  • the possibility of taking advantage of technological innovations to launch taxes with greater precision, proximity to the generating fact and, even, with the confirmation of the taxpayer.

In summary, if the traditional model is based on control after compliance by the taxpayer, taking disagreements to the adversarial stage, the cooperative compliance is based on the premise of a collaborative relationship, with procedures founded on good faith, transparency, justified confidence, and real-time control (Herrán Piñar, 2020).

Cooperative Compliance Programs have already been implemented in several countries, such as Spain, the Netherlands, Australia, the United Kingdom, Italy and other nations. Since the year 2013[2], the organization for Economic Cooperation and Development – OECD – recommends tax administrations to adopt cooperative compliance programs to stimulate tax compliance by building a relationship based on the spirit of collaboration, good faith and transparency. It is estimated that about one-third of the OECD countries have cooperative compliance programs, which are slowly taking hold on a global scale. (Owens & Penberton, 2021). In 2020, the European Union launched its “action plan” for a fair and simple taxation, which includes the creation of a Cooperative Compliance Program. Developing countries, such as Honduras, Nigeria and Zambia, are also implementing such programs, as are some Brazilian states[3].

This expansion is welcome, but we have to be realistic. Cooperative Compliance should not simply replace the traditional model, and its introduction should be gradually and carefully planned. The paradigm shift brings doubts and uncertainties, which if not properly addressed can result in the failure of Cooperative Compliance Programs. If, even with the support of well-designed legislation, companies and tax authorities remain opposed to cooperation, the failure is certain. Companies and corporations must lay down their arms. Companies cannot be fined when supported by the program, but in no way can Cooperative Compliance generate more beneficial treatment for a particular company. As Almeida (2017) explains: “the goal of this paradigm shift is to call tax authorities and taxpayers to mutual cooperation, precisely to ensure the payment of the tax due correctly and on time.”.

Main Challenges

The main challenges of this profound paradigm shift are (OECD, 2013):

  • Communication: complete clarification to taxpayers on all consequences of the cooperative compliance program to avoid two misinterpretations: either that it will lead to greater scrutiny by the TA or that low-risk taxpayers will receive less attention and support as the resources of the TA are directed to those at higher risk.
  • Culture: a cooperative compliance program requires a deep change of culture and conduct by both the TA and the taxpayers. .  Changes are needed in operational processes and attitudes, working in real time, adopting a preventive and problem-solving attitude. Investing in training and capacity building for the tax officers is a key requirement.
  • Contact TA-taxpayers: maintaining adequate contact intensity that produces a successful relationship and creates a climate of openness and trust requires a commitment of time and resources from the parties, particularly in the early stages. Although over time the model will provide compliance cost savings for taxpayers and the TAs, the initial commitment can be complicated in times of budget cuts in the TAs and economic crisis for companies. It is important to pay constant attention to appropriate time management. Internal governance and the risk of creating too close ties are also concerns that must be considered.
  • Tax control framework: Effective tax control is a vital feature of cooperative compliance and requires constant attention. The maturity of tax control frameworks is essential, and tax administrations should invest and have high-level experts in this area.
  • Evaluation of results: it is necessary to create indicators for evaluation and the impact of the expected results. The classic parameters for evaluating TAs are based on the traditional model of the tax relationship, focusing on the measures to sanction noncompliance, identified by the TA. The results of the new relationship will need to be measured by indicators that can measure changes in the behavior of taxpayers such as the increase in the voluntary compliance rate, the reduction of the tax gap, the decrease in litigation, etc.

The CONFIA program

CONFIA is the Cooperative Compliance Program launched by the Federal Revenue Service of Brazil. Its initial milestone took place in April 2021, in an internet event (webinar),  in which foreign academics, employees of tax administrations from other countries, taxpayers who experience the experience of participating in this type of program outside Brazil and RFB agents who work in the Authorized Economic Operator [4] (AEO) program, an initiative in the customs area that bears a certain similarity to the principles of Cooperative Compliance (RFB, 2021), were presented. Since then, the program has been built by representatives of the Internal Revenue Service and taxpayers, because, by principle, the participation of actors in shaping the program is fundamental.

Structure and governance of Confia

The Confia is managed by the Steering Committee, whose task is to deliberate on the proposals formulated in the Dialogue Forum for the solution of topics of interest within the framework of the Confia program. In turn, the Dialogue Forum is organized and governed by an status and composed of three (3) basic structures:

  • an Executive Secretariat, which is responsible for organizing the entire work dynamics of the Dialogue Forum, is composed of RFB servers and representatives of the participating entities.
  • an Assembly of Representatives, deliberative body of the forum, is composed of 10 representatives of the taxpayers and 5 representatives of the RFB, all with the right to vote and responsible for deliberating on the choice of topics for study and on the referral of proposals to the Steering Committee of the trust: and
  • the Thematic Chambers, responsible for studying the themes and proposing solutions. Its composition is more comprehensive, besides members of the participating companies and the RFB, specialists, academics, public or private entities, and any other specialists who have knowledge of the debated themes and can contribute to the construction of solutions can also be invited.

In addition to the RFB officers and representatives of the participating companies, The Forum statute also provides for the possibility of participation of invited entities, who can collaborate on specific topics, partner entities, provided that they sign a cooperation protocol with the RFB for logistical support, and academics, experts and even public entities.

At the present stage, the Confia program has gone through the alignment phase and is in the “design” phase, that is, in the complete specification by the tax authorities and taxpayers. Next will come the “test,” “implement” and “expand ” phases, described in the Trust portal (


The 21st century is being highlighted by the advent of new technologies and new forms of relationships. The multiplicity of internet resources, digital transformation, the need for transparency, the large volume of information available to tax authorities, the appreciation of ethical behavior in companies and the state, all make the environment favorable to the paradigm shift from control to cooperation. However, this cultural change is a great challenge. For the Federal Revenue, several internal events are making its employees aware that cooperating with companies does not mean giving up the possibility of applying sanctions when necessary. It is, rather, to ensure greater efficiency for the tax authorities in fulfilling their institutional mission by seeking greater degrees of tax compliance, higher collection and less litigation. For companies it is necessary to implement internal control structures and the development of a culture of trust in relations with tax authorities.

Despite the potential barriers, the Receita Federal and partner companies are supporting the Confia project. Since its conception, the construction of the project involves representatives of the tax authorities and companies. The Dialogue Forum allows participants to act in search of solutions and the thematic Chambers seek to ensure the highest degree of quality in the technical debate of the issues, avoiding early the controversy of the litigation. The trust must be advantageous for the tax authorities, which anticipating the taxable event, guarantees an accurate and timely collection. It should also be beneficial for companies, which now obtain continuous guidance and monitoring, greater legal certainty and lower compliance costs. For the society, a reduction of litigation is expected, which occupies the courts with millionaire tax cases, so the Brazilian society should benefit from a significant economy of resources, which today are lost in the inefficiency of the credit recovery process.


  • Almeida, C. F. (2017). Compliance Cooperativo: uma nova realidade entre administração tributária e contribuintes. RDTI Atual, 58-82.
  • Herrán Piñar, A. (2020). Un Nuevo Enfoque en el Modelo de Relación con el Contribuyente: el cumplimiento cooperativo. Seminario Internacional sobre Política Fiscal y Administración Tributaria. Antigua-Guatemala: IEF.
  • OCDE. (2008). Study into the Role of Tax Intermediaries. Paris: OCDE.
  • OCDE. (2013). Co-operative compliance: a framework: from enhanced relationship to co-operative. Paris: OCDE.
  • Owens, J., & Penberton, J. (2021). Policy Brief. Cooperative Compliance: A Multi-Stakeholder and Sustainabale Approach to Taxation . Viena, Áustria: Universidade de Viena.
  • RFB. (27 de novembro de 2021). Ministério da Economia – Receita Federal – Operador Econômico Autorizado. Fonte: GOV.BR:
  • RFB. (novembro de 2021). Ministerio da Economia – Receita Federal – Projeto Confia. Fonte: GOV.BR:


[1] The Fourth Industrial Revolution began at the turn of the century and is based on the digital revolution. It is characterized by a more ubiquitous and mobile internet, by smaller and more powerful sensors, which have become cheaper, and by artificial intelligence and machine learning. A world in which virtual and physical manufacturing systems cooperate flexibly, on a global level (Schwab, 2018).
[2] (OCDE, 2013). The cooperative relationship: A frame of reference: From the cooperative relationship to cooperative compliance. OECD Publishing. 10.1787/9789264207547-es.
[3] Sao Paulo, Alagoas, Rio Grande do Norte, Ceara and Rio Grande do Sul.
[4] The Authorized Economic Operator (AEO) program is an initiative of the Brazilian Internal Revenue Service to give fluidity to foreign trade and contribute to the development of Brazil and its partners. The design of the AEO is based on the reduction of the customs risk of the taxpayer who proves compliance with the requirements of the program, after rigorous verification by the Internal Revenue Service. The company participating in the AEO enjoys benefits related to the agility of its shipments, and this benefit can also be enjoyed in countries that have signed a mutual recognition agreement with Brazil. Information about the AEO program can be found at

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