Content published on the Fausto Macedo Blog, in Estadão:
https://politica.estadao.com.br/blogs/fausto-macedo/a-escolha-do-regime-tributario-adequado-nas-novas-empresas/
The political/economic crisis that has persisted in the Country for some years has caused many companies to reduce costs through the dismissal of employees and contributed to substantially raising unemployment rates, reaching the mark of 13 million people.
With the difficulty of placement in new positions, many decided to use their economic reserves to undertake a business. However, we know that the bureaucratic and tax difficulties for those who wish to open a company in our country are not among the most favorable.
Even with the mechanisms established by the government to simplify and reduce taxation, the taxpayer’s life is not easy. States and municipalities create mechanisms so as not to lose or reduce their revenue. As an example, we have the companies classified under the Simples Nacional (Brazil’s simplified tax regime) which, even though simplified, are the target of charges for differences in ICMS rates.
This, added to the inexperience factor of many who decided to undertake a business, can generate a wrong choice of a tax regime and, consequently, affect the formation of the price of the product or service, ending up rendering unviable the business that had barely begun.
In other words, a wrong tax regime, especially for entrepreneurs who are starting out, can compromise the financial health of the company, negatively impacting cash flow because the working capital or the partners’ profit was used to pay taxes. This leads to the formation of a price with the wrong margin, since the high tax will have to be passed on to the consumer, making the product or service more expensive than even the competition.
Logically, the success of a company depends on many factors ranging from the viability of the business, the region in which it operates, competition, to the segment. However, it is unquestionable that tax planning is fundamental for the start of the business.
This planning also applies to companies that have already begun their activities under a wrong classification. Through a study, the tax professional analyzes the company’s activity to find the regime that will bring the greatest savings in tax payment for the next fiscal year, always in compliance with the legislation so that the risks of improper practices are avoided.
Finally, it is important to remember the companies that will sell to several States, since it is necessary to analyze the NCM code (Mercosur Common Nomenclature) of the products. Every good that circulates in Brazil must have this code, which was adopted by the member countries of Mercosur and may impact the collection of ICMS on sales to other states. In many cases, it is more viable to open a branch due to the excessive ICMS tax burden.
*Juliana Assolari, tax specialist, partner at Lassori Advogados
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