What is the Tax Reform?
Considered one of the most significant fiscal transformations in recent decades, this reform aims to simplify Brazil’s tax system, making it more efficient and transparent. It will replace outdated taxes with more modern models that promise to reduce fiscal complexity, facilitate compliance with legal obligations, and boost economic competitiveness.
The main changes include:
- Contribution on Goods and Services (CBS): Will replace PIS and Cofins, simplifying the collection of taxes on goods and services at the federal level.
- Tax on Goods and Services (IBS): Will unify ICMS (state) and ISS (municipal), consolidating taxes into a single calculation base, applicable to states and municipalities.
- Selective Tax (IS): Created to replace part of the IPI, it will be applied to specific products like cigarettes and beverages and will function as a regulatory instrument.
Implementation will occur gradually until 2033, allowing companies and governments to adapt to the new model without significant operational disruptions.
SAP DRC: the solution for compliance in the new tax scenario
SAP DRC (Document and Reporting Compliance) is designed to replace SAP GRC (Governance, Risk, and Compliance) and meet the requirements of the tax reform with more modern and integrated functionalities. Its main benefits include:
- Cloud-based: Automatic updates and flexibility for regulatory changes.
- Split Payment: Automatic management of payments with direct collection to the tax authorities.
- Modern tax reports: Layouts adapted to new legal requirements.
- Integration with tax authorities: Greater transparency and efficiency.
Transitioning from GRC to DRC is an essential step for companies that want to be prepared for the new tax requirements of the reform. DRC not only replaces GRC but also expands fiscal compliance capabilities, ensuring organizations are aligned with regulations more efficiently and flexibly.
SAP ECC: the role and challenges of the tax reform
SAP ECC (ERP Central Component) has played a fundamental role in managing business and fiscal processes for years. However, with the advent of the tax reform and evolving technological demands, this solution is beginning to face significant limitations:
- The need for complex customizations to handle new taxes like CBS and IBS.
- Lack of native functionalities to meet requirements such as Split Payment.
- Support for ECC will be discontinued in 2027, necessitating planning for migration to S/4HANA.
While ECC can still meet some short-term demands, its infrastructure no longer keeps pace with the complexity of new fiscal obligations. Companies using this solution should plan their upgrade immediately to avoid future risks.
Impacts of the Tax Reform on SAP Systems
The transition to the new tax system will bring operational and technological challenges for companies using SAP systems. The main points are:
- Upgrade to SAP S/4HANA: SAP’s most modern solution is prepared to meet the new tax requirements imposed by the reform, including Split Payment and adaptation to new taxes (CBS and IBS). Support for ECC will be discontinued in 2027, requiring early planning.
- Split Payment: Part of the payment will be automatically directed to the tax authorities, responsible for the collection and management of taxes at the federal, state, or municipal level. This mechanism creates a direct link between the tax document and the payment method used, promoting greater transparency and efficiency in tax collection.
Adaptation strategies for companies with SAP
To prepare for the Tax Reform, it’s essential to follow a clear and efficient action plan. Evaluating the impacted business processes, such as billing, purchasing, and accounting, will ensure a smooth transition. Additionally, training teams for implementation is also indispensable.
The Tax Reform is a milestone that requires careful preparation, especially for companies using SAP. Updating systems like S/4HANA and DRC is not only a matter of tax compliance but also an opportunity to modernize processes, increase competitiveness, and ensure long-term operational efficiency.
Count on our specialists to prepare your company for the tax transition.
