Amid discussions about the profound changes in Brazil’s tax system, tax expert Leonardo Manzan emphasizes that understanding indirect taxation in international trade and its impacts on Brazilian companies after the tax reform has become a crucial task for those operating in foreign markets. International trade already involves a complex tax landscape, filled with special regimes, differentiated treatments, and ancillary obligations that vary according to the type of goods, destination, or origin.
With the arrival of the reform, concerns are growing that the unification of taxes could affect export competitiveness and make imports more expensive, altering the foundations on which many Brazilian companies have built their commercial strategies.
Indirect Taxation in International Trade: Impacts on Brazilian Companies After the Tax Reform
According to Leonardo Manzan, the proposal to replace taxes such as ICMS, IPI, PIS, and Cofins with a national Value-Added Tax (VAT) aims to simplify the Brazilian tax system. Still, there is concern that foreign trade operations may be directly impacted if the new legislation does not fully preserve the current export tax relief mechanisms.
Currently, products intended for the international market are generally exempt from these taxes to avoid the issue of tax cascading. However, details on how VAT will treat these operations remain undefined, creating uncertainty for those operating in this sector.
Practical Impacts on Exporters and Importers
Brazilian exporters fear losing competitiveness if accumulated tax credits cannot be refunded or offset quickly. Leonardo Manzan notes that companies’ cash flow could be affected if there are delays or restrictions on the use of these credits, which could hinder investments and international negotiations.
For imports, the concern lies in defining the VAT calculation base. Imported products already face multiple levies, such as Import Tax, ICMS, port fees, and customs expenses. The risk is that the new tax will increase costs, harming sectors dependent on imported inputs or goods not produced domestically.
Special Regimes and Free Trade Zones
Another critical issue involves special regimes such as drawback, Recof, free trade zones, and bonded warehouses. Leonardo Manzan explains that companies operating under these conditions need clarity on whether VAT will preserve existing tax benefits or impose new requirements to access them.
If these regimes are eliminated or significantly altered, industries such as naval, aerospace, automotive, and electronics could face substantial impacts on their production and export costs.
Transition Costs and Required Adjustments
Additionally, the transition phase is a concern for businesses of all sizes. Leonardo Manzan points out that companies will have to operate under two simultaneous tax systems—the current one and the new VAT regime—for several years. This will require investments in technology, staff training, and deep revisions in tax and accounting management systems.
For foreign trade operators, the challenge is even greater, as these companies already deal with international legislation, trade agreements, and increasingly strict compliance requirements—not only regarding taxation but also environmental and social practices.
Strategies to Mitigate Risks
In this context, companies must act proactively to mitigate risks. Leonardo Manzan suggests revisiting international contracts, reviewing adjustment clauses, and analyzing corporate structures that could be affected by tax changes. Running tax impact simulations under different legislative scenarios can help avoid unpleasant surprises.
It is also essential to maintain dialogue with industry associations and closely monitor legislative developments, as details that may seem minor today could significantly influence the tax outcomes of operations.
Outlook for Global Competitiveness
Much remains to be defined about how Brazil will balance tax simplification with the preservation of international competitiveness. For Leonardo Manzan, there is no doubt that foreign trade will remain strategic for the country, but companies will need to pay extra attention in the coming years.
While the final text of the tax reform is not yet consolidated, those operating in international trade must stay alert, ready for quick adjustments, and willing to invest in technical knowledge to remain competitive in an increasingly demanding market.
Author: Vania Quimmer
