Brazil Tax Help-2

12/17/2019
Brazil
Generated on: 2019-12-17
SAP ERP | 6.0 EHP8 SP11
PUBLIC
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Financial Accounting (FI)

Purpose
The Financial Accounting (FI) component covers the most important laws and business practices speci c to Brazil. The following
documentation describes these aspects of the component.
Features
Country Version Brazil allows for the business place entity, the level which is used for reporting taxes on sales/purchases, nota
scal reporting, and official document numbering.
In your day-to-day activities, it:
Calculates taxes automatically when you post a purchase order in Materials Management (MM) or a sales order in Sales
and Distribution (SD)
Processes incoming and outgoing payments in Accounts Receivable (FI-AR) and Accounts Payable (FI-AP)
This includes boletos, faturas, and DME.
You can also use the Brazilian FI functions to ful ll statutory reporting requirements, including the legal books and legal les.
Taxes (FI-AP/AR)
Use
The Taxes component covers the most important laws and business practices speci c to Brazil. For generic information about
Taxes , see Taxes (FI-AP/AR) .
Prerequisites
You have maintained all the tax settings in Customizing. Each tax rate is described in detail in the following documentation, along
with the required Customizing settings. However, for an overview, you may want to refer to this list of Customizing activities for
Brazilian taxes .
In addition, you must have entered all relevant tax numbers for your customers, vendors, and your own company code.
Features
Country Version Brazil calculates the following forms of taxes automatically:
Tax on sales/purchases
The system calculates Brazilian taxes that are levied at federal, state, and municipal levels. It takes into account the many
exceptions that may occur, and it makes available all tax-related data required for statutory reporting.
Taxes: Customizing
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The following list contains all required Customizing activities related to the tax functions for Country Version Brazil , including the
basic settings and those needed for tax calculation. The activities are listed in the same order in which they appear in the
Implementation Guide (IMG).
Note
The Tax Manager's Workplace enables you to make all tax-related Customizing settings from a single point of access.
The SAP note 1706309 provides a detailed documentation of the tax con guration for Brazil as well as BC Sets which can be
used to accelerate the implementation of Brazilian condition-based tax calculation. For general information on how to work with
BC Sets, see Business Con guration Sets (BC-CUS).
Basic Settings
Financial Accounting Financial Accounting Global Settings Tax on Sales/Purchases Basic Settings Brazil
De ne IPI Tax Situations
De ne IPI Tax Laws
De ne ICMS Tax Laws
De ne ISS Tax Laws
De ne Sequence for SD Tax Law Determination
De ne Brazilian Tax Regions and Assign to Geograph. Regions
De ne Tax Regions for Foreign Customers/Vendors
De ne Tax Jurisdiction Codes
Assign Postal Codes to Tax Jurisdiction Codes
Assign Alternative Calculation Procedure per FI/MM Tax Code
De ne Tax Types
De ne Which Taxes Are Included in MM Price Conditions
De ne Which Taxes Are Included in MM-SRV Price Conditions
De ne Which Taxes Are Included in SD Price Conditions
Condition-Based Tax Calculation Settings (only necessary if you employ this type of tax calculation), Condition-Based Tax
Calculation
Activate Condition Generation
Specify Calculation Procedures for Condition-Based Tax Calculation
Map MM Tax Values to Nota Fiscal Fields
Map SD Tax Values to Nota Fiscal Fields
Map MM Tax Laws to Nota Fiscal Fields
De ne Internal Codes for Tax Conditions
Assign Condition Types to Internal Codes for Tax Conditions
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Assign Condition Tables to Tax Tables
Tax Calculation
Financial Accounting Financial Accounting Global Settings Tax on Sales/Purchases Calculation Settings for Tax Calculation
in Brazil
Access Tax Manager's Workplace
De ne SD Tax Codes
De ne Sequence for SD Tax Code Determination
De ne FI/MM Tax Codes
De ne Customer Groups for SubTrib Calculation
De ne Tax Groups for Dynamic Exceptions
Tax Rates,Tax Rates
Maintain Default Tax Rate Values
Maintain IPI Values
Maintain IPI Material-Dependent Exceptions
Maintain IPI Dynamic Exceptions
Maintain ICMS Values
Maintain ICMS Material-Dependent Exceptions
Maintain ICMS Dynamic Exceptions
Maintain ICMS-Complement Dynamic Exceptions
Maintain SubTrib Values
Maintain SubTrib Material-Dependent Exceptions
Maintain SubTrib Dynamic Exceptions
Maintain ISS Values
Maintain PIS Values
Maintain COFINS Values
See also:
Tax Calculation
Tax Number
De nition
See tax number .
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Use
Country Version Brazil covers multiple tax numbers required in Brazil for levying taxes and subsequently reporting to the tax
authorities. You maintain your customers' and vendors' tax numbers in their master records, on the Control data tab (customers)
or on the Control screen (vendors).
CNPJ number for legal persons
CPF number for natural persons
You enter the CPF number in the Tax Number 2 eld and set the Natural Person indicator. The CPF number consists of 11 digits,
for example, 076.635.658-80. Enter all 11 digits directly – with no spaces, periods, or hyphens.
State tax number
You enter the state tax number in the Tax Number 3 eld (no xed number of digits or special format).
Municipal tax number
You enter the municipal tax number in the Tax Number 4 eld (no xed number of digits or special format).
You enter your own state and municipal tax numbers per business place (see Business Place ).
CNPJ Number
De nition
See CNPJ number .
Structure
The CNPJ number consists of 14 digits, for example, 12.345.678./0001-96. These digits represent three distinct elements:
The rst eight digits refer to the company registration number assigned to the company by the tax authorities.
The next four digits comprise the business place .
The last two digits refer to the check digits , which the system uses to perform automatic checks when you create a
customer or vendor master record, to ensure that no invalid numbers are stored in the system.
Master Data
You maintain your customers' and vendors' CNPJ numbers in their master records, on the Control data tab (customers) or on the
Control screen (vendors), in the Tax Number 1 eld. When you enter your customers' and vendors' CNPJ numbers, you just enter
the 14 digits directly – with no spaces, periods, slashes or hyphens.
You enter the various elements of your own CNPJ number in your company code master data. In Customizing for Financial
Accounting (FI), choose Financial Accounting Global Settings Company Code Enter Global Parameters . Choose Additional
details , and enter data as follows:
CNPJ Business Place
Here you enter the business place element that is assigned to your company's headquarters. In most cases, this is 0001. The
system requires it to process Accounts Receivable (FI-AR) and Accounts Payable (FI-AP).
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CNPJ Company Registration No.
Here you enter your company registration number, which is the same for all business places de ned within your company.
Each combination of company registration number and business place provides a unique CNPJ number; the business place is the
level at which reporting must be carried out.
Business Place
De nition
See business place . In Brazil, it refers to an organizational unit located between the company code and plant levels, as illustrated
in the following graphic (called BP):
Use
In Brazil, the business place is used for reporting taxes on sales/purchases, nota scal reporting, and official document
numbering.
Customizing
You need to make the following settings for your business places in Customizing for Cross-Application Components , under
General Application Functions Nota Fiscal CNPJ Business Places :
De ne Business Places
Here you de ne all the business places you require for your company. For each business place, you enter nota scal-related
information, such as the tax numbers. If substituição tributária (ST) is to be applied, you can enter the state tax number for ST, per
tax region. You also need to maintain address data for each business place since the nota scal print program uses the business
place address as the address of the issuer ( not the address of the delivering plant).
By making these settings, the system establishes the business place as the entity registered with the authorities that is
responsible for issuing notas scais and for tax and nota scal reporting.
Assign Business Places to Plants
You assign a business place to one or more plants.
Note
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The plant must be assigned to a Brazilian company code before you can allocate a business place to it.
You are also required to assign number range groups to the business place, since it is at the level of the business place that the
outgoing forms are numbered. You do this in nota scal Customizing (see path above), under Output De ne Nota Fiscal Numbers
and Form Sizes .
In addition, you need to maintain your business place assignment in your company code master data, as described under CNPJ
Number .
Tax on Sales/Purchases
De nition
See Tax on Sales/Purchases, Sales Taxes, and Additional Taxes .
Use
In Brazil, there are a number of taxes on sales and purchases, of which Country Version Brazil covers the following:
Industrial products tax (IPI)
State value-added tax (ICMS), as well as special forms of ICMS:
ICMS complement
ICMS on freight
ICMS tax substitution (SubTrib) and SubTrib on freight
Municipal tax on services (ISS)
Social contribution tax on services (INSS)
When you create a company code using the template for Brazil and complete the required Customizing steps , the system
automatically makes all the settings required for these taxes.
The following sections explain the taxes in detail, starting with an explanation of the various rates per tax, and how the system
calculates them.
Tax Manager's Workplace

Use
The Tax Manager's Workplace (TMW) is a Customizing tool that enables you to make all required settings relevant to tax
calculation in Brazil (nearly 50), from a single screen.
Recommendation
We recommend that you work through the individual IMG activities when you rst con gure Brazilian taxes in your system,
documenting as you need to on a project basis. Then, as you need to make changes (due to a change in tax rate, for instance),
you can do so quickly using the TMW.
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You can use the TMW regardless of the tax calculation method you employ; it simply brings all tax activities to a single transaction.
Only the pull-down menu Condition Setup contains activities that are relevant only to condition-based tax calculation ( Migration ,
Condition Mapping , and Nota-Fiscal Mapping ), and these are not visible if you have not activated condition-based tax
calculation.
Integration
All TMW options can also be found as separate activities within the Implementation Guide (IMG), with the exception of two:
1. Option to change to a different country within the TMW
2. Migration of existing tax rates to condition records, which is necessary if you use condition-based tax calculation (only if
you switch tax calculation procedures )
Activities
You access the TMW in Customizing for Financial Accounting , by choosing Financial Accounting Global Settings Tax on
Sales/Purchases Calculation Settings for Tax Calculation in Brazil Access Tax Manager's Workplace . Refer to the IMG
documentation for a complete listing of all activities contained in the TMW.
You can access the documentation of the individual activities in the standard way (by clicking the document icon to the left of the
activity in the IMG), or by choosing the blue i icon within each activity.
You can also access the TMW by calling the transaction J1BTAX.
Tax Rates
You can de ne various tax rates for IPI , ICMS , SubTrib and ISS , which the system then accesses during tax calculation in the
sequence described below. The standard values correspond to those published by the government, and they are based on a
certain factor or combination of factors:
Tax Rate Factor(s)
IPI NCM code
ICMS Ship-from tax regionShip-to tax region
SubTrib Ship-from tax regionShip-to tax region
ISS ISS is based primarily on the tax jurisdiction code, but many other
factors can in uence its calculation (see ISS ). ISS is handled
differently than the other tax rates: there is one tax rate table, in
which you enter all standard rates as well as any exceptions. If ISS is
to be calculated, the system always accesses this rate table.
In addition, you can de ne exceptions for each tax rate. Dynamic exceptions allow you to de ne special rates based on key elds
stored in master records or taken from transaction data, such as the tax code. By means of tax groups, which you then assign to
the dynamic exception tables, you can de ne up to three key elds that the system uses to determine the appropriate tax rate in
the case of dynamic exceptions.
Recommendation
You can also de ne material-dependent exceptions, but we recommend that you de ne any rate exceptions using dynamic
exceptions; the material is one of the key elds you can de ne for your tax group.
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Lastly, you can de ne default values for IPI, ICMS, and ISS (not SubTrib), which the system uses if it does not determine a valid
rate in the other tax rate tables.
Priority of Values
During tax calculation, the system searches for the correct tax rate in the tax rate tables. It looks in the following tables for each
tax type, in the speci ed sequence, and takes the rst rate it nds:
1. Material-dependent exceptions
2. Dynamic exceptions
3. Standard values
4. Default values
See also:
Taxes: Customizing , for IMG paths for de ning tax rates and tax groups for dynamic exceptions, under Tax Calculation
Industrial Products Tax (IPI)

De nition
See IPI .
Use
IPI, which is included in nota scal documents, must be submitted to the Brazilian tax authorities. It is reported in Modelo 8,
Directory for Calculating IPI Tax ( Registro de Apuração do IPI ).
The system also calculates a special quantity-based form of IPI called IPI pauta . Goods falling in this category are taxed per piece
or by kilogram, rather than being taxed a de ned percentage per product. You make these additional speci cations in the IPI tax
Customizing activities, but instead of entering a rate in the Tax Rate eld, you use the Rate/Unit eld and additionally specify the
number of units and unit of measurement.
Integration
Several factors in uence the percentage rate and base value of IPI:
Usage of the goods (based on the posting in Purchasing)
If a material is used for industrialization (production), the tax amounts are posted to separate line items. If a material is used for
consumption , the tax is nondeductible, in which case the IPI amount is added to the value of the material and you cannot offset
the tax against your output tax. If a material is resold , the IPI tax amount is nondeductible, but it is added to the inventory value.
IPI is typically not due in resale, since it is an excise duty levied on the production or import of goods.
NCM code
The rate varies depending on its product classi cation, as de ned by its NCM code. For some products, IPI is calculated on a
reduced base amount.
Material
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In most cases, the system uses the IPI rate entered for the material's NCM code. However, if any other value has been entered as
an exception (including per material), this value always overwrites that of the NCM code.
Customer
In certain cases, customers can be exempt from IPI. This only applies to SD, as described below.
Vendor
If the vendor is a wholesaler who does not pay IPI, 50% of the calculated IPI value can be recovered. Since the wholesaler does not
charge any IPI at all, this IPI credit is deducted from the inventory value (half of the IPI amount is deducted from the inventory
value and the other half of the IPI amount is posted to deductible IPI). The IPI is not stored and printed on the nota scal. This is
only relevant for MM.
Rate Determination in Materials Management (MM) and Sales and Distribution (SD)
When you enter a purchase order in MM or a sales order in SD, the system derives the IPI rate from the following factors:
Factor MM SD
Tax code The FI tax code determines whether the The pricing procedure checks the SD tax
system must calculate IPI. code: If the Calculate IPI indicator is set, the
system calculates IPI. You specify the SD tax
code in the sales order on line-item level.
Master record Vendor master: Customer master:
If the Tax split indicator is set, then 50% of If the IPI-exempt indicator is set, the system
the calculated IPI value is posted as does not calculate IPI on sales to the
deductible input tax, and 50% is deducted customer.
from the inventory posting or the posting to
an expense account. You generally set this
indicator for wholesale vendors who do not
pay IPI.
IPI rates The system searches for a rate as described here .
See also:
IPI Tax Law
State Value-Added Tax (ICMS)

De nition
See ICMS .
Use
ICMS is applied when goods or services are sold or transferred. The cost of freight and insurance are usually, but not always,
included in the base value used for calculating ICMS.
ICMS is reported in Modelo 9, Directory for Calculating ICMS Tax ( Registro de Apuração do ICMS ).
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The tax region Zona Franca de Manaus , a special duty-free zone created by government incentive to promote development,
represents a special case for ICMS calculation: It must be calculated, but it is subsequently discounted – so that no ICMS
payments are made. A few other regions, called the Cidades Conveniadas , possess a similar status.
Integration
Several factors in uence the percentage rate and base value of ICMS:
Where the goods originate from and where they are being shipped to
Product codes
ICMS exemptions are possible for certain products. An exemption can be either permanent or valid only through a speci ed date,
and its validity can apply to one state or it can extend to all states.
Different or reduced ICMS rates are applied to certain products. Reduced rates are only charged within one state; therefore, the
rates do not depend on the states of origin and destination.
For some products, ICMS is calculated on a reduced base (for example, 80% of the goods' value is taxed and 20% is not taxed).
As is the case with exemptions, the base-value reduction can be valid either permanently or only for a speci ed time period.
Reduced bases are only applied within one state, so again, they do not depend on the states of origin and destination.
Customer
Some companies are not subject to ICMS, such as some government-owned companies.
Usage of the goods
The base value for calculating ICMS depends on the usage of the goods. If a customer buys goods for production or resale, ICMS is
calculated on the goods' value not including IPI. If the goods are earmarked for consumption, the base value used to calculate
ICMS is the value of the goods plus IPI.
In addition, the usage determines how the system posts the amounts in Purchasing (MM-PUR). If the material's usage is
production or resale, the tax amounts are posted to separate line items. If the usage is consumption, the tax increases the value of
the material and it is nondeductible.
When you enter a purchase order in MM or a sales order in SD, the system derives the ICMS rate from the following factors:
Factor MM SD
Tax code The FI tax code determines whether the The pricing procedure checks the SD tax
system must calculate ICMS code: If the Calculate ICMS indicator is set,
the system calculates ICMS. You specify the
SD tax code in the sales order on line-item
level.
Master record Vendor master: Customer master:
The system checks the tax jurisdiction code The system checks the tax jurisdiction code
of the vendor to determine the ship-from tax of the customer to determine the ship-to tax
region, which is required to nd the ICMS region, which is required to nd the ICMS
rate. rate.
In the case of conhecimentos, the system If the ICMS-exempt indicator is set, the
may calculate ICMS on a reduced base value system does not calculate ICMS tax on sales
of 80%. To obtain this reduced base value, to the customer.
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enter 1 in the Tax base eld, on the Control
screen.
Plant Receiving plant: Issuing plant:
The system checks the tax jurisdiction code The system checks the tax jurisdiction code
of the receiving plant to determine the ship- of the issuing plant to determine the ship-
to tax region, which is required to nd the from tax region, which is required to nd the
ICMS rate. ICMS rate.
ICMS rate The system searches for the rate as described here .
See also:
ICMS Tax Law
ICMS Complement
De nition
A special form of ICMS (in Portuguese, complemento de ICMS ).
Use
The system calculates and posts ICMS complement when a company buys goods in a state other than its own and the goods'
usage is consumption.
ICMS complement is calculated as the difference between the ICMS rate that the vendor charges and the ICMS rate valid in the
company's own state. The rates are based on the ship-from and ship-to tax regions, as described under ICMS .
Exceptions can be applied to the calculation of ICMS complement. A state can de ne that for a given material either:
ICMS complement is not to be calculated, or
A different base value is to be used for the calculation (for example, 80%)
You can maintain exceptions for ICMS complement in Customizing for Financial Accounting (FI), under Financial Accounting
Global Settings Tax on Sales/Purchases Calculation Settings for Tax Calculation in Brazil Tax Rates Maintain ICMS-
Complement Exceptions .
Integration
The system posts ICMS complement as a tax liability in FI, but it is not added to the price of the goods, and therefore does not
constitute part of the nota scal.
ICMS on Freight
De nition
ICMS levied on freight services.
Integration
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In Sales and Distribution (SD), the system calculates ICMS on freight if the Calculate ICMS on freight indicator is set in the
respective SD tax code .
ICMS Tax Substitution (Substituição

Tributária)
De nition
Tax substitution in Brazil. Country Version Brazil calculates one form of substituição tributária , for ICMS. The system refers to it
as substituição tributária , SubTrib, or ST.
Use
Tax substitution is a method of collecting taxes for products that typically have few producers, but many customers (alcoholic
beverages, for example). It simpli es tax collection since the tax authorities process a much-reduced volume of ICMS payments. It
works in the following way:
A producer manufactures its product and sells it to a reseller, who in turn sells it to the nal customer. Instead of both the
producer and the reseller submitting ICMS payments to the tax authorities, the tax authorities transfer the right to collect taxes to
the producer of the goods. The producer, called the substitute taxpayer ( substituto tributário ), is obligated to submit ICMS tax
to the tax authorities, including the tax incurred when it sells to the reseller and the tax on the presumed resale surcharge that it
collects from the reseller.
The system calculates the surcharge for the product by applying a percentage rate or a xed price per unit.
When you enter a purchase order in MM or a sales order in SD, the system derives the SubTrib rate from the same information it
checks for ICMS rate determination , only it checks for SubTrib instead:
FI/SD tax code
Vendor/customer master record
In SD, if the customer's tax classi cation is 2 ( Zona Franca - ICMS ), the system can also calculate ST in the special way required
for sales to customers located in the tax region of Zona Franca de Manaus .
Receiving/issuing plant
SubTrib rate (in MM and SD)
The system searches for the rate as described here .
Note
If the system does not nd a SubTrib rate, it does not calculate SubTrib. There is no default rate, as there is for IPI, ICMS and
ISS.
You can group customers according to what rules they use for calculating SubTrib and then specify the customer group in
customer master records. You de ne the customer groups in Customizing for Financial Accounting , under Financial Accounting
Global Settings Tax on Sales/Purchases Basic Settings Settings for Tax on Sales/Purchases in Brazil De ne Customer
Groups for SubTrib Calculation .
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Substituição Tributária on Freight

De nition
ICMS tax substitution for freight services (ST on freight) when a transport company provides the service, but the company who
pays for the freight service calculates and submits ICMS.
Use
If the freight invoice ( conhecimento ) does not contain the ICMS amount, then the company receiving the service must calculate
ICMS, which is called "ST on freight" in the system.
When you create a company code using the template for Brazil, the system sets up the tax codes IF (input tax on goods for
production, ICMS ST on freight) and CF (input tax on goods for consumption, ICMS ST on freight).
Calculation in Materials Management (MM) and Sales and Distribution (SD)
The system calculates ST on freight as follows:
Factor MM SD
Tax code You must create a new FI/MM tax code and The system calculates the tax if the
activate the calculation of ICMS SubTrib on Calculate ICMS Sub.Trib. on freight
freight (by choosing Goto Maintain indicator is set in the respective SD tax code
Conditions ). .
Base value For the system to calculate the tax, you must de ne the base value for the calculation. You
enter the freight conditions used to calculate the base value in Customizing. In the activities
listed below, you must set the S.T.fr. (Add condition to base value for Sub.Trib on freight)
indicator for conditions that are part of the base value for calculation.
The system does not check if conditions for which the S.T.fr. indicator is set are
statistical or not. This indicator is not related to the de nition of freight conditions in the NF
value (SD/MM: Transfer rules: Pricing to Nota Fiscal) eld, which determines to which elds
of the nota- scal line-item a condition value is transferred.
Materials Management Logistics Invoice Sales and Distribution Billing Billing

Veri cation Incoming Invoice Nota Documents Country-Speci c Features
Fiscal Value Determination. Country-Speci c Features for Brazil
Special Conditions for Pricing.
Municipal Tax on Services (ISS)

De nition
See ISS(in Portuguese, Imposto sobre Serviços ).
ISS can be due to the municipal tax authority either where the service is provided or where the service provider is located, or
under certain circumstances to both authorities.
A number of factors in uence the calculation, levying, and reporting of ISS, including:
Tax-relevant location
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This can be one of three tax jurisdictions: where the service provider is located, where the service is provided, or where the
service recipient is located.
Who the tax is levied by
This is typically the service provider, but in certain cases it can also be withheld by the service recipient.
Integration
ISS Determination
The system derives the ISS rate from the following factors when you post a sales order in Sales and Distribution (SD) or a
purchase order in Materials Management (MM):
Factor MM SD
1) Tax code The FI tax code determines whether the The pricing procedure checks the SD tax
system must calculate ISS. code: If the Calculate ISS indicator is set,
the system calculates ISS. You specify the
SD tax code in the sales on line-item level.
2) Master record
Depending on which location(s) are tax-relevant for a transaction, the system checks the tax jurisdiction code in the address data for
customers, vendors, and plants as follows:
a) Service provider Vendor Plant
b) Service recipient Plant Sold-to party(business partner role)
c) Location where service is provided Delivery address Ship-to party(business partner role)
If not speci ed, then the system checks the

plant.
Note that for ISS only (unlike ICMS and

SubTrib), the system takes the jurisdiction
code entered on the Delivery Address tab (
Address Details button) – and not the one
entered on the Invoice tab.
3) ISS rate The system searches for the rate as de ned in Customizing: Financial
Accounting Financial Accounting Global Settings Tax on
Sales/Purchases Calculation Settings for Tax Calculation in Brazil Tax Rates Maintain
ISS Values .
Whether ISS amounts are already included in the net price of a material depends on how you have customized your price
conditions, under Financial Accounting Financial Accounting Global Settings Tax on Sales/Purchases Basic
Settings Brazil De ne Which Taxes Are Included in MM Price Conditions or MM-SRV Price Conditions or SD Price Conditions .
Master Data Maintenance
If ISS needs to be calculated, you must enter the tax jurisdiction code in customer, vendor, and plant master records.
See also:
Social Contribution Tax (INSS)

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De nition
INSS (in Portuguese, Instituto Nacional da Seguridade Social ) is a social tax that a company pays when it receives a service from
a natural person.
Use
When you create a company code using the template for Brazil, the system sets up the tax code IN , which it uses to calculate
INSS based on a xed rate.
See also:
Tax Calculation
Use
The system uses different methods to calculates taxes, depending on whether you enter a purchase order in Materials
Management (MM) or a sales order in Sales and Distribution (SD), as described below. If you post a document directly in
Financial Accounting (FI), certain tax-related data is not available, such as the material and the NCM code; the system proceeds
in the same way it does in MM, but it does not nd this data. If default rates are maintained for ICMS, IPI and ISS, the system uses
these in FI.
When the system calculates taxes, it:
Determines whether a given tax is to be calculated (based on the tax codes)
Determines which rate applies, and subsequently the tax amounts and tax base values per line item
Transfers the calculated tax amounts per line item to the nota scal
The system accounts for tax situations and tax laws , as well as tax regions and tax jurisdiction codes .
Prerequisites
You have made all Customizing settings required for taxes in Brazil.
Note
The Tax Manager's Workplace enables you to make all tax-related Customizing settings from a single point of access.
Note, also, that a Business Con guration Set is available that contains most of the Customizing settings required in MM/FI and
SD (see Taxes: Customizing for details).
Tax Calculation in MM
In MM, the system uses the calculation procedure assigned to Brazil . When you create a company code using the template for
Brazil , the system sets the TAXBRJ procedure automatically (but we do recommend that you change it to TAXBRA, as described
in Calculation Procedure, link above). The delivered procedures allow for all the FI/MM tax codes supplied with the system.
Caution
For the Brazilian tax calculation procedures to function correctly, be sure that the Tax base is net value and Discount base is
net value elds are deactivated in Customizing for your company code.
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Tax Calculation in SD
In SD, the system calculates taxes using the pricing procedures supplied with the system. These procedures require information
stored in SD tax codes .
Calculation Procedure
De nition
See The Calculation Procedure
Use
The system comes complete with two tax calculation procedures for Brazil, one of which must be assigned to your country:
Recommendation
We strongly recommend that you use procedure TAXBRA, as it enables you to exibly adapt the tax calculation logic to cover
new legal requirements or special customer needs.
TAXBRA
This procedure is used for calculating Brazilian taxes based on the standard condition technique . Tax rates, tax laws, and special
indicators that in uence whether tax line items are included in the nota scal are all stored in the system as condition records. By
means of mapping tables and tax code con guration, you can customize which values are written to which elds of the nota scal,
and which tax lines are generated.
If you employ condition-based tax calculation, you need to activate it and carry out all related Customizing activities, all of which
are found in Customizing of taxes forBrazil, under Basic Settings .
If you want to switch to the procedure TAXBRA (and you formerly used TAXBRJ), a migration function is available in the Tax
Manager's Workplace, which you can use to carry out the initial conversion of entries in the Brazilian tax tables to condition
records. Afterwards, the system automatically generates condition records for all new or changed entries in these tables.
Another function is available that allows you to evaluate condition tables and nd condition records with missing tax table (J_1B*)
entries; see Checking Data Consistency .
For detailed information on con guring condition-based tax calculation for Brazil, see SAP note 1706309 . This SAP note
provides a detailed documentation as well as BC Sets which can be used to implement the condition-based tax calculation for
Brazil.
TAXBRJ
When the system processes this procedure, it calculates the taxes externally by calling function module J_1BCALCULATE_TAXES.
SAP strongly recommends to use the calculation procedure TAXBRA. For more information, see SAP note 1538088 .
FI/MM Tax Code

De nition
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See tax code.
Use
The system uses FI/MM tax codes to automatically calculate taxes in Materials Management (MM).
Structure
In contrast to standard FI tax codes, these tax codes contain additional information that is required for tax calculation according to
Brazilian legal requirements:
Material usage (industrialization/production or consumption)
The usage determines how the system calculates tax amounts in Purchasing (MM-PUR).
Service
You must set the Service indicator if the system is to calculate the service tax ISS or INSS.
ICMS and IPI texts
The ICMS and IPI tax laws are stored in the tax code, which specify legal nota scal texts and the respective tax situation
used for legal reporting.
Exemptions
If the respective tax code does not trigger an ICMS or IPI calculation and the ICMS-exempt or IPI-exempt indicator is set,
the system stores the respective base value (ICMS or IPI) as the Excluded/Exempt base instead of the Other base in the
nota scal database (required for legal reporting). If, however, a calculation does take place, the system ignores this
exemption indicator in the tax code.
When you create a company code using the template for Brazil , the system sets up the following sample tax codes:
Tax code Description
C0 Consumption: No tax
C1 Consumption: ICMS + ICMS comp. only
C2 Consumption: ICMS + ICMS comp. + ST
C3 Consumption: ICMS + ICMS comp. + IPI
C4 Consumption: ICMS + ICMS comp. + ST + IPI
C5 Consumption: IPI only
CF Consumption: ICMS (ST on freight)
I0 Industrialization: No tax
I1 Industrialization: ICMS only
I2 Industrialization: ICMS + ST
I3 Industrialization: ICMS + IPI
I4 Industrialization: ICMS + ST + IPI
I5 Industrialization: IPI only
I6 Industrialization: ICMS + IPI: resale
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I7 Industrialization: ICMS + ST + IPI: resale
IE Tax-exempt transactions
IF Industrialization: ICMS (ST on freight)
IN INSS 15%
IS ISS 2004
K0 Future delivery purchasing G/R
K1 Future delivery purchasing I/R
K2 Future delivery G/R - Indust. all taxes
K3 Future delivery I/R - Indust. all taxes
K5 Consignment - Shipment G/R
K6 Consignment - Invoice I/R
K8 Future delivery I/R - Indust. all taxes
K9 Future delivery - Resale purchasing I/R
A0 Industrialization: No tax
A1 Industrialization: ICMS only
A3 Industrialization: ICMS + IPI
B0 Consumption: No tax
I9 ISS
S0 SD tax: No tax
SD SD tax: ICMS/IPI/SubTrib
SE Tax-exempt transactions
SI SD tax: ISS
SZ SD tax: ICMS Zona Franca
In Customizing for Financial Accounting , you can de ne additional tax codes with additional tax details for each tax procedure. To
do so, choose Financial Accounting Global Settings Tax on Sales/Purchases Calculation Settings for Tax Calculation in
Brazil De ne FI/MM Tax Codes .
See also:
Tax Codes
Pricing Procedure
De nition
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See Pricing Procedures .
Use
The system comes complete with the following sample pricing procedures for calculating taxes in Sales and Distribution (SD) for
Brazil:
TPP/Pricing Procedure
TPP Pricing Procedure Description
E RVXBRE Advance invoicing
F RVXBRF Sales future delivery
K RVXBRK Consignment ll-up
L RVXBRL Consignment issue
S RVXBRA Brazil: standard
To de ne additional pricing procedures, in Customizing for SD, choose Basic Functions Pricing Pricing Control De ne and
Assign Pricing Procedures .
SD Tax Code
De nition
See tax code .
Use
The system uses tax codes de ned for Sales and Distribution (SD) to automatically calculate taxes when you post a sales order in
SD. The SD tax codes contain additional tax-related information need for Brazilian tax calculation, such as the usage of the goods.
When you enter a sales order, you must specify an SD tax code. The system can determine a default tax code if:
Tax-related information is maintained in Customizing for SD, under Billing Billing Documents Country-Speci c
Features Country-Speci c Features for Brazil Maintain Sales Document Item Category .
Or, the tax code is entered in the customer material info record.
Structure
SD tax codes contain the information required for tax calculation according to Brazilian legal requirements. They specify:
Whether the material is used for industrialization (production) or consumption
Which tax is to be calculated for the tax code (ICMS, IPI, SubTrib, ISS, ICMS on freight, or SubTrib on freight)
If there are to be any exemptions for tax reporting (ICMS or IPI)
The system comes complete with all SD tax codes required by the delivered pricing procedures:
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C0 Consumption: No taxes
C1 Consumption: ICMS tax
C2 Consumption: ICMS + SubTrib
C3 Consumption: ICMS + IPI
C4 Consumption: ICMS + IPI + SubTrib
C5 Consumption: IPI
I0 Industrialization: No taxes
I1 Industrialization: ICMS
I2 Industrialization: ICMS + SubTrib
I3 Industrialization: ICMS + IPI
I4 Industrialization: ICMS + IPI + SubTrib
I5 Industrialization: IPI
I9 Service: ISS
If you need to de ne additional SD tax codes, in Customizing for Financial Accounting , choose Financial Accounting Global
Settings Tax on Sales/Purchases Calculation Settings for Tax Calculation in Brazil De ne SD Tax Codes .
Tax Region
De nition
Code that identi es a Brazilian region for purposes of tax calculation.
Use
The system calculates ICMS and SubTrib based on materials' ship-from and ship-to tax regions. For Brazilian company codes, the
ship-from and ship-to locations are stored in the tax jurisdiction code , which can be found in address data.
Note that to calculate ISS, the system requires additional information at the municipal level (see Tax Jurisdiction Code ).
Activities
Customizing
You can maintain tax regions in Customizing for Financial Accounting (FI), by choosing Financial Accounting Global
Settings Tax on Sales/Purchases Basic Settings Brazil De ne Brazilian Tax Regions . Here you establish the assignment of
tax regions to regions. Each region can have one or more tax regions assigned to it. For example, the region Amazonas has
assigned to it the tax regions Amazonas and Zona Franca Manuas . In most cases, however, there is one tax region for every
region, and they both have the same code.
The system handles foreign customers and vendors a bit differently. Additional tax regions have been de ned (where the region is
left blank), for example, XX for trade with the United States . You can then assign a tax region to the foreign countries you need by
choosing the same path above, but the activity De ne Tax Regions for Foreign Customers/Vendors .
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For the system to automatically determine the tax region during tax calculation, ensure that the following settings are made in
Customizing for FI, under Financial Accounting Global Settings Tax on Sales/Purchases Basic Settings External Tax
Calculation
De ne Logical Destination
Ex = B; Event = JUR; Function Module = J_1BTAXJUR_DETERMINE_NEW; RFC Destination = leave blank
Activate External Tax Calculation
Reference = enter your calculation procedure (TAXBRA or TAXBRJ); External System = B; leave all other elds blank
Master Data
When you enter address data in master records, the system automatically determines the tax jurisdiction code based on the
region (geographical) that you enter. If a single tax region corresponds to the region, the system assigns this tax region to the
master record in the Jurisdict. Code eld. If more than one tax region is assigned to the region, you must choose the appropriate
tax region for the plant, customer, vendor, or company code.
Day-to-Day Activities
When you then post a purchase order in Materials Management (MM) or a sales order in Sales and Distribution (SD), the system
uses the tax jurisdiction code from the respective master record. Or if you enter address data directly in the sales or purchase
order, the system determines the tax jurisdiction code in the same way as described above, by checking which one is assigned to
the geographical region you enter.
Tax Jurisdiction Code

De nition
A code used for determining tax rates in Brazil ; it controls which tax authorities must be paid for a given transaction.
Structure
The tax jurisdiction code is comprised of the following two parts:
Characters Contain
1-3 Tax region
4 up to 16 Municipal ( município ) code
The system additionally requires the second part of the tax jurisdiction code, the municipal code, to calculate ISS; for ICMS and
SubTrib, the three-character tax region is sufficient.
Integration
When you maintain Brazilian address data in master records or transaction data, and enter the postal code and geographical
region, the system automatically assigns the correct tax jurisdiction code by accessing the entries in Customizing for Financial
Accounting (FI), under Financial Accounting Global Settings Tax on Sales/Purchases Basic Settings Brazil Assign Postal
Codes to Tax Jurisdiction Codes. If it does not nd an entry here, it reads the tax region from the De ne Brazilian Tax Regions
and Assign to Geograph. Regions activity.
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Once the system determines either the tax jurisdiction code or the tax region, it stores the value in the Jurisdict. Code eld of the
address.
Note
The municipal code you enter as part of the tax jurisdiction code is not the same one you may have entered as the city code in
Sales and Distribution (SD), which is visible in the customer and plant masters, but not in the vendor master (in Customizing
for SD, under Basic Functions Taxes De ne Regional Codes De ne City Code ). You must always enter tax jurisdiction codes
for the system to calculate ISS.
Example
Assume that you procure window-cleaning services from a company located in the tax jurisdiction of São José do Rio Preto, and
for calculation of ISS, the location of the service provider is the tax-relevant location. In Customizing, you de ne the tax region SP
for the state of São Paulo . São José do Rio Preto has the municipal code 4980, so you de ne the tax jurisdiction code SP 4980 .
Note that the space after the SP counts as the third character of the tax region.
Tax Law
De nition
Tax laws are de ned by the relevant tax authorities and describe what rates apply forIPI, ICMS, and ISS for different sales and
purchases of goods or services. They detail which transactions are subject to the full rate, which are subject to a reduced rate, and
which are exempt from the tax.
Use
Associated with each tax law is a text which might have to be printed on the nota scal. For IPI and ICMS, you need to print this
text for transactions that are not subject to the full rate. It is not mandatory to print a tax law text for ISS, but we recommend that
you print a dummy tax law, such as IS0.
The system automatically determines the tax laws in Materials Management (MM) and Sales and Distribution (SD) as follows:
MM
For IPI and ICMS, the system takes the tax law from the FI/MM tax code . If, however, an IPI text has been speci ed for the
IPI rate or an ICMS text has been speci ed for the ICMS rate, this entry overwrites the one in the tax code.
For ISS, if a tax law text is to be printed, the system takes this directly from the ISS tax rate table.
SD
The system takes the tax law from one of these sources: sales item category, customer master record, or tax exceptions.
You de ne the sequence in which the system is to access these sources in Customizing for Financial Accounting (FI),
under Financial Accounting Global Settings Tax on Sales/Purchases Basic Settings Brazil De ne Sequence for SD Tax
Law Determination .
You can also manually enter a text for the tax law in the sales order.
You can maintain IPI, ICMS, and ISS tax laws in Customizing for FI, by choosing the relevant activity under Financial Accounting
Global Settings Tax on Sales/Purchases Basic Settings Brazil.
Migrating Tax Rates to Condition Records

12/17/2019
Use
If you switch from using tax procedure TAXBRJ to TAXBRA, which corresponds to condition-based tax calculation, you can
migrate existing tax rate entries to condition records.
Procedure
1. From the Tax Manager's Workplace , choose Condition Setup Migration Tax Tables to Conditions .
2. Select an individual tax rate table and check whether corresponding condition records exist, by choosing Condition
records Check conditions and the appropriate application, MM or SD.
A log appears on the bottom half of the screen, which displays the status of each entry in the table:
Traffic Light Meaning
Green Condition records exist for all elds in the table entry
Yellow At least one eld in the table is missing a condition record (but
some do exist)
Red No condition records exist for elds in the table entry that are
supposed to have one (some do not require one)
The whole tax rate table receives the color status of the lowest of any of its entries.
3. Convert the entries of the tax rate table if it has yellow or red status, by selecting the table, specifying the application (MM
or SD), and choosing a conversion option.
4. Repeat steps 2 and 3 for each of the tax rate tables.
Result
Once you have condition records for all your tax rates, you can use condition-based tax calculation.
Checking Data Consistency

Use
For Brazilian condition-based tax calculation to function correctly, each tax entry in the Brazilian tax tables (J_1B* tables) must
have exactly one corresponding entry in the condition database, and vice versa, meaning there must be a 1:1 relationship.
However, for a number of reasons, the corresponding tax entry or condition record may be missing. You can use the migration
function to check for missing condition records. The other case would be for condition records to exist without corresponding tax
entries – if, for example, you have deactivated automatic generation of condition records and subsequently deleted tax data, or if
you have manually created condition records. To ensure consistency of data in the tax tables, follow the procedure below.
Procedure
1. From the SAP Easy Access menu, choose Tools ABAP Workbench Development ABAP Editor (Transaction SE38).
2. Run program J_1B_CBT_CONSIST, and the system displays a list of condition tables.
3. Double-click a table, and the system displays all condition records used for Brazilian tax calculation.
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The traffic light indicates the status of the condition record: red means there is no corresponding record in the tax
table; yellow means a record exists in the tax table, but the data differs (for example, the tax rate); and green means
a correct corresponding entry exists.
At the far right, you see the corresponding Brazilian tax table as well as the index in the table (for condition records
with yellow and green status only; for red entries, this eld is blank).
4. Select all condition records with red and yellow status, and delete them by choosing the Delete condition records
pushbutton.
5. Repeat steps 3 and 4 for each of the condition tables. For the tax calculation to function properly, all condition tables must
contain green entries only.
Once you have viewed a condition table, the icon next to it changes to include a pair of eyeglasses, ; if you have made at
least one change to a table, the icon includes a diskette, .
Last Purchase Price

De nition
In Brazil, retail companies pay taxes based on the last purchase price of incoming items. Therefore, the last price of an incoming
movement must be available in the system.
This price can be derived from invoices or incoming transfers. In retail companies it is common to transfer the material from a
distribution center to warehouses. The distribution center buys the materials from a vendor and pays the taxes. Later on by
transferring the materials to the warehouses the sending distribution center has the authorization to credit the taxes.
Use
The last purchase price is used within the Brazilian Tax Calculation Schema (TAXBRJ), when calculating certain tax types from
the following tax groups:
ICMS
Substituição Tributária
Reimbursement
For more information, see Activating Last Purchase Price.
Activating Last Purchase Price

Procedure
1. Access Customizing for Financial Accounting under Financial Accounting Global Settings Tax on Sales/
Purchases Basic Settings Brazil De ne Tax Types .
2. Select the Last PP checkbox (Activate Last Purchase Price for Stock Transfers) for the following tax groups:
ICMS
Substituição Tributária
Reimbursement
3. Save your entries.
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Results
When you activate the last purchase price for ICMS and Substituição Tributária tax groups, the system uses the last purchase
price from the Inventory Management (MM-IM) process, as the base for the tax calculation, and it in uences the values of the
nota scal. For this reason, a tax code must be used with the tax type/condition, in the cases where this indicator is set; postings
in Financial Accounting (FI) are not affected.
When you activate the last purchase price for the Reimbursement tax groups, the system creates an offset posting in the FI
document based on the moving average tax. This amount is not transferred to the nota scal.
Last Purchase Price Calculation

Use
You use this function to calculate the last purchase price (LPP), for taxation purposes. The LPP is calculated for the base unit of
measure of the item.
Integration
This function uses information about goods receipts and invoice veri cation from the Materials Management component (MM).
This function is also integrated with the Brazilian Tax Calculation Schema (TAXBRJ).
Activities
After you activate the last purchase price, the system calculates it using two different formulas, depending on the available data as
described below:
When the goods receipt for a certain purchase has been posted, the system uses the following formula:
LPP = (total stock x average from database + tax amount) / (total stock + GR quantity)
All needed information is available in the internal tables referring to table Document Segment: Material (MSEG). The
quantity of the goods receipt is not yet added to the total stock.
When the invoice veri cation for the same purchase is posted, the system recalculates the last purchase price using the
following formula:
LPP = ((average from database x (total stock x numerator / denominator)) + tax value) / total stock
The goods receipt quantity is already included in the total stock and must be subtracted for the calculation. The base unit
of measure is not directly available, which is why the system has to calculate it. For that purpose the system uses the
numerator and the denominator from the conversion rules, de ned in the units of measure conversion of the material
master.
Example
Consider an invoice for screws. The screws are ordered by the box. However, the vendor's price is $10 per kg, and 1 kg of
screws lls 24 boxes. In this case, “numerator / denominator” would equal “24 boxes / 1 kg”.

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What is the purpose of the Financial Accounting (FI) component in Brazil?

What is the purpose of the Financial Accounting (FI) component in Brazil?

What are some of the features of the Country Version Brazil?

What are some of the features of the Country Version Brazil?

12/17/2019

SAP ERP | 6.0 EHP8 SP11

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Financial Accounting (FI)

In your day-to-day activities, it:

This includes boletos, faturas, and DME.

De ne IPI Tax Situations

De ne IPI Tax Laws

De ne ICMS Tax Laws

De ne ISS Tax Laws

De ne Sequence for SD Tax Law Determination

De ne Brazilian Tax Regions and Assign to Geograph. Regions

De ne Tax Regions for Foreign Customers/Vendors

De ne Tax Jurisdiction Codes

Assign Postal Codes to Tax Jurisdiction Codes

Assign Alternative Calculation Procedure per FI/MM Tax Code

De ne Which Taxes Are Included in MM Price Conditions

De ne Which Taxes Are Included in MM-SRV Price Conditions

De ne Which Taxes Are Included in SD Price Conditions

Activate Condition Generation

Specify Calculation Procedures for Condition-Based Tax Calculation

Map MM Tax Values to Nota Fiscal Fields

Map SD Tax Values to Nota Fiscal Fields

Map MM Tax Laws to Nota Fiscal Fields

De ne Internal Codes for Tax Conditions

Assign Condition Types to Internal Codes for Tax Conditions

Access Tax Manager's Workplace

De ne Sequence for SD Tax Code Determination

De ne FI/MM Tax Codes

De ne Customer Groups for SubTrib Calculation

De ne Tax Groups for Dynamic Exceptions

Tax Rates,Tax Rates

Maintain Default Tax Rate Values

Maintain IPI Values

Maintain IPI Material-Dependent Exceptions

Maintain IPI Dynamic Exceptions

Maintain ICMS Values

Maintain ICMS Material-Dependent Exceptions

Maintain ICMS Dynamic Exceptions

Maintain ICMS-Complement Dynamic Exceptions

Maintain SubTrib Values

Maintain SubTrib Material-Dependent Exceptions

Maintain SubTrib Dynamic Exceptions

Maintain ISS Values

Maintain PIS Values

Maintain COFINS Values

CNPJ number for legal persons

CPF number for natural persons

State tax number

Municipal tax number

The next four digits comprise the business place .

CNPJ Business Place

Assign Business Places to Plants

You assign a business place to one or more plants.