The elimination of tax benefits promoted by the tax reform represents a significant shift in the Brazilian business environment.
Although the main objective is to simplify and promote equity within the tax system, the practical effects may generate considerable challenges for companies that, for years, have structured their operations based on sectoral or regional tax incentives.
For this reason, identifying and understanding the impacts of this measure in advance is crucial for taking preemptive actions, with the primary aim of protecting the company’s financial health. With this in mind, we highlight five key points that deserve attention:
1. Loss of State Incentives (ICMS): The majority of ICMS tax benefits, such as presumed credit, exemption, and deferral, will be phased out between 2029 and 2032. Therefore, it is important to conduct a thorough survey of all currently utilized state incentives and simulate the financial impact of their elimination on the company’s cash flow. This will enable medium and long-term tax planning.
2. End of the Fiscal War and Reduced Regional Competitiveness: With the end of state incentives, companies located in regions that previously offered tax advantages may lose competitiveness. Thus, a reassessment of the company’s logistical and operational structure must be carried out. It is important to note that studies on the redirection of distribution centers or industrial plants should be based on economic rather than purely fiscal criteria.
3. Impact on Final Price and Profit Margin: The elimination of benefits may increase the tax cost of operations and affect either the final price to the consumer or the company’s margin. Therefore, it is important to recalculate prices and margins based on the new tax scenario. These projections should be used to renegotiate contracts, adjust price lists, and review market positioning.
4. Loss of Benefits Without Full Utilization: Companies that have accumulated balances of presumed credits or other unused benefits may lose them during the transition. Assessing the possibility of anticipating the use of tax credits and reorganizing the supply chain to maximize the use of incentives before their extinction should be done urgently.
5. Risk of Tax Irregularities Blocking Compensation: Only companies in good standing with tax authorities will be able to access the Compensation Fund, created to financially compensate companies holding burdensome ICMS benefits, which will be gradually eliminated between 2029 and 2032. Outstanding debts or unresolved issues may preclude receipt. Therefore, it is essential to regularize the company’s tax situation at all levels (federal, state, and municipal). It is necessary to verify the validity of negative certificates and organize supporting documents for the benefits used.
The reform is irreversible. Mapping the tax incentives utilized by companies, estimating the impact of benefit elimination on the tax burden, evaluating planning alternatives, and, above all, investing in tax systems and compliance are some of the measures managers need to take. Companies that anticipate impact analysis and adjust their tax strategy will come out ahead. The key is to prepare based on data, predictability, and specialized technical support.
