The Tax Reform in Brazil, approved in December 2023, marks a milestone in the modernization of the tax system. The process now moves into a crucial regulatory phase, where essential details such as rates, special regimes, and regional benefits will be defined.
With the changes set to begin in 2026, the expectation is that the new Value-Added Tax (VAT) model will be fully implemented by 2033.
This period of transition and regulation will require political coordination and adaptation from companies, making it crucial to invest in technological solutions that can ensure compliance and flexibility.
Origen Tech, with its SAP Document and Reporting Compliance (SAP DRC) solution, offers a strategic approach for companies needing agility in adapting to new tax rules and greater legal security in an ever-evolving regulatory landscape.
Current Status of the Tax Reform in Brazil
After nearly four decades of discussions, the approval of the reform introduced structural changes to the tax system, replacing five consumption taxes with a VAT model comprising the Contribution on Goods and Services (CBS) and the Goods and Services Tax (IBS).
The CBS will be managed by the federal government, while the IBS will be the responsibility of states and municipalities, aiming for greater integration and transparency in tax collection.
However, for the reform to be effectively implemented, a critical regulatory phase is underway. This stage involves defining tax rates, expected to be around 26.5%, creating special regimes, regulating selective taxes, and establishing regional benefits essential to ending the fiscal war between states.
Impacts and Challenges for Companies in Brazil
The reform schedule foresees a gradual implementation, starting in 2026, with all new rules being fully applied by 2033.
This transition period is designed to give companies and the public sector the necessary time to adjust to the changes in an organized manner without abrupt impacts on operations.
However, this transition to the VAT model will require companies to make significant adjustments to their internal processes, tax systems, and tax management practices.
Changes in the way taxes are calculated, recorded, and reported will present new operational challenges that, without an adequate technological framework, could lead to compliance risks and increased compliance costs.
The Importance of Technological Solutions
To address these challenges, Origen Tech’s SAP Document and Reporting Compliance (SAP DRC) presents itself as a strategic solution.
Developed to offer automation and continuous monitoring of tax processes, this solution enables companies to quickly adapt to new regulations and legal requirements.
Thus, companies can integrate their ERP systems to automate document issuance, simplify tax calculations, and ensure compliance efficiently.
SAP Document and Reporting Compliance also allows real-time tracking of legislative changes, minimizing the risk of manual errors and penalties for non-compliance.
In addition to providing flexibility, this solution ensures agility in adapting to new tax guidelines, allowing companies to optimize their operations and reduce operational costs associated with tax management.
With a robust tool for tax automation and continuous updates, Origen Tech provides companies with the security and efficiency needed to ensure compliance in an evolving tax landscape.
In an environment of complex changes and dynamic regulations, investing in adequate technological solutions is crucial to ensuring business sustainability and competitiveness.
