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6 steps to optimize your company’s tax management

Posted 2018-09-19

Starting a business in Brazil is complicated, considering it is the country with the highest tax burden in Latin America. According to the Organization for Economic Cooperation and Development (OECD), Brazilians pay the equivalent of 33.4% of the economy in fees and taxes – a number that highlights the importance of tax management in companies.

But the good news is that there are a few ways to prevent and deal with this impact. Good tax management allows the organization to better adapt to its activities and legal requirements to reduce expenses with Brazilian taxes.

Check out our tips to help you make your tax management more efficient:

Know the legislation

To start tax management in companies, it is fundamental to be within the legislation that applies to each of them. It is through this study that you will know the accounting obligations, tax and all the processes that must be fulfilled to keep the company running.

Brazilian legislation has undergone recent changes, many of them related to the declarations that must be made to the Treasury. The process has been computerized and still raises some doubts for many companies. Be aware of the news, as the entire operation of the organization can be put at risk.

Tax Planning

Preventing is always better than solving a problem later. Therefore, it is important for companies to plan.

Planning involves a series of procedures that aim to make your activity more economical. Acting preventively, your company can benefit from tax incentives, for example, and thus direct taxes to certain project, paying less on tax returns.

Choice of tax regime

Choosing the Brazilian tax regime is one of the most important decisions a company should take when it comes to tax management! There are basically three tax systems available to companies in Brazil: Simples Nacional, real profit and presumed profit.

Simples Nacional was a system developed with the purpose of reducing bureaucracy and dismissing micro and small companies, unifying and simplifying the calculation of taxes. However, in practice, the law provides many restrictions so that the company can opt for this model.

The real profit and presumed profit regimes thus remain. The main difference between them is that, in the first case, the taxation is determined by the calculation of the company’s net income, and the amount of calculation can vary according to the company’s results. In presumed profit, the calculation is more simplified, but there is a limitation that the company has a gross revenue of up to 78 million.

Consulting and Auditing

It is precisely because tax management is so complex that often the company needs external assistance to choose the best tax practices available. It takes a specialized and external view.

The consultant can make use of a strong legal-accounting structure, with the best professionals in the market, in order to help the company to choose the best way to be followed so that less taxes are paid.

This can happen, for example, when the company is programmed to avoid the occurrence of the taxable event. The audit, in turn, can look back and identify mistakes and frauds that make the company’s money trickle down the drain.

Implement brazilian tax governance

Tax governance is a term that unites all efforts to fulfill tax obligations in the most appropriate way possible, with the aim of improving tax management in companies. Some of the most common practices are:

Respect to the standards established by national legislation and the norms of renowned institutions in the tax segment;

Valuation of moral and ethical principles to guide compliance with tax obligations;

Concern about the company’s public reputation with employees, partners, customers and the community;

Understanding that any and all advantages obtained illegally do not benefit the company as a whole and therefore the practice should not be encouraged.

Therefore, Brazilian tax governance is this set of responsibilities that the company assumes and that should guide the actions of tax planning.

Automation

To deal with all the administrative and operational parts of the enterprise more effectively it is possible to use modern tools.

Many companies have found in technology a great ally when it comes to tax management. Integrated fiscal solutions and ERPs allow managers to face fewer obstacles and concerns with bureaucracies and fiscal liabilities, allowing them to focus on what matters for real – the management of their business.

Read more in our blog:

Brazil NF-e 4.0 2018 – How the new version of invoice looks like?

Author's post: Europartner Accounting

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