By Tatyane Mendes
The Brazilian tax system is so complex that organizations from several sectors must dedicate many resources to manage the payment of taxes and fees.
And the demand is so great that Brazil is the country that spends the most time on this issue.
Brazilian companies spend up to 43,994 hours a year on tax management, as indicated by the survey “Tax do Amanhã”, produced by Deloitte Consulting.
According to World Bank data, the value is much higher than the average of 233 hours invested by countries worldwide.
Member countries of the Organization for Economic Cooperation and Development (OECD) spend about 164 hours annually.
The time spent considers completing and delivering accessory obligations, calculation, and payment, attendance to inspections, management of tax litigation, and other activities.
Deloitte’s research indicates that the amount of hours increases according to the size and scope of the company.
For companies with annual revenues of up to R$45 million, the average time spent on taxes and tributes is 7,610 hours per year.
The figure rises to 9,849 hours for companies with around R$240 million in annual revenues.
For revenues in the R$1.1 billion range, the time increases to 10,764 hours.
On the other hand, companies with revenues of R$7.1 billion reach 43,994 hours dealing with taxes.
This scenario proves the urgent need for the country to go through tax reform, warn specialists.
Tax consulting partner at Delloite Brazil, Marcelo Natale, points out that the cost of taxation considers the amount collected and all the work spent to settle tax demands.
Due to the complexity of the tax system and frequent changes in legislation, tax compliance becomes a great challenge for companies.
“When the system is very complex, the company is never sure it is doing the right thing. Besides costing a lot, companies still face much legal uncertainty at the end of the day.”
“The tax litigation reflects this. This widespread desire for tax reform is not just simplifying the process because it is less work.”
“It goes beyond this because organizations want to know the rules of the game, how they should structure themselves to operate in this market and to have legal security.”
“Economic decisions are made today, but they must consider the horizon ahead because they affect the long and medium term. Even consumers need to have a horizon of predictability.”
“That is why there is a need for legal security and simplification, without this resulting in higher tax collection,” he analyzes.
Another partner in the tax consulting area of Deloitte Brazil, Guilherme Giglio, reinforces that the main objective of taxpayers is not the reduction of the tax burden but the simplification of the model.
“The complexity of our system brings more concerns and risks. It is not a coincidence that Brazil is often in the last positions in the competitiveness rankings.”
“One of the main factors evaluated is the tax system’s complexity.”
“Today, the complexity of the Brazilian model is an obstacle for investments and companies to come to Brazil. They prefer to stay abroad because of the risks.”
“Regardless of the government, tax reform is currently one of the main pillars for the recovery of the Brazilian economy.”
“It will positively signal to investors and the business environment an improvement in the country.”
“We have understood that the priority would be to attack the taxation reform on consumption, reducing taxes and putting the Value Added Tax (VAT) as a model.”
“In a second moment, we would work on income taxation, which has greater complexity in consumption,” he adds.
With information from Jovem Pan