Author: Renan Magalhães

Source: Correio Popular - SP - ECONOMY - 13/09/2009

ANHANGUERA AGENCY

 

The changes that are taking place in the tax and accounting spheres are generating many doubts among entrepreneurs, since the impact is great in the planning of companies. These are transformations of great relevance, such as the Public Digital Bookkeeping System (Sped), which aims to promote the integrated performance of tax authorities in the three spheres of government (federal, state and municipal) and standardize the process of collecting accounting and through electronic means.

Another impact is caused by the Tax Substitution (ST) in the State, which provides that the Tax on Transactions related to the Circulation of Goods and on Interstate and Intermunicipal Transport and Communication Services Provision will be fully collected in the industry. And, finally, the change in the role of the accountant driven by Law 11.638.

Check out the interview given by lawyer Octávio Ustra to Correio Popular below. Specialist in Tax Law by the Pontifical Catholic University of São Paulo (PUC-SP) and in Corporate Income Tax by the São Paulo Association of Tax Studies (APET), he is manager of the tax area at Finocchio and Ustra Sociedade de Advogados and coordinator of the Tax Study Group of the Brazilian Institute of Finance Executives (IBEF-Campinas).

Correio Popular - Several measures will change the taxation for companies. How will it be?

Octávio Ustra - These are measures that are being planned and some of them are already being put into practice. Some companies are already feeling it. Several tax changes are taking place. All of them, in the sense of leaving the inspection with more instruments. One of the most important is the Public Digital Bookkeeping System (Sped), which will transform all the information that companies pass to the tax authorities on paper in digital media. The businessman will no longer keep the book on paper. It will be a digital file that is made available to the departments of the Federal Revenue and the state, which will work with this information. It is a very impacting point. But, in parallel to this, we are experiencing other changes that are also relevant. The State of São Paulo has applied a mechanism in the ICMS called Tax Substitution, which has an increasingly broad application and consists of concentrating in the industry all the collection of the ICMS that should occur along the chain until the final consumption of a certain commodity. Thinking about the economic cycle, we have an industry that sells to a wholesale, which sells to a retailer, which sells to the final consumer. In all these stages, the ICMS is levied. Normally each would collect the tax due. But the state cleverly concentrates the entire collection only in the industry, in order to inspect only this.

It will be something of importance that even goes beyond tax issues, right?

It is not restricted only to the tax point of view. We are experiencing a convergence to international accounting standards. Especially large corporations and limited companies, will have to adapt to the standards that are in force abroad. Brazil wants to allow foreign investment with a greater degree of transparency. This will change a lot from an accounting point of view and the accountant's role will grow a lot.

How will this new role be?

He will move from a position of mere tax and accounting agent to a situation in which he will need to analyze the economic situation that is being placed in order to know how to work in the most correct way. Because of this pattern of convergence of national to international accounting, what will predominate is the economic essence of the fact and not the form that is given to it.

What are the main objectives of these changes?

When we talk about accounting standardization, the main objective is to allow transparency and compatibility of information from national companies with information from companies provided abroad. Especially because we already have Brazilian multinationals. This information will all be within the same standard. In relation to Tax Substitution and Sped, the main one is the facilitation of inspection. It is much easier and gives more elements for the tax authorities to do this.

Regarding Sped, how will this happen?

Most of these changes are already happening. Sped, which is the most important element for all companies, works with three pillars. The first is electronic accounting writing, that is, all accounting documents of companies, such as balance sheets, accounting books will be transmitted electronically. We will also have Sped Fiscal. Hence, tax books, such as the IPI, will also be transmitted electronically. And there is also the Electronic Invoice, which is now issued in this electronic format. Then, the tax authorities will have access to all information electronically, which will allow the crossing of data, with a more advanced inspection. In order to make use of this information, the Tax Authorities are using computer equipment with a high degree of performance.

Will this solve the big problem that exists in the inspection area?

With the entrepreneurs I have talked to, the assessment is that a good environment is being created. Many believe that increased enforcement will improve competition and make it more reasonable. With everyone paying tribute in the right way, the one who is actually better will prevail. So, it is a positive transformation for the economy. On the other hand, the entrepreneur will have to adapt. He will not be able to evade. Accounting will have to be adjusted accordingly. This will be the counterpart of the companies.

And do you believe that tax evasion will really end?

There are people who say no, but I particularly believe that it will decrease a lot. Because every company has suppliers and buyers. Everyone will be going over their information digitally. If one of them omits, the tax authorities will cross over and have elements to identify this.

How is the implementation of Sped going?

In June, Sped Contábil was delivered by large companies. In June 2010, it will be delivered by all companies that are in real income tax. Sped Fiscal is starting now in September for many companies. They were notified by the state farm departments and will deliver this month. The Electronic Invoice will be brought gradually by sectors. There are sectors that started back there, others now in September. A large timetable was created to determine the implementation of these adaptations.

Do you believe that companies are following this process or are still lagging behind?

In general, you can see a big gap in information. Nowadays, we have advanced a lot in relation to 6 months, but it is still common to see cases of companies being taken by surprise. Who do not know about the obligation, think that it is something future or that they have not yet tried to prepare for it. It is a series of adjustments that are laborious.

Does the exchange of knowledge and experience between companies also help in this process?

For sure. I see that there are discussion forums and I am even part of some. The number of doubts is very large. The more space for debate, the better it will be for the entrepreneur.

Are they more complex procedures?

I wouldn't say more complex, because everything that will be done digitally is already done on paper. Only the paper accepts the registration the way the company does. But the IRS adopts a standard, it is something universal that all companies have to adapt to. In the medium term, the trend is that there is no such problem and the procedure is considered even easier.

Can this change be comparable to what occurred in relation to individuals with the declaration of income tax on the internet?

We could put it that way. Brazil has been going through these technological transformations for a long time. Among individuals, 99% of them make the statement digitally. Now this phase is reaching for legal entities. In fact, many obligations were already delivered that way, but now the range of information that will be provided in this way has increased.

What will happen to those who do not adapt?

If a company is required to issue an Electronic Invoice and does not do so, it will be like selling without a tax document. Therefore, the penalty is large. In the same way to a company that obliges it to provide bookkeeping and does not do it, it will be as if it had not done so. These are serious penalties from the point of view of the administrator's responsibility, which include heavy fines.

What about ICMS? How will it work?

It has already been applied to a large volume of sectors. The automotive sector, for example, has had this system for a long time. Now this is extending to other sectors, such as animal feed, construction, auto parts, pharmaceuticals. A number of sectors are already in this system of tax substitution.

Does that make the dynamic simpler?

Yes. Except that there is also a lot of difference in the form of verification, but then, what matters is not exactly the change in the medium that will deliver the documentation. What changes is that wholesale and retail taxpayers are switched to industrial ones. So it is the industrialist who is obliged to collect. Others have to know how to work with it. These are adjustments that require each member of the chain to know how to apply the system correctly. It is a matter of knowing the tax legislation.

And the question of tax reform?

This is a point that I usually get asked a lot by my clients. This is all happening, I understand with a tax reform. Even though, the changes do not interfere with the tax problems that we have in relation to the tax burden. Brazil remains a country that is not good for the exporter and, in general, does not help the entrepreneur. And the government turns and moves trying to bring the issue of reform to the agenda, but honestly, I see no evidence that this will happen. Regarding the ICMS, because we are in a federal state, we have specific legislation for each state. There was a proposal to unify this legislation. But the problem is to put all the governors on a table and get them to reach a common conclusion. From a political point of view, reform is very difficult. And many of the proposals could be implemented without even touching the constitution. It would be enough for the federal legislator to have an interest, that significant improvements could happen. An example is PEC 233 (Constitutional Amendment Proposal No. 233) which aims to simplify the two taxes that affect corporate income: Income Tax and Social Contribution on Net Income. I don't think I would need to change the constitution for that. There are other instruments for making unified legislation. The same is true of many other proposals. It is not always necessary to change the Constitution.

Has the government missed the opportunity to make further reforms?

As the inspection will become stricter, more tax will be collected. This is the trend. And then one of the main arguments for the high tax burden will fall to the ground: the high number of tax evasions. On the other hand, businessmen say they are evading because the burden is too high. So there is a game between who is to blame for this situation. If the government creates conditions for a higher tax collection, the business community will also be able to organize and ask for a smaller tax system.

ICMS

“The automotive sector, for example, has had this system for a long time. Now this is extending to other sectors, such as animal feed, construction, auto parts, pharmaceuticals. ”

PATTERNS

“We are experiencing a convergence to international accounting standards. Especially large corporations and limited liability companies. ”