Split payment could require up to R$ 160 billion extra from companies
Split payment provides for automatic withholding of IBS and CBS on sales payments and threatens companies' cash flow. Learn more on Gazeta do Povo
TL;DR
- The split payment mechanism requires automatic tax collection at the time of payment for operations.
- It is estimated that this will require an additional R$ 65 billion to R$ 160 billion annually in tax disbursements for businesses.
- Around 56.2% of companies taxed under Lucro Real and Lucro Presumido will be affected.
- Companies may need an additional R$ 117 billion in working capital to compensate for the loss of temporary access to tax funds.
- The high VAT rate, potentially close to 30%, could be the highest in the world.
- Implementation costs and cash flow pressures may be passed on to consumers, increasing final prices.
- There is a risk that automatic withholding could incentivize operations without issuing invoices to avoid tax collection.