Record collection and default: what this reveals about Brazil

Brazil is experiencing the dichotomy between two records: public revenue and corporate debt. This situation begs the question: Are the tax amounts charged by the government correct or are companies being stifled to reach zero deficit at any cost?

To give you an idea, federal revenues reached a total of R$201.6 billion in August, an increase of 11.95% above inflation compared to the same month last year. According to the Federal Revenue Agency, the value is the highest for the month since the beginning of the historical series, in 1995. From January to August, revenues collected R$ 1.7 trillion, an increase of 9.47 % above inflation compared to the first eight months. of last year. The amount also constitutes a record for the period.

On the other hand, the debt of Brazilian companies has reached the sum of R$ 146.2 billion, according to data from the Serasa Experian Company Default Indicator. According to the study, at the end of the first half of 2024, 6.9 million businesses had negative accounts, accounting for 31.2% of the total number of Brazilian businesses.

Again according to Serasa Experian, in the month of July alone a total of 228 companies submitted requests for judicial recovery, 29% more than the previous month and more than double (123.5%) compared to a year ago. This is the highest number recorded in the historical series, which began in 2005. In the first seven months of this year, orders totaled 1,242.

The fact is that many of the companies that find themselves in a worrying situation, with several overdue invoices and those in judicial recovery, do not know that they may have taxes to recover, which means a cash reserve with the government itself starved for revenue. Of course, this is partly due to the tax disorganization of the companies themselves, but largely due to the complexity of the Brazilian tax system, which is undergoing a comprehensive reform;

Interesting data illustrating this situation comes from the survey we carried out as part of the Revizia tax audit system. Over the past five years, 6,156 Brazilian companies, with revenues exceeding R$1 million, have left a total of R$10.51 billion in excess in public coffers. It is estimated that in Brazil there are more than 250 thousand companies with a turnover equal to or greater than R$10 million. If we consider the average amount that each company must receive, it is possible to verify that the public coffers received R$ 426.6 billion more than they should have received between June 2019 and June 2024, i.e. R$ 85.3 billion per year. The revenue record is not surprising.

The fragmentation of the tax structure generates an environment of high complexity and lack of clarity in the Brazilian system. Each federation entity has its own legislation, with different taxes, rates and obligations. Therefore, the diversity of rules and procedures makes understanding and complying with tax obligations a constant challenge for companies that end up paying more taxes than they should.

ICMS and PIS/COFINS are the main taxes in the list of recoverable charges. This is because, since these are indirect taxes which, by their nature, are passed on to prices until they reach final consumers, these operations (purchase, sale, transfers, etc.) generate large volumes of resources. In this way its impact and consequently the recovery, if paid unduly, are notoriously significant.

This scenario is expected to change with tax reform, but, at least for now, the situation will become even more complex. The new system will go through a long transition period, which means that for a few years two different systems and two different rules will be in place, which means that companies will have to organize themselves even more and always be attentive to changes as they are adapted.

For companies going through difficult times, tax recovery appears as an opportunity to generate liquidity and raise resources. The future is currently uncertain and, given the changes ahead and the difficult economic situation, entrepreneurs must seek to secure existing credit now.

Vitor Santos is CEO of Revizia, a company specializing in auditing and tax compliance that operates through a SaaS platform based on machine learning.

Source: Terra

Rose

Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.