The fiscal and tax management scenario in Brazil
Tax management is a vital area for the financial success of any company, especially when it comes to Brazil, which is home to some of the most complex legislation in the world. And you know that you will pay dearly if any deliveries are not up to date with the tax authorities' rules. As well as being complex, Brazilian tax legislation also imposes some of the highest fines in the world, ahead of countries like the United States, France and the United Kingdom, according to a study published by FGV.
The fiscal and tax management of a company involves the management of taxes and levies, as well as financial and budget planning. Effective management in this area can help a company save money, avoid fines and tax penalties, and ensure compliance with tax laws. But perhaps the main challenge is being able to keep up in real time with the legal changes published by the tax authorities.
However, there are several alternatives to make this path easier, and automating tax management is already a reality. Over the last 30 years, technology has been a great ally in changing this scenario, especially with the emergence of management software (known as Enterprise Resource Planning https://www.castgroup.com.br/erp-sap-beneficios-e-vantagens-competitivas/or ERPs) and their complementary solutions, such as tax and fiscal management software, which can take the experience of companies to new heights and increase the productivity of teams.
Why is fiscal and tax management important?
Fiscal and tax management refers to the administration of an organization's fiscal and tax obligations, including the payment of taxes, the maintenance of accurate accounting records and compliance with tax laws and regulations. The complexity of Brazilian tax legislation is internationally recognized and even highly qualified even highly qualified teams find it difficult to keep up with updates and changes to the tax authorities - resulting in fines that are very costly for any type of company.
One of the main challenges is the number of taxes laid down in Brazilian legislation. Effective fiscal and tax management consists of adapting to the more than 320,000 rules that exist in this area, be they national, state or municipal, according to the Brazilian Institute of Planning and Taxation. In addition, the country is known for having one of the highest tax burdens in the world, which also adds up to one of the highest tax rates: 150%.
Another challenge is the constant change in tax legislation, which is updated frequently and requires managers to be able to keep up with it almost in real time to avoid manual errors and financial losses. The lack of uniformity in tax laws between Brazilian states is also something to be overcome, as it can lead to differences in interpretation and application.
Last but not least, we can mention the challenges related to technology. Most large companies in the market have already overcome the barriers to communication between areas by implementing ERPs that integrate all sectors with information in real time. But adapting their systems and processes to meet the demands of the tax authorities is still a scenario that is less well known and explored.
Over the years, the problems imposed by Brazilian tax regulations have come to the fore more and more, and it has become clear that an ERP alone is not enough to deal with them. With this in mind, Cast group has created its own software that is fully integrated with all ERP versions SAP that automates the fiscal and tax management of companies, keeping them always in compliance with the tax authorities. Called "Complementary Tax Solutionor SOFICOM, it is certified by SAP and its great advantage over other software on the market is that it is 100% connected and embedded in the SAP ERP - which means you don't even have to leave the same interface to use it.
What are the current challenges of fiscal and tax complexity?
One of the most challenging scenarios in fiscal and tax management deals with what we call the qualified fine, which penalizes taxpayers or companies that intentionally fail to comply with a tax obligation, which is interpreted as evasion or fraud.
In the study "Enforcement of Qualified Tax Fines: a comparative legal and economic approach"professors from the Getúlio Vargas Foundation analyzed the fiscal and tax scenario in Brazil between 2011 and 2019 and found that the application of qualified fines grew 70% in quantity and more than 100% in value.
The main peculiarity observed is that, compared to the other countries cited in the survey, Brazil is the only one that does not provide for fines in graduated amounts according to mitigating and aggravating factors. In other words, Brazilian legislation provides for fines to be imposed based on subjective criteria, which depend on interpretation - which may or may not be correct. In the other countries studied, fines are imposed based on objective criteria, such as repeat offenses, use of false documents, deductions and others.
This is why effective fiscal and tax management is extremely necessary to maintain the vitality of companies of any size or segment. As well as avoiding fines and ensuring compliance with legal obligations, it reduces costs, improves efficiency, increases productivity and prevents future problems.
SOFICOM: A strategic partner for fiscal and tax success
Tax management is a complex task that requires specialized knowledge and constant updating on the laws and regulations in force. So far, we've understood the complexity of keeping up with the tax authorities' changes and that the consequences of not adapting to the rules can be very costly for companies of all sizes. But how can you prevent this scenario?
The best way to avoid manual errors and tax fines and increase your team's productivity is to automate any and all processes related to fiscal and tax management. Since 2009, Cast group has been perfecting this subject and looking for complementary alternatives for companies using the SAP system to facilitate their fiscal and tax control. The Complementary Tax Solution has been chosen by most companies with a turnover of more than R$ 300 million to get around this scenario.
SOFICOM works in all SAP scenarios and comprehensively meets the scope of Brazilian Brazilian tax legislation. Because it was developed natively in this technology, it guarantees greater reliability of tax information through the automation of processes, greater control in real time and even tax management reports, boosting clients' competitiveness.
SOFICOM is a solution designed to meet the specific needs of each business. It adapts to the type of service performed by different companies and complies with the tax laws of each Brazilian state, with automatic updates whenever a new standard is published.
This allows for maximum operational efficiency for the teams, reducing the risks generated by incorrect processing of debits and credits, and guarantees acceleration in your company's fiscal and tax closing. To ensure successful implementation, Cast group also offers complete management of the solution, with a specialized team to manage the product roadmap with a focus on optimization and continuous evolution.
SOFICOM's approach: How we meet the needs of large companies
The Complementary Tax Solution has already been chosen by more than 100 large companies in the Brazilian market and one of the major highlights reported by managers is its reliability. Making the day-to-day running of teams easier is one of the basic missions of any area leader. Investing in a new tax management tool may be essential, but above all it needs to be easy to implement and use.
If your company uses SAP ERP as its main management software, SOFICOM could be the best alternative, as it fulfills both roles at the same time. Its implementation will be carried out by a Cast group specialist, and employees in the tax and fiscal areas will find it easy to use due to the numerous similarities with the ERP.
A MASTERBOI, a meatpacking giant from Pernambuco, and Morlan, a wire company from São Paulo with annual sales of R$1 billion, are already using the system. In both cases, managers report increased productivity and improved processes among the teams after implementing SOFICOM.
In MASTERBOI's case, one of the main gains was in terms of tax closing times. The company's top managers report that, despite being extremely qualified and engaged, the team found it difficult to complete operational tasks, such as submitting tax obligations.
Tax closing, for example, used to take an average of ten working days to complete. After implementing SOFICOM, the same process took less than half the time: just three working days to complete. This allowed operators to focus on the strategic part, and everything operational was automated.
The result was a 90% gain in productivity.
In the case of Morlana company that has been operating in the domestic and international markets for 50 years, the first step was to standardize processes and communications between sectors by implementing the SAP ERP. Even so, employees reported not feeling confident in complying with the tax obligations required by the country.
The main challenge was to unify all the information generated by the company and get it calculated and extracted in real time, and Cast group's software was considered the best alternative. Carlos Tassinari, head of technology at Morlan, says that "It's practically instantaneous: it extracts and calculates all the records made by the accounting accounts, practically in real time." Be the next to facilitate your company's fiscal and tax management.
