Tax Reform has been widely discussed in Brazil, bringing changes that promise to simplify and modernize the tax collection system. For those looking to stay up to date and understand the impacts of this ongoing reform, we highlight the main points that deserve attention.
Debureaucratization and Unification of Taxes
One of the main goals of the Tax Reform is to reduce bureaucracy in the tax system. The proposal aims to unify several taxes into what has been called value added tax (VAT), the dual VAT, subdivided into: Contribution on Goods and Services (CBS) of a federal nature and the Tax on Goods and Services (IBS), of States and Municipalities. This means that taxes such as PIS, Cofins, ICMS and ISS can be combined into IBS and CBS, each with a single rate. The IPI (Tax on Industrialized Products) will be abolished, but the Selective Tax (IS) will be created. This change aims to simplify the tax system, making it easier for companies and individuals to comply with tax obligations.
Expected Reduction in Tax Burden for Some Sectors
In addition to simplification, the reform is intended to reduce the tax burden, especially for small and medium-sized companies. Initially, the reduction will only be applied to earnings up to a pre-established limit, with the aim of promoting the growth and competitiveness of this segment, which is vital to the country’s economy. With regard to the services sector, however, the forecast is for an increase in rates for sectors outside the scope of Simples Nacional.
Transparency and Equity
Another crucial point of the reform is increased transparency in the collection and use of taxes. The expectation is that, with a clearer and more simplified system, there will be greater supervision and social control over the collection and application of public resources. The reform also seeks equity, reducing inequalities in the burden of taxes between different sectors and layers of society.
Impacts on the Business Sector
For corporations, the changes mean not only making it easier to comply with tax obligations, but also opportunities for more efficient financial planning. With a potentially lower tax burden and a more predictable system, companies will be able to invest with more security and strategy.
Let’s focus for a moment on the example of Canada, which has already undergone its own tax reform. In Canada, when forming a Corporation, there is protection of the partners’ personal assets, in addition to the expected reduction in the cost of paying taxes. Wouldn’t the objective of the Brazilian reform be to seek these same benefits? The North is that a more conducive business environment be fostered, where we have the possibility of paying less taxes and, thus, reinvesting these resources in our growth.
Challenges and Considerations
Of course, every change comes with challenges. The transition to the new system will involve adjustments on the part of companies and the government. Adaptations to management systems, personnel reallocation and even cultural changes within organizations may be necessary to adapt to the new tax model.
The Brazilian Tax Reform promises to be a milestone in simplifying the tax collection system levied on consumption, bringing benefits to companies and citizens. Keep an eye on updates and prepare to take advantage of the opportunities that this transformation could bring.
