Tax Reform: How to ensure a successful transition?

Companies must prepare to maintain competitiveness in a restructured tax environment.

The Tax Reform presents evident challenges, but it also opens opportunities for companies that prepare adequately.

To ensure a successful transition, businesses must gradually adjust their operations to the new rules, reducing the risk of unexpected consequences. Below, we list some key points in this context:

Understanding the new scenario

The first step is to understand the changes being implemented and how these changes will specifically affect your operations. Even the way the company negotiates with suppliers and customers should be reconsidered.

The reform includes the introduction of the Dual IVA, which is composed of: the CBS (Contribution on Goods and Services), federal, and the IBS (Tax on Goods and Services), from states and municipalities. IBS and CBS will replace PIS, Cofins, ICMS, and ISS.

A Selective Tax (IS) is also being created, which will serve as a way to discourage the consumption of products harmful to health and the environment. The so-called "sin tax" generates an additional charge for specific items and sectors: cigarettes, sugary and alcoholic beverages, vessels and aircraft, cars, physical and online gambling, iron ore extraction, oil, and natural gas. In return, the IPI will no longer be applied in the way it is today and will only apply to goods listed as produced in the Free Trade Zone of Manaus when manufactured outside the ZFM, as a way to maintain protection and encourage the development of the region.

Read more: Tax Reform Enacted: What Changes and How the Transition Will Work

Tax Planning

The transition to the new system requires planning and an analysis of the potential impacts. Companies should start identifying the key points for adaptation, such as changes in the tax burden and fiscal benefits, possible changes in their operational processes, and the effect of the full non-cumulativity brought by the new rule.

The new rate system, still with some aspects to be defined, will have implications for companies operating in states with differentiated tax regimes. For example, one issue is the elimination of regional tax advantages currently granted by ICMS, which requires attention from those who currently benefit from such incentives.

Therefore, investing in effective tax planning is not only a way to protect against potential penalties or mistakes in complying with the new regulations, but also a strategy to optimize fiscal management, ensuring financial health in the long term.

Study on operational costs and cash flow

One of the main concerns of companies when dealing with the Tax Reform is the impact on costs, which can affect profit margins, requiring adjustments in fiscal and financial strategy.

The implementation of split payment also needs to be considered. In general terms, in this mechanism, the tax payment is automatically separated from the value of the goods or service, aiming for greater control over transactions and improved efficiency in tax collection. However, this model has effects on the cash flow of businesses, as the tax will no longer be paid in the following month and will instead be deducted at the time of payment.

Read more: Split Payment: Tax Reform brings changes in the way taxes are collected

System Adaptation

The adaptation of technological systems and ERPs is another critical aspect. The new tax model will require adjustments to technological platforms to calculate, collect taxes, and transmit obligations. Companies must invest in tools that integrate the changes in an automated and secure way, avoiding errors that may result in fines and sanctions.
Technological resources play a crucial role even during the transitional phase, being indispensable during the years when companies will need to deal with both current tax rules and the new ones.

Specialized Consulting

Given the complexity of the changes, having consultative support becomes essential for a smooth transition. A detailed analysis will be crucial in this process, identifying specific impacts for the segment and the business.

Consulting can also assist in creating a transition plan, guiding the necessary restructuring of processes and systems, and ensuring that all tax obligations are properly met during the period when the new system will coexist with the model being replaced.

Support for the Challenges of Tax Reform

Specialized support during the adaptation to the Tax Reform process is essential to mitigate risks and ensure that all stages are carried out efficiently and in compliance with regulations.

With the DPC team, your business has access to secure guidance and information that will support important business decisions. Count on this support: dpc@dpc.com.br.