What can tax review do for your company?

The complexity of the Brazilian tax scenario is a recurring topic when one speaks of the difficulties faced by the entrepreneurs in Brazil. The obligations weight of this order requires constant monitoring for companies do not commit their cash with taxes payment.

Yes, what you see in the marketplace is that many taxpayers get lost in the tangle of taxes, pay more than they should, operate under a less advantageous tax regime, and no longer enjoy benefits that can be decisive in the business direction.

In this sense, tax review is an essential tool, with immediate results and with the potential to reduce tax expenses, show ways and opportunities and, consequently, contribute to a more solid and competitive positioning.

What is tax review?

The tax review is a complete diagnosis of the company's fiscal behavior, fundamental to charting its current outlook. This work analyzes the fiscal and tax area in a global way, in order to map situations that can be corrected.

This can be decisive to the company be able to present its real market value and its cash flow.

This kind of survey is also being used in cases of merger and acquisition, where potential buyers seek answers about the new business risks. Thus, a tax review is recommended in due diligence processes, since the data raised in the review should be considered in the feasibility assessment of a contract.

How to do the tax review?

Ideally, a specialized consulting firm that promotes a thorough analysis of the tax situation and of all taxes paid should conduct the service.

The specialist or consultant should analyze whether the current rules have been complied with and if there is a possibility to recover the credits, for example, one of the foreseeable opportunities that many companies no longer enjoy adequately. One can do this survey in relation to the company's operations in the last five years, as a retroactive credit recovery is possible.

This service involves a great proximity with the client, since it is done in partnership and thoroughly analyzing the company's balance sheets and records. The result is a report that will guide the contractor on actions that can be adopted to boost up their performance under the tax aspect.

In practice, what are the benefits of tax review?

• It contributes to the recovery of tax credits and preservation of the cash;
• It prevents wasting resources that could be applied to business growth;
• It indicates the possibility of using tax incentives or benefits;
• It reviews the business’ financial and operational structure;
• It identifies eventual irregularities in the action, anticipating to correct failures that could generate fines and penalties;
• It indicates the adoption of a most advantageous tax regime;
• It guides the taxpayer to tackle harmful causes and review processes in order to ensure more operational efficiency;
• It identifies internal team training needs to maintain good practices;
• It positively influences the business reputation.

In a recent case, Domingues e Pinho Contadores made the tax review of a hotel business in the acquisition process. The analysis soon identified an overvaluation of market value and showed that the records were unreliable.

We identified taxes, such as ISS, PIS, and Cofins, were not being used, and taxes paid in duplicity, which could be reimbursed. The survey also showed that income tax returns could be corrected, generating a retroactive credits repayment.

This analysis enabled the recovery of more than BRL 3 million, which significantly influenced the final evaluation and the acquisition process completion. The example reinforces that the fiscal review can transform the course of a business.

Tax Review and Tax Planning

The tax review is a step toward the tax planning, whose accomplishment should be based on the information surveyed from the accounting and management records. This plan aims to reduce, by legal means, the tax burden on the company's operations.

The first aspect to consider is the company's framing in the most appropriate tax regime, as well as the analysis of particularities related to the activity branch, capital structure, location, among others.

The option for the tax regime (Real Profit, Presumed Profit, or National Simple) allows the company to collect taxes according to their size and/or activity practiced.

Beyond complying with current obligations, this involves identifying and analyzing existing forms of taxation that relate to the business, verifying the taxes collected, in accordance with legal requirements, and avoiding future contingencies.

Both tax review and planning are strategic actions to maintain the business’ financial health, which, faced with such a competitive market, is forced to adopt increasingly efficient practices for generating profits and containing expenses.

DPC: an assertive tax diagnosis

With Domingues e Pinho Contadores' expertise in the tax service and guidance to companies of different sizes and segments, it performs a monitoring work that can significantly influence the business life.

The tax review service provides guidance on the use of tax incentives or benefits, the collection of tax credits that can be recovered and even training of internal teams.

An assertive tax diagnosis is always necessary to better apply the tax rules and to guide the company's actions in a scenario full of obligations to be met, implications of the chosen tax modality, applicable rates, and statements to be filed.

The advice of DPC's experienced professionals, always in line with the best market practices and updated on the constant changes in legislation, certainly has much to contribute to the viability and competitive advantage of advised businesses.