Paulo Zirnberger, CEO of Omnitax, a company specializing in tax intelligence, states
that the Brazilian tax landscape is about to undergo a significant transformation with the introduction of Split Payment, an innovative strategy scheduled to take effect in 2027. The change will initially focus on business-to-business (B2B) transactions and should make tax collection more efficient, real-time, and less susceptible to tax evasion. However, it also brings implications that led the government to opt for a gradual implementation.
The concept of Split Payment refers to dividing the payment of a transaction into two parts: one part goes to the seller and the other is automatically returned to the government in the form of taxes. Thus, at the time of the transaction, a percentage of the total value is withheld to pay the tax due, simplifying the tax collection process. Adoption of this system remains a major point of contention for businesses and tax authorities.
The main reasons for postponing its implementation until 2027 include technological development and market preparation. The gradual introduction allows companies, financial institutions, and technology providers to adequately prepare for the transition. This is essential to ensure that all participants are ready to operate within the new system and understand its functionalities. There is also an initial voluntary phase. That is, initially, companies will have the option to adopt Split Payment. This voluntary adoption phase offers the necessary flexibility for organizations to test the new system, adjust their internal processes, and understand the tax implications without the pressure of immediate mandatory implementation.
The Brazilian government recognizes that market readiness is a critical factor for the success of Split Payment. The first phase will be an opportunity for a sufficient number of companies to familiarize themselves with the process. Mandatory adoption for B2C (business-to-consumer) transactions will be considered as the system evolves and B2B companies participate. Furthermore, the gradual introduction of the system is a strategy to minimize the risks associated with an abrupt transition. Simultaneous implementation for all transactions could result in operational and legal complications, as well as confusion among users.
The expectation, for example, is that this change in the tax landscape will reduce tax evasion. With automatic tax withholding, tax evasion can be reduced, offering the government better collection and greater control over tax revenues. This change also promises to increase transparency in commercial transactions, since taxes due are calculated and withheld at the time of payment, and should also reduce the administrative burden that companies face when managing taxes, as the process will be automated.
This is where tax intelligence comes in, a tool that can play a fundamental role in the implementation and optimization of the Split Payment system in Brazil, especially focusing on B2B transactions. This can be achieved through Real-Time Data Analysis, which helps companies monitor their transactions and tax obligations, or through Process Automation, reducing the administrative burden on companies, particularly in the implementation of Split Payment. In other words, it utilizes artificial intelligence and machine learning to improve the security of tax data and ensure compliance with tax legislation.
Tax intelligence can also facilitate the modeling of diverse scenarios, allowing companies to simulate different taxation situations under the new system. This helps managers understand the financial and operational impacts of Split Payment on their operations and better plan their tax strategies, as well as tax intelligence systems that facilitate the generation of detailed reports and tax audits. With Split Payment, transparency in transactions will be crucial, and automated reports can provide valuable insights into tax compliance and financial performance, helping companies prepare for audits.
The fact is that we have gained more time until 2027, but Split Payment is an irreversible path, and tax intelligence can be a vital ally for companies in Brazil, helping to mitigate risks, ensure compliance, and maximize efficiency. The implementation of Split Payment scheduled for 2027 represents a significant step towards modernizing the Brazilian tax system, especially regarding B2B transactions. The gradual approach, which prioritizes market preparation and offers an initial voluntary phase, reveals a prudent strategy in a complex economic environment. With acceptance and adaptation to the new system, Brazil can be at the forefront of more efficient and transparent tax practices, which can benefit both the government and businesses in the long term.
