Strategic tax management: best practices help ensure competitiveness

From time to time, companies should reevaluate their tax behavior and look for tax-related opportunities

By André Ferreira and Luciane Santana

The achievement of corporate objectives depends on many actions and factors, and in the tax environment some steps need to be taken to ensure business competitiveness. Strategic tax management involves reducing tax impact to a minimum by identifying opportunities and carrying out periodic analyses.

Business communities usually associate the Brazilian tax system with heavy taxation. But this is far from the biggest problem. The complexity of Brazil’s tax laws and the time it takes to calculate taxes take a huge toll on the business environment, despite the country’s attempts to make progress with efforts towards tax simplification.

But this complex scenario also holds its share of opportunities. When well assisted, companies can find advantages and ways to position themselves in a more strategic and profitable manner, as presented below.

Tax planning

Tax planning is one of the strategies for reducing business costs. Part of this process involves choosing a taxation regime: Simplified Taxation System, Taxable Income or Presumed Profit (“Simples Nacional”, ”Lucro Real” or “Lucro Presumido”, respectively), which must be aligned with the business’s reality and goals. Taking the wrong path can lead to financial waste and impact costs, damaging a company’s competitiveness.

This planning assists companies not only at their initial stages, so it must be performed constantly, especially in times of changes in business direction and legislative developments relevant to their segments.

Another important factor is to consider tax planning as a joint responsibility of a company’s different sectors, because it is necessary to reach a result that best meets their needs.

Tax benefits

Tax benefits promote the reduction or elimination – either directly or not – of tax burdens at the federal, state and local levels, in order to foster the development of a given industry or region. They can take the form of tax exemptions, tax-base reductions, presumed credit, zero ratings, tax deferrals, among others.

The assessment of tax benefits is unique to each company. Numerous factors need to be considered, such as business segment, size, location, tax regime, etc.

In this sense, it is necessary to perform technical studies, check the feasibility of the tax treatment, assess the conditions for benefit entitlement, carry out the procedures at the competent level, and keep track of the duration and renewal deadlines.

Tax breaks

As per the tax laws, companies are allowed to support preapproved social, cultural, and sports-related projects, allocating to them part of the taxes already due, without incurring in any additional costs. From an Institutional Marketing standpoint, this presents a highly interesting opportunity, as it helps consolidate one’s brand as a driver of social change.

Tax reviewing

This is another strategic action to improve a company's tax situation. Through this process, all tax-related choices and decisions made by the business over the past five years can be mapped. This assessment can identify opportunities such as:

Read more:

• What can tax review do for your company?
• Tax offsets and refunds: from tax review to PER/DCOMP

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Process Management

Tax complexity is a reality in Brazil, and the rules in place must be complied with. But it is possible to enhance tax process management within companies, reducing costs and boosting security and speed.

The use of technology and integrated information systems is crucial to generate quality data, preventing reworks and avoiding the risk of fines, penalties, and audits.

On June 21, in partnership with the Brazil-Germany Chamber of Commerce of São Paulo (AHK-SP), DPC hosted the webinar: "Strategic tax management: best practices to ensure competitiveness". Check out the recording below (Portuguese only):

Focus on the best tax practices

Domingues e Pinho Contadores has the necessary expertise to guide national and multinational businesses from different segments through processes that may create opportunities for tax optimization.

DPC's experts bring together a comprehensive overview of the current economic landscape as well as the regulatory requirements, assisting its clients in developing strategies aligned with the business’s commercial and operational objectives. You can rely on this support: dpc@dpc.com.br.