Rogerio Menezes Director of Finance AkzoNobel PPC Brazil March 2014

Transcription

1 Rogerio Menezes Director of Finance AkzoNobel PPC Brazil March 2014

2 AkzoNobel Worldwide, latest figures 2013 PPC Brazil RNM Financials Imperatriz 2

3 High-growth markets will become significantly more important % of revenue, indicative 32% Mature Europe 18% North America 9% Emerging Europe 5% ME&A 25% Asia Pacific 11% Latin America High-growth markets will be around 50% of revenue in this decade 3

4 AkzoNobel Specialty Chemicals and PPC The BU Pulp & Performance Chemicals (PPC) is one of the most relevant business for AkzoNobel and is part of the Specialty Chemicals Business Area PPC figures worldwide: Sales 1.1 billion Investments 150 millions Employees Production plants 37 Countries 35 More information

5 AkzoNobel PPC around the world Valleyfield Moses Lake Magog Green Bay Duluth Marietta Columbus Augusta Amatitlán Maracay Santiago de Cali Stockvik Oulu Rjukan Helsinki Koryazhma Bohus Alby Gothenburg Moscow Wurzen Düren Leverkusen Ambès Mannheim Soave Estella Barcelona Gunsan Tokyo Suzhou Guangzhou Taichung Wellgrow Tachia Bangkok Imperatriz Eunápolis Três Lagoas/Jupia Jundiaí Rio de Janeiro Jacareí Talcahuano Headquarters Production site Surabaya Pasuruan Hallam Office

6 Honest question to ourselves: do we really know / understand Brazil taxwise? 6

7 Maybe not true as far as tax environment is concerned AkzoNobel

8 This is the way I see Brazil when talking about Tax A dangerous place if we are amateurs in tax management 8

9 As a Brazilian citizen!!!! Eu sou brasileiro, com muito orgulho e com muito amor I want to believe we can do something different in the future, the current pillars of our tax system are not sustainable long-term 9

10 FAITH and HOPE!!!! Will Brazil change taxwise??? 10

11 Examples: The Brazilian Long-term Challenges Low Standard or costly infrastructure including telephones, transport networks, utilities Failure to honour contracts, bribery, corruption, weak corporate governance Lack of key skills including management Poor quality control Rising wages / low productivity Underdeveloped retail and distribution systems Credit risk Availability of credit Difficult relations with organised labour Saturated markets Source: HSBC Conclusion: if we analyse each individual topic, there are tax issues in all of them! 11

12 Brazil: the TAXLAND - 76 different taxes, 170 official obligations!!! - 36% of GDP are taxes - An average company spends 1,5% of revenues in dealing with tax requirements - PwC study Brazilian companies spend 2,600 hours/year just to pay taxes versus 212 hours/year in NA or EU Source: IBGE / FGV 12

13 Brazil s efficiency in tax!!! Simple translation: Brazil is the worldwide champion on working hours dedicated to pay taxes!!!! 13

14 Brazilian Tax / Fiscal Scenario sharing with you a graphic from PwC official obligations fiscal documents types Today s tax scenario 76 taxes types 3 government levels Conclusion: couldn t it be more complex, right?

15 Tax Management One of the main challenges for any Brazilian CFO!!! Brazilian Tax System: the most complex in the world! Not only difficult to explain, it is almost impossible to go into the details!! In average, 35% of overall Finance People dealing with tax!! SSC is the solution??? Law changes periodically more new electronic demands Dimensions on tax: Federal, State, Municipal Tax rates varies from State to State!!!! Internal Tax War between States of the country 15

16 Tax Management Continuation Tax mindset in the companies operational day-to-day, compliance purposes strategic opportunities for savings or better call it cost avoidance? to assist & to support the business, planning Find qualified people that navigate in both operational and strategic sides of the tax this is a real challenge!!! Fiscal auditors from govern: usually they don t understand the business flow of the companies, purely guided by the book only, not well prepared/qualified for that position or responsibility Tax lawyers: the only one that make money with all such complex environment, by the way they can really make a lot of money!!!! This is the career of the decade in Brazil!!!! 16

17 Tax Management: just some challenges involving Indirect Taxes Market environment tax incentives in some sectors tax exemptions in some States of the country Tax engineering schemes involving companies (customers, suppliers, ) / M&A actions with tax purposes / corporate tax planning more and more needed, to help on having profitable business, is there any company here that don t act in that way?? Tax compliance, through following new government demands (NF-Eletrônica, SPED, EFD PIS/COFINS, ) it requires a lot of adaptation of our ERP and outside systems, several manual processes workarounds Find qualified people to deal with taxes: always an issue!!! 17

18 Tax Management: just some challenges involving Direct Taxes Fully connection with Accounting outcome (P&L), New Brazilian Accounting Rules (CPCs) / Transfer Price local policies Understanding of the combined Cash-Flow & Tax Actions for Cash Optimization Interest on Capital, Royalties Agreement, Dividends Tax Exemption environment: yes, it exists!!! (eg ADENE), cost x benefit of putting your business in the northeast region of Brazil to be evaluated Tax Compliance, accuracity of the figures and answers to External Tax Audits / External Auditors / etc Find qualified people (again!!!) 18

19 Tax Burden in most of the companies Direct Taxes Indirect Taxes Income/Corporate Tax Interests on Capital Royalties Agreement Dividends IOF VAT ICMS debits / credits ICMS paid VAT PIS/COFINS debits/credits PIS/COFINS paid ISS (Service Tax) VAT IPI debits/credits and we could add much more I.N.S.S., I.I., I.R.R.F., Ex-Tarifario, 19

20 Now I invite you to make a deep reflection: how much money the taxes represent in your company??? What % of your total cash flow? 20%, 30%, 40%,. Maybe we can conclude that tax management is a crucial activity for your business, maybe the reason to explain your profit or your loss, maybe as important as margin management by product, sales strategy, logistic and distribution, HR strategies, etc At least in Brazil, this is the truth! 20

21 I hope you agree & appreciate my comments!!! This is just a warm-up for some discussion between ourselves Thank you for the audience!!!! Rogerio Neri Menezes rogerio.menezes@akzonobel.com Mobile: Current Position: since 2005 acting as Director of Finance for AkzoNobel PPC in Brazil Past Positions: Director of Finance for Rhodia Specialty Phosphates in Mexico ( ), Director of Finance for Rhodia Polyamide South America ( ), several previous positions in Finance within Rhodia (controller, manager finance, internal auditor,...)