Impacts of Tax Reform on the Communications Sector

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The tax reform, recently approved by the Chamber of Deputies, introduces substantial changes to the Brazilian tax system, directly impacting the communications sector.

This sector, which includes advertising agencies, media and communication management, organization of fairs and events, direct marketing, and other information service provision activities, is expected to face an increase in the tax burden due to the new rates proposed by the reform.

In this article, we detail the impacts of these iran telegram data changes, highlighting the importance of strategic management of tax credits , especially PIS and COFINS, in addition to addressing the importance of identifying credit opportunities that are often not verified internally by companies.


Impact of Tax Reform on the Communications Sector
The tax reform establishes a dual Value Added Tax (VAT) model, consisting of the Contribution on Goods and Services (CBS) at the federal level and the Tax on Goods and Services (IBS) at the state and municipal levels. These taxes will largely affect operations carried out by companies in the communications sector .

Currently, communications companies that operate under the real profit regime, such as large advertising agencies and event organizers, collect PIS and COFINS in a non-cumulative manner, with rates of 1.65% and 7.6%, respectively, totaling 9.25% and with the possibility of taking credits, however, with restrictions and strong debates, since the administrative authorities try, at all costs, to restrict them.

Furthermore, the ISS (Tax on Services), which is levied on these activities, varies between 2% and 5%, depending on the municipality. With the replacement of these taxes by CBS and IBS, and the expectation that the combined rates of these new taxes could reach 26.5%, the communications sector will face a significant increase in its tax burden.

For example, an advertising agency that currently pays a total tax burden of approximately 12.25% (considering PIS, COFINS and an average ISS rate of 3%) may see this rate increase to 26.5% with the new taxation. This increase of more than 14 percentage points represents a significant challenge to the profitability of companies in the sector, especially those that already operate with reduced profit margins.

This is because the nature of the communications sector, which often involves intangible services and intensive use of labor, limits the possibility of taking advantage of tax credits, in contrast to industrial sectors that have longer production chains and more inputs eligible for credit.