When a giant moves, many things around him can suffer the consequences.
In a simple step of a giant, many small ones can be reached directly and indirectly, especially those who have no idea how much it costs to import technology in Brazil.
And just like in movies and cartoons, the little ones take time to notice the giant's movement and, when they do, it's usually too late to react and there's no use screaming anymore.
Speaking of giant, the biggest giant in the world is “walking” from the United States to here and this will bring us the most didactic and painful lesson about how much it costs to import technology in Brazil!
Let's understand this story...
It's so good that feeling of freedom that the credit card gives us, of being able to buy anything from outside the country without paying taxes for it, isn't it?
Yes, it's so good and so easy, that any company from outside Brazil can get here (even earning abroad) and take all the customers of your company, your technology, an entire segment, an entire market.
Normally, those who consume technology over the internet, and most of the time pay via credit card, do not make much distinction between national or imported technology (except for the dollar or euro exchange rate).
Thus, few delve into issues such as: which country are the suppliers from or what type of service they provide.
Those who classify the nature of the services contracted in detail and pay attention to the taxes due in each case and, mainly, on who is responsible for the collection of these taxes. For them, the answer to the question “How much does it cost to import technology into Brazil?” is at most 6.38% of IOF.
But the right answer for this situation is very simple:
- When the supplier is national (domiciled in Brazil):
- All taxes are borne by the seller, even if passed on to the borrower, as the seller is obliged to issue invoice in the country, making it clear to those who buy, what the taxes of that transaction are.
- When the supplier not domiciled in Brazil:
- Obviously, there is no way for him (supplier in another country) to issue a note and pay taxes in Brazil.
- Thus the obligation falls completely on the company in Brazil that is “importing” (buying) the service, being obliged to determine, calculate, issue guides and pay up to six taxes, five federal and one municipal, in addition to declaring all this in accessory obligations.
- For these companies, the answer to the question “How much does it cost to import technology into Brazil?” it can go from 40% and reach 70% when the supplier is from a tax haven, as with many technology companies that invoice from Ireland, for example.
The first problem?
Less than one in ten companies does this entire procedure. All others are exposed.
The second problem?
Less than one in ten accounting professionals have the conditions, tools, time and knowledge about each of these technologies acquired, their tax classification, country of origin and consequent taxation, to keep track of each purchase on each card, of each customer, of each bank. , etc., especially considering that some taxes are due on the same day the card is debited.
The first consequence of not knowing how much it costs to import technology into Brazil:
For those who BUY technology from outside!
The first consequence that the use of imported technology (without proper Compliance) brings to Brazilian companies is reflected on who buys the services.
Why?
Because companies are exposed to tax and taxation, but they think it's okay, either because they don't know they owe taxes, or because they don't even want to know about it, the so-called "blind eye" or "let it go, it's never been a problem".
And when can it be a problem?
1) Data provided by the Credit Card issuer to the Federal Revenue
Expenses above 10 thousand reais per month per CNPJ and 5 thousand per CPF, are mandatory declaration to the Federal Revenue by the card issuer in an obligation called DECRED.
The agency has used these data for a legal entity tax mesh, as announced in September 2020.
2) Data exchanges between countries
Brazil has an agreement with around 90 countries for the exchange of data on transactions between companies domiciled between one and the other. Example: The Brazilian Internal Revenue Service may receive data from the US IRS on purchases made in the US by companies and persons domiciled in Brazil.
3) Data provided by the Service provider
It is common for companies from outside Brazil to start billing via Invoice, from outside the country and, at a given moment, start billing with Invoice here in the country. This will now be the case in December for the world's largest provider of cloud services, which until today did not issue an Invoice in Brazil, but which from December 2020 will start billing all its Brazilian customers here in the country. And what will be the consequences?
A) For companies that already paid taxes for importing the service:
No problem, depending on how much tax the supplier will pass on, the cost may even decrease.
B) For companies that did not pay or declare taxes:
RISK: As of December, the Federal Revenue will have a detailed list, via invoice, of all companies that hire this service and it will be very easy to identify who already imported the service before and did not pay taxes correctly.
The cost for companies, of this simple crossing of data by the Revenue, can reach 40% of the value of the services imported in the last 5 years, plus interest and fine for delay, in addition to any penalties for not declaring the transaction to the agency, which can reach 20% of the tax due.
A sad prediction, but one that we need to make:
We believe that the migration of revenue from this giant technology player from the USA to Brazil will bring a great and painful learning experience for Brazilian companies about How much does it cost to import technology in Brazil.
The second consequence of not knowing how much it costs to import technology into Brazil:
For those who SELL here in Brazil and COMPETE with technology from abroad
The second impact on the purchase of imported technology, without due Compliance, is for those who sell a similar technology in Brazil.
Why?
If we are talking about two CRMs: one national and the other imported.
Imagine that the CRM provider that is in Brazil is thanks to pay here, a series of taxes, both when issuing the note and after it, taxes on income and on consumption.
The competition of foreign technology companies with national companies, without taxation and without inspection, is unfair.
Why?
Because the foreign company, for being in another country, normally does not pay, there in its country, any type of tax on the sale, such as VAT or VAT, as it is billing a person not domiciled in that country (just as Brazil does not tax the export of services).
Consumption taxes (outside VAT/IVA, here in Brazil, ISS, PIS, COFINS) should be paid here in Brazil, as well as withholding income tax.
However, in payments via credit card, due to this illusory belief that international payments on the card "have no tax" or only have the 6.38% of IOF, the sale value enters fully into the company's cash flow abroad, leaving do Brasil without suffering any taxation on income or consumption, since the buyer in Brazil is unaware of his obligation.
This “tax-free import” ends up benefiting companies from other countries, to the detriment of Brazilian companies, since the price charged by a foreign company ends up being cheaper than the service of a national company, which already includes in its price, obligatorily, all taxes.
This generates, in addition to unfair competition, unemployment in Brazil.
Most people think it's good, as I do, the ease that the credit card makes for an internet purchase, but we would all find it bad if the service/technology being purchased from outside, without taxes, is similar to what we supply here in Brazil with our high tax burden.
How can it be fair that we, here in Brazil, have to pay a series of taxes and a giant company, from abroad, can make billions in our country, without paying any taxes inside?
It's sad, but that's how it has been for many years, even though most people and companies are unaware of this reality!
Either we zero taxes for everyone, or everyone must pay fairly!
Where does your company's Accounting enter this story?
And before anyone falls into the commonplace of putting all the blame on accounting, it's important to clarify that your accountant may not be unaware of the obligation, but usually unaware of the transaction that is made on your credit card.
For the accountant to fulfill all these obligations, he would need to receive the Invoice of each debit in advance, in addition to having online access to the statement of each card, of each client, something unthinkable for the day to day of this professional.
How to simulate your case and know how much it costs to import technology in Brazil?
We created a Cloud and SaaS Import Simulator, click and check the financial and tax cost of the technology you use, considering all taxes included.
What is the ideal solution?
The ideal solution is a tax reform that simplifies taxation for the purchase of technology from Brazil and abroad and creates fair rules for everyone in the market!
