Tax Reform is on the agenda in Brazil, bringing significant changes that will affect various sectors, including e-commerce. Companies in this market will need to reassess, primarily, cash flow, product purchase and sale prices, and the supply chain.
Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, a cloud-based management (ERP) platform, explains that the Reform is one of the most profound structural changes in the Brazilian economy in recent decades, considering the impact on businesses of all sizes. As a result, the coming years will likely see significant improvements in corporate management. The economist outlines below everything an e-commerce professional needs to know about the new rules.
1 – Unification of taxesThe package of measures to regulate Tax Reform is under debate in the Legislature, with the main proposal being to unify five taxes — ICMS, ISS, IPI, PIS, and Cofins — into two: CBS (federal) and IBS (state/municipal), in addition to a Selective Tax for a specific list of products. This change will result in the creation of VAT (Value-Added Tax), simplifying tax collection and making the process more transparent.
“By reflecting the tax burden on the stages of the production chain more transparently, e-commerce companies gain greater clarity in defining their pricing policies. It is necessary to pay attention to the changes the Reform will introduce to the market, whether in the redistribution of the tax burden across sectors or the broader mechanism of tax credits in production chains,” explains the economist.
2 – Impact on purchase and sale pricesThe practice of crediting and debiting specific taxes was, until now, more common with ICMS (Tax on Circulation of Goods and Services). With tax reform, crediting will be expanded to consumption as a whole.
To adapt to the new tax burden, a thorough analysis of pricing policies will be necessary. Waiting to adjust the prices of products sold online all at once may require significant increases. “A sudden change affects relationships with customers and suppliers, who may choose not to buy anymore, impacting business viability and growth,” Beraldi comments.
3 – Impact on cash flowThe economist notes that, with legislative changes, online businesses will need to work more with data and better understand financial aspects of their operations. “Lack of preparation can lead to inadequate structuring of cash flow and basic business indicators, including the risk of overpaying or underpaying taxes, which could trigger tax audits and investigations by the Federal Revenue Service,” he adds.
4 – Gradual transitionTax Reform is expected to have positive effects on the country’s potential GDP in the medium and long term. More growth also means more business opportunities, which will come with complex challenges. Beraldi emphasizes that the implementation of IBS will be gradual, with a transition period of up to eight years. During this time, old taxes will coexist with the new system, requiring adaptation and planning from businesses. “It is essential for e-commerce professionals to be prepared for this transition, adjusting their systems and processes to ensure compliance with the new rules,” he recommends.
5 – Supplier chain assessmentConducting good tax planning will become essential for survival—it will involve a detailed evaluation by entrepreneurs to maintain competitiveness in the market without fully compromising their margins.
“At this time, e-commerce leaders should stay alert to regulatory developments and potential specific impacts on their segment, organize their business’s financial information, and especially engage closely with accountants—professionals who will play a highly strategic role for companies in this context,” the economist highlights.
