Losses from fraud in Brazil added up to BRL 336 bi in 2021

Smuggling, piracy, unfair competition through tax fraud, tax evasion, and the theft of public services are some of the illegal practices that caused economic losses in Brazil amounting to BRL 336.8 billion in 2021. Of this total, BRL 95 billion are taxes not collected by the government.

The data can be found in the survey Brasil Ilegal em Números (“Illegal Brazil in Figures”), released Thursday (Aug 4) by ACRJ, Fecomércio RJ, and FIRJAN—trade, service, and industrial associations based in Rio de Janeiro.

The illegal market in Brazil is alarming, said FIRJAN head Eduardo Eugenio Gouvêa Vieira. “Resources are subtracted, taxes are left uncollected, and jobs cease to be created. We must cast light on the socioeconomic losses stemming from this practice in the country and call for coordinated actions by all levels of government to combat this wrongdoing,” he stated.

In the view of Antonio Florencio de Queiroz Junior, head of Fecomércio RJ, “consumers are the greatest protagonist in this process. We can only fight this evil if society is engaged.”

José Antonio do Nascimento Brito, head of ACRJ, argued that the partnership between the three institutions demonstrates the urgency to redress the loss. “This is the first step, but we will remain vigilant and continue advocating short-, medium- and long-term efforts to change this landscape,” Brito pointed out.

Illegal practices

Early this year, in a bid to gauge the aspects and the impact of the issue, the associations created the work group Rio Legal, which collected data across 16 economic segments as well as energy and water infrastructure services.

Based on data from Brazil’s anti-counterfeit forum FNCP and the World Health Organization, the greatest losses in 2021 stemmed from clothing, BRL 60 billion; fuels, BRL 26 billion; cosmetics, BRL 21 billion; alcoholic beverages, BRL 17.6 billion; agricultural defensive agents, BRL 15.1 billion; and pay TV, BRL 15 billion.

Under utility services, the costs of electricity theft amounted to BRL 6.5 billion last year. According to electric energy watchdog ANEEL, the rate of energy theft in Brazil is 15 percent. In the North of Brazil, losses surpass 50 percent.

As for water, the cost of illegal connections in the supply network was estimated to total BRL 20 billion countrywide by 2021.

Manifesto

As a follow-up on the publication, the institutions drafted the Manifesto de Combate ao Brasil Ilegal (“Manifesto to Combat Illegal Brazil”). In it, the group underscores the need for coordinated actions by the country’s Legislative, Executive, and Judiciary branches at federal, state, and municipal level, to fight criminal activities.

The associations also urge the productive sector and society to become involved in the efforts to raise awareness and help combat illicit practices in the country.