Brazilian authorities are saying that Cisco Systems Inc.’s Brazilian unit is under investigation for setting up a scheme to defraud by evading the payment of import duties, local sales and corporate taxes on behalf of Cisco.  Police said they arrested 40 people on temporary warrants including the chief executive of Cisco do Brasil, Pedro Ripper and other Cisco executives.  Six Federal Revenue Service agents were also arrested in connection with the case. Cisco confirmed that Brazil represents approximately 1% of its overall business.  “Local police are talking with U.S. authorities about warrants for the arrest of give other people there…”We’ve contacted U.S. authorities and they are taking the appropriate steps…It’s inevitable that we’ll arrive at the corporate headquarters (of the U.S. company),” said Erika Nogueira, the Federal Police agent in charge of the investigation. She also commented that “The investigation is ongoing, but eventually those involved could be fined for tax evasion, “ she added. 

This article reminds us that blue chips may be held liable for tax underpayments that are carried out by a few, with or without company knowledge. 

To read more click here or visit the Tax Whistleblower Legal Network.