2020 tax planning: your company ready for the challenges of the New Year

 Through an effective tax planning, companies can leverage competitiveness by 2020.

Luiz Flávio Cordeiro

Optimizing the cost is an ever-present goal in any business planning, whatever the size or segment of the business. Many companies, however, do not pay due attention to tax planning, ignoring the benefits of periodically review the tax expenses.

The complex Brazilian fiscal scenario requires companies to reevaluate at the end of each year, so that it is possible, next year, to come up with a combination of variables that will allow the company, through legal means, to reduce tax costs.

It is also important to highlight that each company must fulfill its reevaluation journey, since there is no single model for tax planning, given the number of aspects that must be considered in this process.

In general, one must know all the forms of framework, taxes, accessory obligations, tax benefits, special regimes and tax opportunity in force to achieve the best results with this planning.

The entrepreneur still needs to follow what is to come. The Tax Reform should take shape throughout 2020, bringing news and, perhaps, the desired simplification.

Having an expert advice is a good practice for those who have a global view of these issues, keep up with changes in legislation and have expertise in pointing out the most beneficial practices for each business.

What to consider when drafting the 2020 tax planning

 

1. Tax regime: calculations and projections indicate which regime is most advantageous

The tax regime (Real Profit, Presumed Profit or Simples Nacional) the company will adopt in 2020 should be established at the beginning of the year. This choice should be in line with size, segment and billing forecast, among other variables.

The option for the Simples Nacional may be changed until January 30th. If one opt for the Presumed Profit or Real Profit regime, the limit is the payment date of the first due date of the year.

This option will be valid throughout the calendar year. The right framing is a decisive aspect for business success. A wrong choice can cause losses, leading the company to pay more with taxes, as well as problems with the tax authorities.

Simples Nacional Companies earning annual revenues of up to BRL 4.8 million may opt for this scheme. Presumed profit This is the option for the company whose total gross revenue in the previous calendar year was equal to or less than BRL 78 million.  Real profit In cases in which annual gross revenue is greater than BRL 78 million, legal entities may already be compulsorily included in Real Profit. Companies in certain areas, including those in the financial area, are also required to adopt this regime.

2. Tax Benefits: Tax Opportunities That Will Make a Difference

Resorting to federal, state and municipal tax benefits has the potential to reduce the burden of tax burden while maintaining business efficiency and competitiveness. There may be the differential that the company seeks so much to optimize finances.

The taxpayer should also be aware of the special regimes that cover businesses from different productive sectors.

With proper planning, it is possible to benefit from the "tax war" among the states in order to, within the legality, achieve advantages and spend less on taxes.

However, it is necessary to identify the demands of the business and draw a detailed study of the segment to verify the possibility of harnessing these benefits.

See also: Tax benefits must be on corporate tax planning for 2020

3. Tax Credit Recovery: Minimizing Tax Impact

It is not uncommon for businesses to get lost in the tangle of tax obligations. Therefore, it is valid to verify the occurrence of double payments or overpayments of taxes such as INSS, PIS, COFINS, IR, ICMS and ISS.

The tax credits recovery is a legal alternative to recover the money erroneously intended to pay for taxes. This process should integrate a broader assessment with a survey of detailed business information.

It is important to make clear that the forms of redemption and use of credits vary by tax. Credits can be redeemed by offsetting or receiving securities, or used to pay suppliers (in some states).

See also: Tax credit recovery: a boost to emerge from the crisis

 

New tax scenario under discussion

 

Tax reform must move forward

The discussion about new tax rules aimed at reducing bureaucracy and unblocking the country's development is underway. House, Senate, and Government are seeking consensus on the text that should be submitted for approval.

The proposals provide alternatives to eliminate distortions in the current tax system, with the abolition of taxes on goods and services and the replacement of a VAT (value added tax) tax.

Changes in income tax and payroll taxation

Besides the consolidation of the Tax Reform, the possibility to collect tax on dividends, currently exempt, is another point of attention for next year. The measure, under a government study, provides for the imposition of Income Tax on the distribution of profits and dividends by legal entities to partners or shareholders. By abolishing the exemption, the 15% income tax percentage would be deducted at source.

In other words, over the next year, the political and legislative framework will need to be monitored for tax changes and their likely impact on the business community.

Advice for the best performance of your business

Domingues e Pinho Contadores brings together the expertise required to help your company leverage competitiveness in 2020 from an efficient tax planning and tailored.

A specific plan for your business is the first step to a year of waste-free finance under control in accordance with tax law. DPC specialists keep up with changes in the legislative field, keeping clients informed about current obligations.

DPC promotes an x-ray of the company's tax landscape, identifying the most beneficial practices for the business profile. Rely on this advice to re-evaluate the tax framework, for an analysis of the application of tax benefits, mapping of tax credits to be recovered / offset and a complete tax diagnosis.