The Thomson Reuters Institute’s new report on the impact of Brazil’s tax reform on tax & accounting professionals explores the sentiment and expectations of these professionals towards the country’s recently approved tax reform
Tax & accounting professionals in Brazil are anticipating both opportunities and stiff challenges coming from the country’s pending tax reform, according to a new report from the Thomson Reuters Institute (TRI).
The report, Brazil Tax Reform: Insights, Challenges, and Opportunities for Tax & Accounting Professionals, gathered the opinions of 179 tax & accounting professionals in Brazil though an online survey in which these professionals were asked about their perspective on a number of reform-related issues, including how ready they feel for the transition, their satisfaction with the support received from their firms, and how the reform will impact them both positively and negatively.
They also were asked to estimate their firms’ adjustments in investment and budget in the short- and medium-terms due to the reform. (The new report is a companion piece to TRI’s previous report on the impact of Brazil’s tax reform on corporate tax departments, which came out in August.)
Key findings
The survey for the report on tax & accounting professionals was conducted in April and May of this year, and most of the respondents said that their firms had not yet begun implementing actions in response to the tax reform. According to these professionals, their firms were still in the process of collecting information and assessing how the reform might affect their operations. However, more than 60% of respondents said that they expect a high or very high impact of the reform in their businesses.
Tax & accounting professionals surveyed for the report identified both benefits and challenges from the transformative change brought by the reform plans. More than half of respondents agreed that the simplification of ancillary obligations, a decrease in the tax burden, and greater clarity in tax and fiscal planning will be positive changes. By contrast, respondents cited an overload of work during the transition period between existing and new tax models, a potential rise in the tax burden, and increased costs to learn, adapt, and change firms’ systems to comply with the new rules as the biggest challenges brought by the reform.
You can hear more about the impact of Brazil’s tax reform on a special edition of the Thomson Reuters Institute Insights podcast on Spotify (in Portuguese).
Not surprisingly, the majority of respondents said they anticipated their firms would increase investment in talent training, process updating, and tax management solutions within the first six months of the reform. This trend is expected to continue over the next two years, with talent training, process updating, and accounting management solutions being key areas of focus and investment.
These findings suggest that many tax & accounting firms in Brazil have already begun investing in human capital, anticipating that enhanced investment in process updating and tax management solutions will support their professionals during the transition to the new tax regime.
Regarding expectations for their firms’ tax management solutions and the role of those systems in the tax reform, tax & accounting professionals noted the two most important aspects of these systems during the transition period will be: i) keeping up with continuous updates with the new rules; and ii) increasing automation and accuracy in the systems’ ability to do tax calculations and assessments as well as generate ancillary obligations.
Conclusion
The new report shows that as Brazil’s tax reform plans being to have an impact local tax & accounting firms will need to plan and adopt strategies such as keeping abreast of regulatory changes, make use of technology and automation, and reallocate resources to areas like talent development and tax management systems, among other initiatives.
And the way to ensure a smooth transition, according to the opinions of the tax professionals who will be at the forefront of this change, will be for tax & accounting firms to prepare in advance in order to better position themselves to face the obstacles and leverage the opportunities that the tax reform will bring.
You can access the Thomson Reuters Institute’s Brazil Tax Reform: Insights, Challenges and Opportunities for Tax & Accounting Professionals report here.
