While the estimated 28% rate for the new Value Added Tax (VAT) has dominated public debate, an unprecedented Omnitax study reveals deeper impacts on the productive sectors.
According to the analysis by the Tax Intelligence Platform, the new consumption tax model, focusing on the Tax on Goods and Services (IBS) and the contribution on goods and services (CBS), should expand the industry’s net profits by up to 10 percentage points and up to 5 points.
On the other hand, the service sector may have to increase its prices by up to 40% to maintain current profitability.
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The main explanation lies in the expansion of the tax credit system: while industries and trades have long supply chains and, therefore, will benefit from more credits, service providers, which have a labor -based structure (which is not credible), will bear a much heavier load as the study.
This expansion of credit base for non -cumulative taxes on consumer goods will be one of the main changes in tax reform, in the opinion of Marcos Camilo, CEO of the Pulse Capital consultancy. “IBS and CBS come to replace ICMS, IPI, ISS PIS and COFINS and each has a credit rule. While IPI is the most limited, ICMS has limitations and PIS and COFINS have less, when compared to each other. With the unification of systems, the possibility of credit is broader,” he says.
According to Paulo Zirnberger, CEO of Omnitax, the reduction of indirect load can be converted into profit or competitiveness. “Retail, for example, can maintain prices and earn up to 5 net profit points, or reduce prices and sacrifice part of the gain to increase market share,” says the study manager, who involved quantitative and qualitative interviews with more than 100 customers, crossing financial simulations with large companies CFOS data.
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In industry, potential gain is even more expressive. Keeping current prices, the sector can expand operating results by 17 points and net profit at up to 10 percentage points, according to simulations made by Omnitax. An eventual price reduction, to win market, would lead to a loss of up to 5 points in net income.
Impact on services
The account, however, does not close for service providers. “The dynamics is cruel,” summarizes Zirnberger. The sector will face an average increase of 267% in the load for new indirect taxes, according to the study. To compensate for the effect on the result, it would be necessary to increase up to 40% in the prices charged to customers.
Even with the possibility of full credit to those who hire services, the price transfer will not be simple. “Many customers have already expressed interest in credits, but will not accept readjustments of this magnitude. The tendency is to seek more competitive suppliers,” warns the executive
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This scenario can accelerate the migration of Simples Nacional companies to real or presumed profit regimes. “Large companies will require their providers to be aligned with the logic of reform tax credits. For the simple, this represents an operational and significant management challenge,” says the executive.
Sectoral reorganization
The tax burden redistribution movement should cause a structural recomfort in economy prices, with lasting impacts, in the evaluation of the vice president of Corecon-SP, of Haroldo da Silva. “The most historically taxed industry will be relieved. The most burdened services are now leading the list of the most impacted,” he says.
According to him, in this new tax logic, there will be winners and losers, depending on the ability of each company to adapt. This includes reevaluation of the location of suppliers, the distribution chain and the contracts with partners. “I have helped companies create transition committees. The impact will be cross -sectional, reaching legal, accounting, marketing, logistics…” he says.
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Still, the balance for the economy can be positive in the medium term. “Reform corrects historical distortions and makes the system more transparent. In terms of potential impact, it will be similar to what the Real Plan represented in 1994,” says Silva.
Even so, he warns that the transition will not be simple or homogeneous. “Poorly prepared companies can leave the market. Which can adapt will have opportunities to grow in a more rational and predictable environment.”
One of the most significant advances will be transparency. According to Silva, the consumer will know exactly how much tax pays for the acquisition of goods and services, which today is not clear. “Currently, the Brazilian tax burden is around 33% of GDP, and almost 50% of this is about the purchase of goods and services. With the reform, taxation on consumption will remain high, but will be better distributed among the sectors. This reinforces the need to advance in a reform of income,” he says.
