Angelo Ambrizzi
Lawyer at Marcos Martins Advogados
Every day, various tax regulations are published, generating legal uncertainty among businesspeople when it comes to making decisions. In addition, the high tax burden has an impact on increasing prices and reducing the profitability of companies.
According to a study carried out by the Brazilian Institute of Planning and Taxation (IBPT), “there have been 443,000 rules on tax issues since 1988. In other words, more than 50 per working day – or two every hour”.
The excessive number of laws creates a complex and confusing tax environment, and at the same time is full of opportunities to question the application of the laws in the day-to-day running of companies.
In Brazil, it is impossible to ignore or underestimate the ability to question legislative abuses of tax collection, since 95% of companies pay taxes unduly, according to a study carried out by the IBGE. With the tax authorities’ voracious drive to collect, taxpayers, whether individuals or companies, need to be mature enough to identify opportunities to reduce their tax burden by questioning the incidence of taxes in their operations.
Opportunities for reduction
The path the company must take to identify opportunities for reduction is to map out in detail the incidence of taxes in its operations, such as taxation on the purchase of inputs, the tax burden on its sales, analyzing the payment of social security contributions on the payroll, among others.
The mapping will serve as a strategic map for administrative or judicial questioning of the tax burden, with the aim of paying a lower overall rate at the end of the month.
In this way, the greater a company’s tax intelligence, the more efficient its cash flow becomes from a tax point of view.
Entrepreneurs’ efforts to legally reduce their tax burden must be relentless, as the inefficiency of government tax collection is unduly consuming amounts that could be used by the company for investment, price reductions or increased profitability.
The delay in questioning legal inconsistencies also generates losses, just by objectively analyzing the economic repercussions on a company of the “thesis of the century”, which is the exclusion of ICMS from the PIS and COFINS calculation base.
The Supreme Court limited companies that had not filed a lawsuit up to the date of the judgment to refunding amounts overpaid up to March 2017, while companies that had filed a lawsuit prior to that date were allowed 5 years to do so retroactively.
Here’s an example
Imagine the following situations involving two companies:
Company A overpaid monthly Pis and Cofins in the amount of R$50,000.00 and filed the lawsuit in April 2017, after the STF decision began. The amount to be recovered will be R$2,700,000.00.
Company B overpaid the same R$50,000.00 per month, but was diligent and filed the lawsuit before March 2017. In this case, the amount to be recovered will be R$5,800,000.00.
The difference in what will be refunded is approximately 115% greater for company B.
Although the situations mentioned are hypothetical, they show that delay in seeking to adjust the tax burden can cause damage to companies.
Therefore, faced with a situation of tax inefficiency, it is necessary for companies to analyze opportunities to reduce their tax burden, which will certainly bring improvements to the company’s cash flow, as well as a competitive advantage.
Learn about a model that can reduce your company’s tax burden, click here.
