Tax benefits must be on corporate tax planning for 2020

Tax benefits can have relevant and positive influences on tax planning for the coming year.

Marluci Azevedo

In 2020, businesses are challenged to maintain efficiency and competitiveness in the face of the Brazilian tax system's complexity. In order to reduce the impact of this burden, taxpayers have the option of resorting to federal, state, and municipal tax benefits.

Tax benefits are a stimulus to business activity and can significantly influence the companies' cash, reducing costs and driving growth. However, the evaluation of these advantages requires a detailed study that takes into account the size, segment, performed operations, and even logistical aspects.

These incentives are part of programs where special taxation schemes are provided. This may occur in the form of exemptions, rate reductions, deductions and depreciation, for example.

As companies are preparing tax planning for the coming year, it is critical to put the issue of tax benefits on the agenda, which should not only be considered but should be among the agenda's priorities.

Federal Tax Benefits

Tax benefits, when at the federal level, may be granted to companies located throughout the country. Incentives may involve federal taxes:

- Contribution to Social Security Financing (Cofins)

- Social Contribution on Net Income (CSLL)

- Tax on Industrialized Products (IPI)

- Corporate Income Tax (IRPJ)

There are also a number of special schemes covering businesses from different productive sectors. See some examples:

Repetro - Special Customs Regime for Exports and Imports of Goods destined to the activities of Research and Mining of Oil and Natural Gas Deposits.

Reidi - Special Incentive Regime for Infrastructure Development.

Repes - Special Taxation Regime for the Export Platform of Information Technology Services (IT).

Recap - Special Regime for the Acquisition of Capital Goods for Exporting Companies.

Drawback - Special customs regime that provides for the exemption or suspension of taxes, which works as an incentive to export.




The competing states




In search of economic recovery and rebalancing the accounts, Brazilian states have waged a real “fiscal war” to attract new business, foster the local economy and, consequently, increase the potential for revenue.

Thus, within their tax competence, states are creating tax benefits, offering tax exemptions and other advantages for companies to settle in their territories. The winner is the one who can offer a more favorable environment for businesses to remain more competitive in the market.

Each state has autonomy to grant benefits and establish what the valid rules will be.

From the state's point of view, the incentive works to promote the region's socioeconomic development, increase job creation and administrative gains. For the company, decrease of tax expenses is the main practical result.

However, in the face of this war, taxpayers need to carefully assess scenarios and possibilities. Often, tax benefits are associated with government policies that can change course, even leading to the extinction of the advantage.

A change of location, for example, can be decisive for making the business financially viable or, on the other hand, risky if not planned on a solid footing.




Featured State Incentives




While some states have been suffering from the lack of attractive policies to move the state economy, other areas have been highlighted by the offers of tax benefits.

Very impacted by the economic crisis, Rio de Janeiro tries to become more interesting to the business community by releasing benefits such as Rio Importa+, which grants a reduction in the ICMS tax rate on imported products.

Through this measure, Rio intends to stand up to the states of Santa Catarina and Espírito Santo, mainly, which are currently adopting the strategy of facilitating the entry of imported products to increase local economic growth.

In Espírito Santo, the Port Activities Development Fund (Fundap) is a consolidated incentive that raises interest of companies from all over Brazil by granting advantages in foreign trade operations taxed with ICMS in the state.

In turn, Santa Catarina has already been recognized as a pole of tax opportunities. Through the Santa Catarina’s Company Development Program (Prodec), incentives are given for the deployment or expansion of employment and income generating industrial enterprises.

The state is not among the top positions as a Brazil’s consumer market, but has been a gateway for imports that arrive, especially, through the Itajai Port. The appeal is the ICMS rate practiced by the Santa Catarina government.

The São Paulo government has also a series of structured programs to attract taxpayers to its territory and coffers.




Municipal Incentives




The municipal administration is in charge for regulating the benefits at this level of responsibility. A very common example is the reduction of the Urban Property Tax (IPTU) for companies that can add to the city's economy.

Offering a lower Tax on Any Service (ISS) rate can also be a good draw. This, for example, has been the tactic of Florianópolis city hall bringing to technology there companies, which has made the city increasingly expressing itself producing innovation.

Along the same lines, Belo Horizonte, through the Proemp - Incentive Program of Installation and Expansion of Companies, grants a reduction in the ISS to stimulate basic and technological enterprises in the city.




Tax analysis for tax benefits




The search for legal ways to reduce tax expenses should be in the companies' planning, as this economy increases the profitability and viability of the business. However, the ideal is to turn to specialists for assistance in analyzing opportunities.

In addition to knowing the current programs, it is necessary to study what is applicable in each case, considering a series of variables and rules that do not allow the accumulation of benefits.

A team dedicated to this form of analysis, Domingues e Pinho Contadores guides the taxpayer through an individualized study, considering the benefits of all areas of public interest, the particularities of the business, the field of action and/or operations of interest and the tax framework.

A complete diagnosis of the company's fiscal behavior also indicates directions and opportunities. In this sense, it is worth considering what tax review can do for your company.

DPC is one of the founders of GBrasil, a network made of 38 accounting companies located in all capitals and in major cities of Brazil. This integration allows members of the group to provide advice in various areas and share expertise, even on tax benefits in all regions of Brazil. The group works together to offer a complete services portfolio.