Tax planning 2024: now is the time to carry it out

Tax planning provides you with the best results when performed in line with your business’s current situation

By Glória Cunha

Looking for more beneficial operating models is crucial for reducing tax burden and ensuring an increased profit margin. In this sense, companies should carry out their tax planning for 2024 if they want to ensure compliance with the best accounting and tax practices.

Even when faced with economic uncertainty, market fluctuations and changes arising from the on-going tax reform, companies should assess, first of all, their own operating particularities, recent performance, business goals and projections.

Choosing a company’s tax regime for the coming year is one of the decisions that should be taken based on this first analysis. Tax planning allows a company to assess whether its current tax scheme is still the most suitable, given the Brazilian laws currently in force and the strategic goals of the business for the years to come.

Below we break down a few reasons as to why companies should incorporate annual tax planning in their routines right away:

Meeting the deadline for changing tax regimes

A company's tax regime has a significant impact on its tax burden, regardless if it is taxed under the Simplified Taxation Scheme, Actual Income or Deemed Taxable Income methods.

Planning ahead for the coming year is also important because, if an analysis indicates that your company’s tax regime should be changed, it is possible to take action in advance to carry out this change as smoothly as possible, without running the risk of missing the legal deadlines.

Each year, taxpayers are generally given the option to switch to the Simplified Taxation Scheme until the last business day of January, which in 2024 falls on the 31th. However, the option for the Deemed Taxable Income or the Actual Income methods must be made by the date of payment shown on the first income tax and social contribution form issued for the corresponding year.

It should be noted, however, that certain tax regimes may be mandatory for companies in some situations, according to legal criteria. But if no such requirement is imposed on them, legal entities are given the option to choose the tax scheme that benefits them the most.

Read more: Doing Business in Brazil: learn the pros and cons of each tax regime

Keeping your company compliant with the tax legislation

To give you an idea of how changes are constantly made in the Brazilian tax environment, according to the Brazilian Institute of Planning and Taxation (IBPT), more than 2.26 tax rules have been issued per hour every business day in Brazil ever since the Federal Constitution was enacted.

Therefore, in a country known for its tax complexity that undergoes frequent legislative changes, carrying out this procedure every year is a way of ensuring that your company’s operations are in line with the most beneficial rules in order to find the best opportunities.

Making the most of tax breaks and special tax schemes

This procedure is key, as it can result in tax reductions or even exemptions, easing the tax burden imposed on the business.

Thus, it is worth starting your 2024 tax planning well in advance, so that you can identify tax breaks and evaluate special tax schemes at the federal, state and local levels, and make the necessary arrangements to meet the legal requirements on time.

Identifying opportunities to recover tax credits

By re-evaluating the tax situation of your business, you will be able to identify overpaid taxes, a situation that is quite common due to the aforementioned complexity of the Brazilian tax environment.

This assessment can be performed through a tax review, which is also valid during this planning stage.

If such situation is detected, it is possible to offset tax credits against outstanding taxes or even apply for refunds in certain cases. In addition, by taking these resources into account, companies can make better financial planning decisions.

Planning your company's fiscal year

DPC's team of specialists assesses the client's tax records in order to draw up a tax plan in line with the particularities of the business. Plan your company's fiscal year based on accurate information. Please, contact us at: dpc@dpc.com.br.