Tax credit recovery: a boost to emerge from the crisis

08/11/2018

EXPERT OPINION

Tax credit recovery: a boost to emerge from the crisis


In times of crisis, companies have been using more and more the tax credit recovery in order to minimize the impact of taxes on their operations. This legal alternative can give cash back to boost the finances.

Optimizing resources and applying capital strategically can be decisive points for the success of a business. Acting in this line is certainly something that every entrepreneurial management wants, but it is quite common to observe companies in the market that pay more than they should for their tax obligations, wasting values that could be used in their growth.

In fact, in the view of the complex Brazilian tax scenario at some point, many businesses, even those large and stabilized, get lost, a fact that only confirms the importance of betting on specialized monitoring.

Companies that are lost in this path full of acronyms such as INSS, PIS, COFINS, IR, CSLL, IPI ICMS, and ISS can find in tax credit recovery a good opportunity to recover any overpayments.


How does the tax credit recovery work?


Ideally, a credit recovery request should be preceded by a more comprehensive tax review, with collection of detailed information. Only a thorough technical analysis is able to point out credits that can be recovered, if they have been improperly or overpaid.

When these occurrences are identified, it is possible to request the tax credits recovery by administrative means, through Electronic Request for Refunding, Reimbursement or Repayment and the Offsetting Statement (PER/DCOMP). The adjustment based on Selic rate sum up the likely recovery value.

It is noteworthy that public and private companies of all sizes can benefit from this procedure.




Benefits of Tax Recovery


The diagnosis made to collect cases that may result in the recovery of credits contributes to factors such as:

  • Identification of failures that must be corrected to minimize risks of assessments and penalties;
  • Adjustment of the tax burden, since it identifies what should or should not be paid by the taxpayer;
  • Overall improvement of the financial management of the business.
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Tax opportunities


Taxes subject to tax recovery are federal, state, or municipal. They are:

  • Contribution for Social Security Financing  ("COFINS");
  • Social Contribution on Net Income (“CSLL”);
  • Guarantee Fund for Length of Service ("FGTS") - 10% penalty on termination without a cause;
  • Tax on Sales and Services ("ICMS");
  • ICMS - Electric energy bills;
  • ICMS - Tax Substitution;
  • Social Security ("INSS") on indemnification funds - in cases of termination without a cause;
  • Tax on Financial Operations ("IOF");
  • Tax on Manufactured Products ("IPI");
  • Corporate Income Tax (“IRPJ”);
  • Tax Over Services ("ISS");
  • Social Integration Program (“PIS”).

The identification of double payment may be through specialized analysis. Important steps in this evaluation are revisions of the calculation basis, the tax burden framework and the determination of credit possibilities, either by offset or recovery of amounts when there are credit on behalf of the company is verified.

It is very common that companies pay ISS at source and then make the payment to the municipality, for example, characterizing a duplicity situation. Similar cases also occur with other taxes listed above.

The forms of redemption and use of credits will vary according to the tax. In the case of ICMS, it is possible to redeem credits through court-order offsetting or receipt. It is also possible, depending on the state, to use them even for payment of suppliers.

The review for tax credit recovery should not be discarded. There are cases where values representing 5% of company's monthly turnover is redeemed, that, in times of crisis and tight finances, can influence the business direction.


Specialized advice ensures more agility in the process


The tax credit recovery process can be bureaucratic and time consuming. Therefore, it is advantageous to count on specialists to perform the procedure with greater assertiveness and agility, always having the knowledge about the tax and tax legislation as a guide.

Domingues e Pinho Contadores has consultants ready to help your company to reach new levels of competitiveness and profitability from the tax credit recovery, from a comprehensive tax review and a specific tax planning to your business.

Credit recovery can be a timely demand from the company or can be integrated with the tax review service, which includes a complete diagnosis of the company's tax behavior, with the potential to reduce tax expenses and point out ways and opportunities for a new commercial position.

How DPC may help your company?

Domingues e Pinho Contadores has specialized team ready to assist your company.
Contact us by the e-mail dpc@dpc.com.br

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