Tax planning 2019: Appropriate practices contribute to business success

In times when cost reduction is an objective pursued by companies, the tax planning becomes even more strategic. The correct taxes administration is decisive to boost the profitability of any business. Specialized guidance, in this sense, can be a differential to pass through 2019 with more breath and better financial health.

Tax planning is performed for a complete mapping of collected taxes and for scheduling future steps, always in accordance with the provisions of the relevant legislation, so that the risks of improper practices are avoided.

We can say that tax planning contributes to:

• the company’s tax management;
• the preventive reduction of the taxes payment;
• reduce the company’s tax burden;
• increase margins of profitability.

Periodically, and especially at the end of each fiscal year, it is fundamental that companies promote a review of their tax policy, considering some issues, such as:

 Adequacy of the tax regime

The definition of the type of taxation that the company will use in 2019 can be made until the beginning of the next year, but it must analyze in advance for a certain choice, thus reducing the chances of errors.

The option for the tax regime (Actual Profit, Presumed Profit or Simples Nacional) should be in line with the company’s size and/or activity, in addition to other variables. In all cases, the recommendation is to provide calculations and projections to assess the most advantageous setting.

- Simples Nacional

Legal entities with annual revenues of up to BRL 4.8 million may opt for this regime. From November 1st to December 29th, 2018, Micro-enterprises (ME) and Small Enterprises (EPP) can schedule a request at the Simples Nacional Portal the option for Simples Nacional 2019. If there is no pending, the option request will be confirmed, and, on Jan-01-2019, the registration of its option will be automatically generated. In case of pending issues, the scheduling will not be accepted, but the taxpayer will be able to settle the situation and re-schedule until December 28. After this period, the company can still request the option for the Simples Nacional at the Portal until Jan-31-2019, effective from the first day of the calendar year of the option.

- Presumed profit

It is the option for the company whose total gross revenue in the previous calendar year was equal to or less than BRL 78 million. Although complex, it can be beneficial when analyzed together with other factors.

- Actual profit

In cases where gross annual revenue is greater than BRL 78 million, legal entities may already be compulsorily included in the Actual Profit. Companies with activities focused on the financial sector are also required to adopt this regime.

Companies should evaluate the taxation form choice considering the business behavior and planning. The right framing is decisive for the success of the business.

Incentives or tax benefits

Tax planning contributes to the identification of favorable situations for companies, evaluating opportunities for tax exemption or resignation of entities responsible for taxation.

These incentives include promotion programs at the municipal, state and federal levels, which allow the taxes to be applied in future operation or destined to socio-cultural activities or projects.

Recovery of tax credits

Public and private companies of all sizes can find in the recovery of tax credits an opportunity to recover/offset double payments or overpayment for federal, state or municipal taxes.

A comprehensive and thorough tax review should be conducted to identify situations in behalf of the taxpayer. INSS, PIS, COFINS, IR, ICMS, and ISS are just some of the taxes that can be redeemed in these cases of undue or overpayment.

The forms of redemption and use of credits vary according to the tax. In some cases, credits can only be used to pay taxes due, while some situations allow the amount refunding to the company's cash.

Either way, this legal alternative should not be discarded in times of tight finances.

Updating of register data

As the taxation that will be levied on the company and its tax environment are affected by the economic activity practiced, it is important to align this activity codes information also with documents such as contracts and bylaws.

Keeping the company's corporate acts updated and duly filed at the Commercial Registry or Civil Registry of Legal Entities avoid problems with regulatory agencies.

New form of data filing to the Treasury should be considered

Full tax management also includes full compliance with accessory obligations related to the deadlines to file tax and tax documents. Correction of actions in relation to these obligations avoids penalties and waste of business resources.

In this way, it is necessary to devote maximum attention to the fulfillment of demands, such as eSocial and EFD-Reinf, among other information provided in the integrated digital Sped - Public Digital Bookkeeping System environment.

The increasing computerization of the relationship between taxpayers and taxpayers makes it possible to immediately verify the information provided and to cross-check the data, making a possible identification of inconsistencies an easily detectable process, exposing companies to penalties.

Hence the importance of including the improvement of the provision of accessory obligations information in the annual schedule, always acting in a preventive way so as not to contradict the strategies of Treasury global electronic fiscalization.

Specialized guidance is a differential

Periodically, it is recommended that companies apply a review of their internal processes to map possible tax risks and to identify positions that must be corrected or deployed.

Domingues e Pinho Contadores’ experts have the required experience to fully evaluate the tax benefits and risks related to the economic activity of its clients.

DPC provides a complete survey of the company's tax outlook and offers an accurate diagnosis to support decision making, so that the advisor works year-round being sure that it is in line with the best practices for your business profile.