Tax Reform is on the agenda in Brazil, bringing significant changes that will affect various sectors, including e-commerce. Companies in this market should re-evaluate, primarily, cash flow, purchase and sale prices of products, and the supply chain.
Felipe Beraldi, economist and manager of Indicators and Economic Studies at Omie, a cloud management (ERP) platform, explains that the Reform is one of the most profound structural changes in the Brazilian economy in recent decades, considering its impact on businesses of all sizes. With this, the coming years are expected to be marked by a significant improvement in management within companies. The economist lists below everything an e-commerce professional needs to know regarding the new rules.
1 – Unification of taxesThe package of measures to regulate the Tax Reform is under debate in the Legislature, with the main proposal to unify five taxes — ICMS, ISS, IPI, PIS, and Cofins — into two: CBS (federal) and IBS (state/municipal), in addition to the 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 in a more transparent way, e-commerce companies will have greater clarity in defining their pricing policy. It is necessary to pay attention to the changes that the Reform will introduce into the market, whether it be the redistribution of the tax burden between 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 on a specific tax was, until then, more common in ICMS (Tax on Circulation of Goods and Services). With the tax reform, the crediting will be expanded to consumption as a whole.
To adapt to the new tax burden, a thorough analysis of the pricing policy will be necessary. Leaving the adjustment of the values of products sold online all at once may require significant increases. "A sudden change affects the relationship with clients and suppliers, who may choose not to buy anymore, which influences the viability and growth of the business," comments Beraldi.
3 – Impact on cash flowThe economist recalls that, with legislative changes, online selling businesses will need to handle more data and better understand the financial elements of the business. "Lack of preparation can lead to an inadequate structuring of the financial flow and basic business indicators, including the risk of paying too much or too little in taxes, which can trigger tax audits and investigations by the Federal Revenue Service," he adds.
4 – Gradual transitionThe Tax Reform should bring 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 the IBS will be gradual, with a transition period of up to eight years. During this period, the old taxes will coexist with the new system, requiring companies to adapt and plan. "It is essential that e-commerce professionals are prepared for this transition, adjusting their systems and processes to ensure compliance with the new rules," he/she/they recommends.
5 – Supplier chain assessmentCarrying out good tax planning will become an essential element for survival – it will involve a thorough assessment by the entrepreneur, aiming to maintain their competitiveness in the market, without completely compromising their margins.
“At this time, e-commerce leaders must be aware of regulatory developments and potential specific impacts on their segment, seek to organize their business’ financial information and, especially, approach their accountant – a professional who will play a very strategic role for companies in this context”, highlights the economist.
