The tax reform in Brazil, consolidated by Constitutional Amendment No. 132 of 2023, marks the beginning of a structural transformation in the tax system, with the potential to simplify taxes, increase transparency, and promote fiscal equity. However, this reform presents considerable challenges that will need to be addressed in the coming years.

PERSPECTIVES

One of the main expectations surrounding the reform is the simplification of the tax system through the unification of consumption taxes via the Goods and Services Tax (IBS) and the Contribution on Goods and Services (CBS). This promises to alleviate the current complexity, which imposes an extensive bureaucratic and administrative burden on taxpayers and accounting professionals. The creation of these two taxes aims to replace taxes such as ICMS, ISS, IPI, PIS, and Cofins, creating a more transparent and efficient value-added system.

Another positive aspect is the introduction of the Selective Tax, focused on products that negatively impact health or the environment, such as cigarettes and alcoholic beverages. This could not only generate additional revenue but also encourage more responsible consumption, aligned with public health and environmental sustainability concerns.

The reform also brings significant changes for micro and small businesses. The Simples Nacional system will undergo adaptations to fit the new scenario, allowing participants to choose whether to calculate IBS and CBS within or outside the unified regime. This could result in greater flexibility for these businesses, enabling more effective tax planning.

CHALLENGES AND UNCERTAINTIES

Despite the positive outlook, the reform faces considerable challenges. One of the main ones is the complex transition, which will extend until 2033. During this period, taxpayers will need to gradually adapt to the new rules, while the government must approve complementary laws that regulate the application of the new taxes. This creates an environment of uncertainty, especially for companies that depend on predictability to plan their activities.

Maintaining the overall tax burden is another sensitive issue. Although the promise is that the reform will not increase the total tax burden, the transition to a new value-added system, with rates estimated around 27.5%, has raised concerns among business owners and taxpayers. Depending on how the rates are applied, some sectors may face tax increases, especially those already dealing with narrow profit margins.

Additionally, the extinction of taxes such as ICMS and ISS requires significant reorganization at the state and municipal levels, which could generate political resistance. States and municipalities that benefited from tax competition will have to adapt to a more equitable system, potentially creating federal tensions.

Another crucial point is the impact on micro and small businesses, which, despite benefiting from simplification measures, may struggle to compete in a reformed tax environment. The choice between calculating taxes within or outside the Simples Nacional regime requires a level of tax planning that not all companies have access to, especially smaller ones.

HOW COMPANIES CAN PREPARE FOR THE CHANGES IN TAX REFORM

Given the challenges and transformations the tax reform will bring in the coming years, it is crucial for companies to start preparing to minimize impacts and seize opportunities. Here are some strategic actions that can help face this new reality:

OPERATIONAL IMPACT ANALYSIS: The unification of taxes and the implementation of IBS and CBS will require changes in internal processes for calculating and paying taxes. Companies should review their financial and accounting management systems, ensuring they are ready to meet new requirements. Automating the tax calculation process will be an essential strategy to avoid errors and ensure compliance.

ECONOMIC IMPACT PLANNING: The transition period and new tax rates may directly affect profitability. It is essential for companies to conduct financial projections, considering the new tax regime. Price adjustments, profit margin reviews, and cost control will be necessary to remain competitive in a scenario of possible tax increases.

NEW COMPETITIVE LANDSCAPE: The standardization of taxes and the end of tax competition may change the competitive landscape, especially for companies that benefited from tax incentives in certain regions. Competitiveness will increasingly depend on operational efficiency rather than regional tax advantages. Analyzing the competition and adapting market strategies will be vital to stand out.

ADMINISTRATIVE MANAGEMENT: The reform will also require changes in companies’ administrative structures, particularly regarding tax compliance. The volume of information that will need to be managed will increase, demanding more attention to document management and communication with tax authorities. Having a team prepared for these new demands will be crucial to avoid penalties and delays in meeting obligations.

SUPPORT FROM TAX SPECIALISTS: Given the complexities and scope of the changes, relying on the support of professionals specialized in taxation is a decisive action. Consultants, lawyers, and accountants experienced in tax law can guide companies through all aspects of the transition, helping to identify tax planning opportunities and adjust operations to the new regime. Investing in proper consultancy can not only avoid risks but also maximize the benefits that the reform can offer.