Tax, financial, labor and social security initiatives as a response to the crisis

Rita Araújo

Faced with the crisis caused by the Coronavirus pandemic and the threat of a downturn in business activities in several segments, it is necessary to use strategies to face the economic reality of the period which will be the "new normal" in many ways.

There is a desire for a close resumption and a greater number of open companies and employment maintained. However, the instability in the economy and the sharp drop in revenues fill the entrepreneur with uncertainties and concerns about the market and the impacts on business itself.

The Federal Government has been editing measures to reduce the negative effects of Covid-19 on business, either by postponing the payment of taxes, the presentation of accessory tax obligations or by developing programs to preserve employment.

In this scenario, fiscal, financial, labor and social security consultancy assumes an even more strategic position for companies, assuming the role of supplying managers with grounded and updated information from an integrated vision that may contribute to making the right decisions and even to the perception of new opportunities.

See some important details that companies should consider when analyzing the moment.

Financial management

Time to maintain a high level of control over finances, given the economic instability of the moment and the drop in revenues that affects most businesses. Therefore, it is important to:

• Analyze cash flow: more than ever, inflows and outflows need to be carefully tracked. Expenses that can be eliminated must be identified.

• Planning for the short-term: To thoroughly provide for the expenses expected in the coming months, including planning for the contingency measures that will be adopted. It worth establishing an action plan.

• Evaluating the hiring of specialized advice: relying on specialized support for both operational tasks and consultancy services makes the difference currently when the entrepreneur has so many strategic issues to reconsider.

Tax Management

The Tax Law, known for its complexity, has been frequently changed at the municipal, state and federal levels since the public health emergency situation was established in the country. A series of new decrees and ordinances are being published by the public authorities aimed at extending tax payment deadlines, providing information and establishing benefit programs.

As the measures may guarantee a greater period to organize or even contribute to a relief in the accounts, it is important to accompany the changes. Here are a few:

• Extension of the deadline for filing EFD Contribuições and DCTF due in April, May and June: was extended to July 14, 2020 and July 21, 2020, respectively.




• Extension of the deadline for filing the ECD 2020 calendar year 2019 to July 31, 2020.




• Postponement of delivery of the Quarterly Brazilian Capitals Abroad - CBE to June 15, 2020 to July 15, 2020 and the Annual CBE to June 1, 2020.




• Postponement, suspension and/or debitment of taxes

The recently edited measures have also opened the possibility of extending the payment of taxes in installments. Rules are in force for federal tax debts, as well as for states and municipalities. One of them is the suspension of contributions to the FGTS for three months. The payments from April to June will be made from July to December in six installments, free of penalties or charges.

The companies also have other resources, such as:




• Tax benefits

Tax benefits offered based on productive activities should also be considered. A series of special regimes cover businesses from different productive segments.




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




• Indebt determination of PIS and COFINS

The indebts determination of PIS and COFINS from lawsuits to exclude ICMS from the PIS and COFINS tax base, a kind of legal tax advantage that requires a good study and guidance by lawyers, may even be in the assessment.




• Use of tax credits

In this crisis period, a tax review is worthwhile to identify whether all credits or overpayments were used and to immediately use the refund or offsetting. In case of any occurrence, the company can apply for it through an administrative proceeding with the Brazilian Federal Revenue, using the PER/DCOMP Web system.

The deadline for refunding and or offsetting overpaid taxes is five years and the adjustment is calculated based on the Selic rate.




See also: Compensation and restitution of federal taxes: crisis scenario expands search for tax opportunities




• Review of the tax environment

It is also important to reevaluate the 2020 tax planning considering these impacts not expected so far in operations. When re-comparing the assumed and actual profit from new estimated surveys, the company can identify a considerable change in the total payable, highlighting advantages in replanning the route yet in 2020, if the company has not yet collected IRPJ and CSLL in that year.

Labor and Social Security Management

Find here some of the measures that companies can adopt:

• Use of the benefits introduced by the Provisional Measures 927, 932 and 936 to face the crisis. Among the benefits are: collective vacations, anticipation of vacations and holidays, reduction of the Employer's Social Security Contribution for Other Entities, suspension of the employment relationship agreement and reduction of the workday.

• Labor and Social Security Review: the survey indicates wrong processes and weak points that are harmful to the company, in addition to tax and social security credits.

• Review of social security framework and Accident Prevention Factor – FAP that affects the rates applicable to the company.

Expert advice is essential

An advice that is based on an integrated and strategic perspective and that combines an overall comprehension of the situation, knowledge of the obligations and rules in force and technical excellence has much to contribute towards business today.

Domingues e Pinho Contadores acts side by side with clients, understanding the challenges faced at the moment and responding quickly to provide specific solutions and outline the best ways to overcome the crisis.