What is fiscal and tax management?
Fiscal and tax management is a set of practices and processes that companies adopt to manage their obligations to the tax authorities. This includes paying taxes, complying with constantly evolving tax laws and looking for savings opportunities.
In Brazil, the tax system is known for being one of the most complex in the world, with a myriad of taxes and very high rates, which can significantly impact companies' financial results.
What does fiscal and tax management do?
Tax management involves a series of complex activities and strategies aimed at optimizing compliance with tax laws and obligations, as well as reducing tax-related costs. It is an extremely important and critical aspect for the financial health of any company, especially in the complex national fiscal and tax scenario.
The main responsibilities of fiscal and tax management include the calculation and payment of taxes, involving the precise amount of taxes due, such as income tax, ICMS, IPI and others, followed by payment within the established legal deadlines.
Legal compliance is also a key point; companies must keep up to date with ever-changing fiscal and tax laws, as failure to comply with these laws can result in significant fines.
Effective tax management also looks for legal opportunities to reduce the company's tax burden, taking advantage of available tax incentives and exemptions. Tax accounting must be kept in such a way as to accurately reflect financial transactions and ensure that records are compatible with tax obligations.
In addition, companies are subject to tax audits, and it is essential to keep records and documentation to respond to this analysis.
Good tax planning plays a fundamental role in companies, helping to reduce costs and optimize the tax structure.
Why is fiscal and tax management important?
Tax management is extremely important for a company's success, especially in Brazil. According to a study by the Getúlio Vargas Foundation (FGV), o Brazil has the highest tax fines in the worldahead of countries like the United States, France and the United Kingdom.
In addition, the study shows that the Brazilian tax rate is one of the highest in the world (150%) and has no gradation, and identified that the country applies fines based on criteria considered subjective and related to proving the taxpayer's intention to commit illegal conduct. In other countries analyzed, the assessment is based on more objective criteria.
That's why investing in measures to help achieve more effective fiscal and tax control can have an extremely positive impact on a company's financial health.
One of the impacts is the reduction of financial risks, as failure to comply with tax obligations can lead to significantly high fines and, even more complex, legal problems.
Another important point is saving resources. Identifying opportunities for tax savings can generate a substantial reduction in companies' cash flow. And what company wouldn't want that?
These precautions and good tax management practices with the tax authorities not only have an impact on compliance, but also maintain a good reputation for the company, as they avoid unnecessary litigation and problems linked to brand image.
Effective tax management also allows companies to anticipate and plan their tax obligations, which leads to financial predictability in the medium term.
With all these points, we can see that fiscal and tax management goes far beyond a simple legal obligation. It is a vital strategy for ensuring the financial stability and continued success of companies in the Brazilian business environment.
What are the biggest challenges in tax management for large companies?
Tax management is a complex task for any company, but large companies face additional challenges due to the volume of transactions and the extent of their operations.
One of these is tax complexity, as large companies often operate in several states. This means dealing with different regulations and tax rates according to each location, requiring in-depth knowledge of tax laws and the ability to adapt to frequent changes in each state.
As the FGV study shows, the tax burden in Brazil is one of the highest in the world, and large companies often face a considerable tax burden. This directly affects companies' profitability and competitiveness, making it essential to find strategies to optimize the tax burden within legal limits.
The lack of objective criteria combined with the complexity of the tax system can create a lack of clarity in compliance with the rules, leading to an interpretation of tax evasion and avoidance. Large companies need to be vigilant and adopt rigorous measures to avoid this type of legal problem.
Due to the very high volume of transactions in large companies, compliance with ancillary obligations, such as issuing invoices, sending electronic ancillary obligations and keeping accurate tax records, becomes a challenging task. Non-compliance in these areas can result in significant penalties.
Another point that needs to be closely monitored is the constant change in tax legislation in Brazil. These frequent changes can impact the company's operations and tax structure, making it essential to constantly monitor and adapt to new requirements.
Facing these challenges requires a proactive approach. Large companies often turn to tax management software solutions and have specialized teams to deal with these complexities.
Over the years, we have identified the problems imposed by tax regulations and understood that an ERP alone is not enough to deal with them. With this in mind, we created our own solution, fully integrated and embedded in the SAP ERP, which automates the fiscal and tax management of companies, keeping them always in compliance with the tax authorities, the Complementary Fiscal Solution (SOFICOM).
How Brazilian companies overcame challenges with Soficom
SOFICOM is already used by more than 100 customers in the market and works with all SAP ERP versions. Two of the most pertinent examples of the efficiency and process improvement brought about by the platform are MASTERBOIa Pernambuco giant in the meatpacking industry, and MorlanMorlan, a metallurgical company from São Paulo consolidated in the export business, which achieved impressive results by using the solution.
MASTERBOI
The meatpacking giant has been operating for more than 20 years and is a benchmark in meat distribution, both in the domestic and international markets: it is authorized to export to more than 90 countries.
The company's top managers report that, despite being extremely qualified and engaged, the team had difficulties in executing deliveries and obligations - in other words, everything operational. Tax closing took an average of ten working days to complete.
With the implementation of SOFICOM, tax closing now takes only three working days to complete.
One of the main consequences has to do with the productivity of the team, which has gained more speed and efficiency after implementing the system. The employees themselves report that they now feel more confident in carrying out their work, since SOFICOM provides complete security from the registration of products to the delivery of accessory obligations.
Now, the operators are focused on the strategic part and everything operational has been automated. The result was a 90% gain in productivity.
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The implementation of SOFICOM is treated internally as one of the biggest deals in MASTERBOI's history.
MORLAN
Morlan, a São Paulo company with more than 50 years' experience in the wire market and consolidated in exports, has more than a thousand employees and a turnover of around R$1 billion a year. It recently implemented an SAP ERP to standardize its processes and communications.
However, the managers identified the need to go further in order to feel more secure in complying with the tax obligations required by the country.
The main challenge was to unify all the information generated by the company and be able to calculate and extract it in real time. SOFICOM was considered the alternative most in line with these expectations.
"The accounting and tax scenario in Brazil is one of constant change. We need to be secure in some way so that we can focus on what we do best. SOFICOM has brought us this peace of mind. It's practically instantaneous: it extracts and calculates all the records made by the accounting accounts, practically in real time."
Carlos Eduardo Tassinari, head of technology at Morlan.
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If you want to achieve excellence in fiscal and tax regulation, just like Masterboi and Morlan, we are on hand to help you and your company achieve this goal.
