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today. Tax Project Existing Wal-Mart stores
Existing Bom Preço stores before purchase in 2004
Existing Sonae stores before purchase in 2005 Doing Business in Brazil from a Tax Perspective
Tax burden in Brazil is one of the highest in the world.
While the average of the emerging markets is 16% of GNP,
the tax burden in Brazil is 38%.
Brazil taxation system is complex, detailed and very
dynamic with more than 23,000 changes per year. The
legislation is not combined in a unified source, having
its laws presented by the federal tax code and several
other amendments. The tax law then becomes a dynamic
changing document, rather than a static and consistent
Additionally, the federation States each have their own tax
code based on their legislation. In numerous instances
the State tax law is not consistent with the Federal code,
creating legal discussions and disputes as to the legality of
This scenario presents a unique challenge for retailers, as
the large product assortments are subject to numerous
fiscal requirements that vary from product to product: The challenge
Wal-Mart’s corporate systems are known as being the
most complete, robust, and to be capable of adding
value to the business as no other in the retailing business.
Nevertheless, it did not have the capability of dealing
with such a complex tax environment as it finds in Brazil.
Having the possibility of adding the tax functionality to
the existing engine would bring to Brazil all the rest of the
functionality that the system already has.
While adding new stores and entering new states created
manageable liability, the acquisition of complete chains
of stores (Bompreço and Sonae) created an even more
The challenge was to guarantee that the tax system would
fulfill the Brazilian tax legislation and fit the recurrent
changes over the years. It would have to be achieved in
the shortest time frame and the lowest internal impact
possible, knowing that Wal-Mart would have to deal
with the largest and most intrusive system change ever
Wal-Mart team in Brazil has started developing the system
specifications and these were translated to programme
code by the different focus teams in Bentonville by
the Information System Division. This by itself was a
task larger than the y2K and Euro conversion effort put
together. • Indirect taxes are embedded in product cost; retailers
become tax collectors. 28 2006/2007 FROM SÃO PAULO TO SHANGHAI – New consumer dynamics: the impact on modern retailing* An effort such as this has no means of achieving success
if the commitment of all the stakeholders was not present.
All main executives in Bentonville1 have been involved and
their participation has had a significant importance. Areas
such as legal, tax, information systems, merchandise,
vendor relationship and many others have had to act in
a coordinated way with their counter parts in-country
to deliver a compliant product to the internal customers
(users in Brazil). PRICEWA...
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- Spring '08
- São Paulo, Shanghai, New consumer dynamics