A tax reform It represents one of the most significant changes to the Brazilian tax system in recent decades and requires companies of all sizes to conduct detailed studies to understand its financial implications.
Although many organizations are keeping up with the latest news about the IBS, the CBS, and the Selective Tax, few have already begun a structured calculation to determine how these changes will affect costs, prices, cash flow, profit margins, and competitiveness.
In this article, you'll learn how to calculate the impact of tax reform on your company, which indicators to analyze, and how the support of a advisory accounting can turn this obligation into a competitive advantage.
Why calculate the impact of tax reform?
Many companies believe they will only need to worry about the reform once the new rules take effect. However, this approach can lead to poor decisions, a loss of competitiveness, and financial difficulties during the transition period.
A tax reform It does not merely change tax rates. It alters the logic of consumption taxation and introduces a new system based on the Dual VAT, expands the use of tax credits, shifts the tax burden to the destination, and creates new mechanisms, such as the split payment.
These changes directly affect:
- Price formation;
- Contribution margin;
- Cash flow;
- Tax planning;
- Commercial contracts;
- Operational structure;
- Product profitability;
- Market competitiveness.
Companies that conduct simulations in advance will have much more time to refine their processes and adapt their strategy.
What will change with the tax reform?
A tax reform It replaces several existing taxes with two new consumption taxes.
Among the main changes are:
- Replacement of PIS and Cofins with CBS;
- Replacement of the ICMS and ISS with the IBS;
- Establishment of a Selective Tax on certain products;
- Adoption of destination-based taxation;
- Expansion of the tax credit system;
- Gradual implementation of split payment;
- Reduction in cumulative effects.
Although the goal is to simplify the Brazilian tax system, The transition will require significant adjustments within companies.
Complete Guide to
Tax reform
What information is needed to perform this calculation?
Before starting any simulation, you need to gather reliable information about the the company's operations.
The key figures are:
- Annual revenue;
- Revenue by product or service;
- Current tax system;
- Amount of taxes paid;
- Supplier costs;
- Operating expenses;
- Profit margin;
- Payroll expenses;
- Customer locations;
- Supplier locations;
- Sales profile (B2B or B2C).
The more detailed this information is, the more accurate the analyses will be
Step 1: Identify which taxes will be replaced
The first step is to Identify which taxes currently apply to the company's operations.
Depending on the activity being carried out, there may be impacts on:
- ICMS;
- ISS;
- PIS;
- Cofins;
- IPI (in specific situations).
These taxes will be gradually replaced by the CBS and the IBS, in accordance with the schedule set forth in the tax reform.
Knowing exactly how much each tax amounts to today is essential for establishing a basis for comparison.
Step 2: Calculate your current tax burden
Before envision the future, it is necessary to understand the company's current situation.
A best practice is to calculate:
- Percentage of the tax burden relative to revenue;
- Taxes paid by product;
- Taxes paid for services;
- Taxes paid by business unit.
This type of analysis often reveals significant differences between operations that appear to be similar.
In many cases, products with good profit margins are subject to high taxes, which significantly reduces their profitability.
Step 3: Evaluate the tax credits
One of the biggest changes in the tax reform is the expansion of the credit system.
Currently, various expenses do not qualify for tax credits. Under the new model, the approach will be much broader.
That is why it is important to map out:
- Purchases of goods;
- Purchase of supplies;
- Procurement of services;
- Administrative expenses;
- Operating expenses;
- Investments;
- Fixed assets.
The greater the amount of expenses that generate tax credits, the lower the effective tax burden may be. This factor can completely change the company's bottom line.
Step 4: Analyze the customer profile
Not all companies will be affected in the same way effects of tax reform. One important aspect is identifying who buys from the company.
Businesses that They sell primarily to other companies (B2B) can benefit from the new credit model, since their clients will be interested in taking full advantage of the taxes set aside in these transactions.
Meanwhile, companies focused on end consumer (B2C) They often face different challenges, as customers typically do not take advantage of tax credits and tend to be more sensitive to the final price.
This analysis directly influences business strategy.
Step 5: Review the pricing structure
Another common mistake is to believe that simply replacing one tax rate with another is enough. In reality, the entire pricing policy may need to be revised.
The calculation must take into account:
- Product cost;
- New taxes;
- Credits that can be applied;
- Desired margin;
- Operating expenses;
- Business expenses;
- Competition;
- Market positioning.
Companies that conduct this review in advance will find it easier to maintain their profitability.
Step 6: Simulate different scenarios
A good analysis does not rely on just one scenario. Ideally, simulations should be built based on different scenarios.
For example:
- Conservative scenario: It anticipates modest gains from credit and the maintenance of current margins.
- Intermediate scenario: It includes operational improvements and the partial use of credits.
- Optimistic scenario: It considers processes that are fully adapted to the new tax system.
These projections help identify risks and opportunities before final implementation.
Step 7: Assess the impact on cash flow
With mechanisms such as split payment and new methods of tax collection, the company's financial behavior could change significantly.
It's worth considering:
- Average time to receipt;
- Average payment term;
- Working capital requirements;
- Cash balance;
- Operating liquidity;
- Financial projections.
This study helps prevent surprises during the transition.
Conclusion
Calculate the impact of the tax reform It is no longer just a concern for the tax department; it has become part of companies' strategic planning.
A replacement of taxes with the IBS and the CBS, The new credit system, taxation at the destination, and mechanisms such as split payment require a detailed analysis of the operation so that the organization can maintain its competitiveness and profitability.
In this context, accounting plays a key role by providing analyses that support more informed decisions aligned with business objectives.
With proper planning and expert support, the transition to the new tax model can proceed in an organized manner, reducing risks and strengthening the company’s long-term financial sustainability.
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