Apoio Impostos

Brazil Localization - Taxes
Version 0.99 (Draft)

March 7, 1997
SAP R/3
GUIA DE IMPLEMENTAO
Contents
1. Description of the taxes...............................................................6
1.1 IPI Imposto sobre Produtos Industrializados ................................................6
1.2 ICMS Impostos. Circulao de Mercadoria e Servios ..................................7
1.3 Complement of ICMS.....................................................................................8
1.4 ISS Imposto sobre servicos...........................................................................9
1.5 IRRF (Imposto de Renda retido na Fonte) for companies (CGC)...................9
1.6 IRRF (Imposto de Renda retido na Fonte) for natural persons (CPF)............9
2. Calculation examples of ICMS, IPI, Complement of ICMS, ISS and
IRRF.....................................................................................10
2.1 General calculation rules for the different taxes........................................11
2.1.1 Calculation formula(s) for ICMS................................................................11
2.1.2 Calculation formula for IPI........................................................................12
2.1.3 Calculation formula for ISS.......................................................................12
2.1.4 Calculation formula for IRRF withholding tax (for companies)................12
2.1.5 Calculation formula for IRRF withholding tax (for natural persons).........13
2.2 Sale/purchase within/outside a federal state..............................................13
2.2.1 Usage of goods - industrialization/resale.................................................13
2.2.2 Usage of goods - consumption (buying: only within a federal state).......15
2.2.3 Usage of goods - industrialization - reduced calculation base for ICMS...16
2.2.4 Usage of goods - consumption - reduced calculation base for ICMS.......18
2.2.5 Rules if ICMS or IPI are not applicable......................................................19
2.3 Special cases for purchasing.......................................................................21
2.3.1 Usage of goods - industrialization - vendor = non industry.....................21
2.3.2 Usage of goods - consumption - purchasing from another federal state.22
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2.4 Outgoing/incoming NF with ISS for companies...........................................23
2.5 Outgoing/incoming NF with IRRF for companies (only)...............................24
2.6 Outgoing/incoming NF with ISS and IRRF for companies............................24
2.7 Incoming NF with INSS/IRRF or INNS/ISSF/IRRF for natural persons...........25
2.7.1 Incoming NF with INSS/IRRF - vendor not married...................................26
2.7.2 Incoming NF with INSS/ISSF/IRRF - vendor not married...........................29
2.7.3 Incoming NF with INSS/IRRF - vendor married - 4 family members.........32
2.7.4 Incoming NF with INSS/ISSF/IRRF - married - 2 family members............35
3. Additional tax requirements.......................................................40
3.1 Discounts.....................................................................................................40
3.1.1 Discount not included in the Nota Fiscal (SD only)..................................40
3.1.2 Discount included in the Nota Fiscal........................................................41
3.1.3 Cash Discount..........................................................................................43
3.2 Freight.........................................................................................................44
3.2.1 Freight in a separate conhecimento in MM............................................44
3.2.1.1 Intramunicipal Freight ..................................................................................................44
3.2.1.2 Intrastate and Interstate Freight - no base value reduction..........................................45
3.2.1.3 Intrastate and Interstate Freight - base value reduction for carrier (80%)....................46
3.2.2 Freight included in the Nota Fiscal...........................................................47
3.3 Zona Franca................................................................................................47
3.4 Change of usage (industrialization <-> consumption)...............................48
3.5 Substituicao Tributaria (S.T.)......................................................................49
4. Design and implementation of tax calculation..............................61
4.1 Interface to the external tax calculation (External tax interface).............62
4.1.1 Connection of external tax calculation procedure to standard R/3.........62
4.1.2 Standard customizing of the external tax interface................................63
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4.1.3 Layout of tax calculation procedure in MM/FI..........................................64
4.1.4 Definition of tax codes.............................................................................67
4.1.4.1 Tax codes for non taxable transactions........................................................................67
4.1.4.2 Tax codes for incoming movements - Industrialization.................................................68
4.1.4.3 Tax codes for incoming movements - Consumption.....................................................70
4.1.4.4 Tax codes for incoming movements - ICMS Sub.Trib. on freight...................................71
4.1.4.5 Tax codes for incoming movements - Future delivery purchasing / Consignment........73
4.1.4.6 Tax codes for incoming movements - Services - ISS and INSS......................................73
4.1.4.7 Tax codes for outgoing movements - Ind.+Cons. posted in SD....................................74
4.1.4.8 Tax codes for transfer postings - outgoing movements - Ind.+Cons.............................75
4.1.5 Determination of the tax jurisdiction codes.............................................76
4.1.6 Other standard customizing in MM/FI.......................................................78
4.1.7 Tax part of pricing procedure in SD.........................................................79
4.1.8 Other standard customizing in SD...........................................................80
4.1.9 Other Brazil specific customizing in SD....................................................82
4.2 External calculation of taxes.......................................................................83
4.2.1 Interface parameters / parameter determination in standard R/3..........83
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What significant changes have been made to this document:
Version 0.92: December 12, 1995
Requirement analysis completed, chapter 1. to 3. finished; chapter 4 still under
construction
Version 0.93: January 23, 1996
Chapter 4 partly changed and completed
Version 0.94, February 1, 1996
Chapter 2, Formulas for the calculation of taxes with discounts revised
Version 0.95, March 8, 1996
Chapter 4, Customizing SD adapted for foreign customers; ICMS posting logic
added to SD pricing procedure; FI/SD processing for Zona Franca added; chapter
4 still not completed
Version 0.96, September 5, 1996
Chapter 2 and 3, several changes and enhancements according to the brazilian
requirement document; chapter 4 still not completed and in some parts not up
to date
Version 0.99, March 7, 1997
Chapter 2 and 3, again changes in the requirements, status of the document is
the 3.0F delivery; chapter 4 reworked and completed; to avoid double
maintenance no further versions will be generated; requirements which are not
mentioned in this document can be found in the requirement documents
provided by the Brazil development link team.
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1. Description of the taxes
1.1 IPI Imposto sobre Produtos Industrializados
The IPI is a federal tax which is charged when selling, transferring, etc. goods. The
percentage rate and the value-base of IPI depends on several factors which are:
Type of operation
- The type of operation (CFOP) determines if IPI is charged or not. Type of
operation is defined per line item. Types of operation are e.g. export, sending
goods from one stock to another.
- CFOP is currently implemented in the Nota Fiscal but not in the standard system
and will therefore not be used to determine which tax types have to be
calculated in a special business case.
Product/NBM-code
- IPI is charged per product, and calculated from the goods value incl. ICMS. The
due percentage rate depends on a product classification which is called NBM-
code.
In the current solution the NBM-code is implemented as a material master
extension.
It is important to make a difference whether a product group (NBM-code) is
taxed with the rate 0% or not taxed at all (exempted). This has to be determined
by the NBM-code to create a correct Nota Fiscal.
- For some products (identified by the NBM-code) IPI is calculated on a reduced
base. That means e.g. 80% of the goods value is taxed and 20% is not taxed.
The reduction of the base can be valid permanently or only for a certain time
range.
- Origin of product (imported/domestic/...) is only important for sales to Zona
Franca (see chapter Zona Franca).
Customer
- Some companies do not have to pay IPI tax (e.g. some government companies).
This is only relevant if something is sold to such a company (A/R / customers).
Usage of the goods
- The usage determines how the amounts are posted in purchasing. If a material
is used for production the tax amounts are posted to separate line items. If a
material is used for consumption the tax increases the value of the material and
can not be recovered.
Vendor (industry equivalent)
- If the vendor is no non IPI paying wholesaler, half of a calculated IPI amount can
be recovered when purchasing from such a vendor. This IPI amount is deducted
from the inventory value of the product. For further details see example.
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1.2 ICMS Impostos. Circulao de Mercadoria e Servios
The ICMS is a state tax which is charged when selling, transferring, etc. goods. The
percentage rate and the value-base of ICMS depends on several factors which are:
Type of operation
- The type of operation (CFOP) determines if ICMS is charged or not. Type of
operation is defined per line item. Types of operation are e.g. export, sending
goods from one stock to another.
- CFOP is currently implemented in the Nota Fiscal but not in the standard system
and will therefore not be used to determine which tax types have to be
calculated in a special business case.
State of origin and state of destination of the goods.
- State of origin and state of destination are determined by the delivering plant,
the customer or by the vendor and the receiving plant
The field Region is used for the brazilian states which need not be the same as
the Tax regions in the sense of state of origin and state of destination. In most
cases the Region (like SP, RJ,...) is the same as the Tax-region. Only in some
cases there is a 1:N assignment between Region and Tax region (AM -> AM
and Zona Franca).
- Technically the field Tax jurisdiction will be used to define the ship-from and
the ship-to tax region of goods. This field is available in the customer, vendor,
cost center and plant master. The jurisdiction code will be determined
automatically from the address maintained in the object.
Product/NBM-codes
- Exemptions of ICMS for particular products are possible. Exemptions can be
permanent or only valid until a certain date. It is possible that an exemption is
only valid inside a state or an exemption is valid for all states.
- Different/reduced rates of ICMS for particular products. It is important to make a
difference whether a product is taxed with the rate 0% or not taxed at all. This
has to be determined to create a correct Nota Fiscal.
Reduced rates are only used within a state. Therefore they do not depend on
state of origin and state of destination.
- For some products ICMS is calculated on a reduced base. That means e.g. 80%
of the goods value is taxed and 20% is not taxed. The reduction of the base can
be valid permanently or only for a certain time range.
- Origin of product (imported/domestic/...) is only important for sales to Zona
Franca (see chapter Zona Franca).
Customer
- Some companies do not have to pay ICMS tax (e.g. some government
companies) This is only relevant if something is sold to such a company (A/R /
customers).
Usage of the goods
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- The base value for the calculation of ICMS depends on the usage of the goods.
If a customer buys goods for reselling or production, ICMS is calculated on the
goods value without IPI. If the goods are used in a different way (e.g.
consumption), ICMS is calculated on the goods value plus IPI.
Additionally the usage determines how the amounts are posted in purchasing. If
a material is used for production the tax amounts are posted to separate line
items. If a material is used for consumption the tax increases the value of the
material and can not be recovered.
- Concerning the tax calculation in MM/FI the usage has to be implemented as
different tax codes because the tax code determines the account assignment
(distribute tax to separate line items, add tax to expense) in the tax procedure.
In SD the usage has to be entered manually on line-item level in the sales order.
1.3 Complement of ICMS
A special case of ICMS is the complement of ICMS. This tax is calculated and posted
under the following conditions:
a company buys a product in another state
the product is used for consumption
The complement of ICMS is calculated as the difference between the ICMS rate
charged by the vendor and the ICMS rate which is valid when buying in the same
state. Comp. ICMS has to be posted as a tax liability but is not added to the product
price.
In addition to the normal calculation of the complement of ICMS the following
exceptions are possible. A state can define that for a certain product (material)
the complement must not be calculated and paid
a different calculation base (e.g. 80%) has to be used.
It is important to consider that the complement of ICMS just affects the FI-posting. The
amount is not part of the Nota Fiscal and therefore not stored in the Nota Fiscal
database.
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1.4 ISS Imposto sobre servicos
ISS is a tax on services. It is a municipal tax. The tax rate is determined by the city of
the supplier and by the type of service. There is only one exception for construction
companies which use the ISS rate of the city where they are building/working. The
exception for construction companies is currently not in scope for the localization. The
ISS tax amount is normally included in the service price.
The type of service is not implemented in the system and most companies deliver
only one type of service. This means that the ISS-rate depends on the vendor
(supplier) on the incoming side and on the selling company (code) on the outgoing
side.
The calculation of ISS is only relevant on the outgoing side (SD) because the ISS
amount has to be stored in the Nota Fiscal database for reporting purposes. On the
incoming side (MM) the ISS amount is not posted as an ISS credit but is included in
the service price. Therefore in MM no ISS calculation is necessary. ISS is not stored in
the Nota Fiscal database on the incoming side. On the incoming side there is also not
reporting related to ISS necessary.
ISS can be used together with IRRF (income tax). There might be ISS without IRRF.
The calculation of ISS is only necessary when selling a service. When
buying a service ISS need not be calculated and also not stored in the
Nota Fiscal.
1.5 IRRF (Imposto de Renda retido na Fonte) for companies (CGC)
If the vendor of a service is a company (CGC), for some services (e.g. consulting) IRRF
has to be calculated and posted as a withholding tax. The IRRF rate depends on the
type of service. This rate cannot be determined but has to be entered manually. IRRF
for companies can occur together with ISS tax but with no other tax.
In MM the calculation has to be done during invoice verification. In SD the calculation
has to be done when creating the invoice.
IRRF is not charged for all services. The decision if IRRF is calculated has to be
triggered manually. At year end a report about the withholded IRRF amounts per
vendor has to be generated.
1.6 IRRF (Imposto de Renda retido na Fonte) for natural persons
(CPF)
If the vendor of a service is a natural person (CPF), for some services IRRF has to be
calculated and posted as a withholding tax. Together with IRRF there are two other
taxes which might be calculated:
INSS Instituto Nacional de Previdencia Social (Social Security tax)
ISSF Imposto Sobres Servicos na Fonte (Service tax withholding)
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IRRF for natural person is only possible in MM. The calculation has to be done during
invoice verification. The decision if IRRF is calculated has to be triggered manually. At
year end a report about the withholded IRRF amounts per vendor has to be
generated.
The calculation is done based on table table defined periodically by the government.
This table defines which rate has to be used for which service amount. The tax
amount and the tax base amount has to be accumulated per vendor and month and
is then calculated according to the intervals given in the calculation table.
A special deduction of the base amount for the calculation is also possible. For each
member of the family of the natural person (wife and children) a fix amount (e.g. R$
90) has to be deducted from the base amount.
2. Calculation examples of ICMS, IPI, Complement of ICMS, ISS and
IRRF
In this chapter some examples for the calculation of ICMS, IPI, Complement of ICMS,
ISS and IRRF are given:
Examples for ICMS / IPI / Complement of ICMS
Sale/purchase within/outside a federal state
- usage - industrialization
- usage - consumption (purchasing: only within a federal state)
- usage - industrialization - reduced calculation base
- usage - consumption- reduced calculation base
Special cases for purchasing
- usage - industrialization -> vendor = non industry
- usage - consumption - purchasing from another federal state
Examples for ISS / IRRF (for companies)
Outgoing/incoming NF with ISS
Outgoing/incoming NF with IRRF for comanies (only)
Outgoing/incoming NF with ISS and IRRF for companies
Examples for ISS / IRRF (for natural persons)
Incoming NF with INSS/IRRF for natural persons - not married
Incoming NF with INSS/ISSF/IRRF for natural persons - not married
Incoming NF with INSS/IRRF for natural persons - married (e.g. 4 family
members)
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Incoming NF with INSS/ISSF/IRRF for natural persons - married (e.g. 2 family
members)
2.1 General calculation rules for the different taxes
2.1.1 Calculation formula(s) for ICMS
The calculation of ICMS is not done as a surcharge to the price (excluding tax) but
the calculation assumes the price including ICMS tax (and sometimes also IPI tax) as
the calculation basis. Depending on the use of the product different formulas are
used.
In case of discounts IPI is charged over the full amount; ICMS is charged on the
discounted amount including IPI.
Calculation base: price including ICMS (industrialization)
EPRICE DisAmt IPRICE IPRICE
ICMSrate

_
,
*
100
or
IPRICE
EPRICE DisAmt
ICMSrate

1
100
IPRICE = price including ICMS
EPRICE = price excluding ICMS
DisAmt = discount amount (N.F. relevant)
The values for the Nota Fiscal are calculated as follows:
ICMSvalue = IPRICE - ( EPRICE - DisAmt)
ICMSbase = IPRICE
Calculation base: price including ICMS over IPI (consumption)
EPRICE DisAmt IPRICE IPRICE
ICMSrate
IPRICE
ICMSrate IPIrate

_
,
_
,
1
]
1
* * *
100 100 100
or
IPRICE
EPRICE DisAmt
ICMSrate
IPIrate
_
,
1
1
100
100
*
IPRICE = price including ICMS calculated over IPI
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EPRICE = price excluding ICMS
DisAmt = discount amount (N.F. relevant)
The values for the Nota Fiscal are calculated as follows:
ICMSvalue = IPRICE - ( EPRICE - DisAmt)
ICMSbase = ICMSvale / ( ICMSrate / 100 )
2.1.2 Calculation formula for IPI
The calculation of IPI is done as a surcharge to the price (including ICMS). The
formula is therefore:
IPRICE EPRICE EPRICE
IPIrate
+
_
,
*
100
IPRICE = price including IPI
EPRICE = price excluding IPI but including ICMS
and without regarding discounts
2.1.3 Calculation formula for ISS
The calculation of ISS is not done as a surcharge to the price (excluding tax) but the
calculation assumes the price including ISS tax as the calculation basis. The formula
behind this rule is:
Calculation base: price including ISS
EPRICE IPRICE IPRICE
ISSrate

_
,
*
100
or
IPRICE
EPRICE
ISSrate
1
100
IPRICE = price including ISS
EPRICE = price excluding ISS
2.1.4 Calculation formula for IRRF withholding tax (for companies)
The calculation of IRRF for companies is not done as a surcharge to the price
(excluding IRRF but including ISS tax) but the calculation assumes the price including
IRRF and ISS tax as the calculation basis. The formula behind this rule is:
Calculation base: price including IRRF and ISS
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EPRICE IPRICE IPRICE
IRRFrate

_
,
*
100
or
IPRICE
EPRICE
IRRFrate
1
100
IPRICE = price including IRRF
EPRICE = price excluding IRRF
2.1.5 Calculation formula for IRRF withholding tax (for natural
persons)
The calculation of IRRF for natural persons is done using the price (excluding)
INSS as a base amount for the calculation. The calculation itself is done using a rate
table which contains the information for which base amount which WT tax rates has
to be used. For each vendor the base amounts and taxes are to be cumulated per
month so that finally the tax is calculated over the total amount of services the
vendor has provided.
For further information see calculation example.
2.2 Sale/purchase within/outside a federal state
When selling or purchasing a product within or without a federal state the same rate
of IPI but different rates of ICMS are used. The additional tax calculation rules apply in
both cases. Therefore all examples are given with only one ICMS rate. As calculation
base the amount incl. ICMS is displayed if the full rate is used. Otherwise the reduced
amount incl. ICMS is printed.
If a special rate for ICMS has to be used the whole calculation is done according to the
normal calculation rules but with this special rate.
If the calculation is done on a reduced base amount there is a special calculation
for the base amount necessary.
Amounts and rates for the examples:
Sales price : 82.000,00 (excluding tax)
ICMS : 12 %
IPI : 10 %
2.2.1 Usage of goods - industrialization/resale
Calculation of ICMS is done based on the amount without IPI
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82. 000,00
1
12
100
82. 000,00
0, 88
93 181 82
. ,
IPI is calculated based on the price incl. ICMS
93.181,82 (including ICMS)
9.318,18 (10 % of IPI)
102.500,00 (invoice value)

Calculation base: 93.181,82
Invoice value: 102.500,00
ICMS amount: - 11.181,82
IPI amount: - 9.318,18
Sales price: 82.000,00

The FI-posting for selling is:
Accounts receivable 102.500,00 D
Sales 93.181,82 C
ICMS tax to be paid 11.181,82 C
IPI tax to be paid 9.318,18 C
ICMS - tax expense 11.181,82 D
Stored in the Nota Fiscal for selling:
Base
Tax type Tax amount Rate Amount Exclude Others
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
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Purchasing: If the purchasing company is reselling the product
The FI-posting for purchasing is:
Accounts payable 102.500,00 C
Inventory 91.318,18 D
ICMS tax 11.181,82 D
Stored in the Nota Fiscal for purchasing:
Base
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
Purchasing: If the purchasing company is using the product in production
IPI tax 9.318,18 D
Base
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
2.2.2 Usage of goods - consumption (buying: only within a
federal state)
Calculation of ICMS is done based on the amount incl. IPI. According to the calculation
formula the ICMSrate is calculated over IPI as follows:
ICMSnew ICMSrate
IPIrate
+
_
,
* 1
100
in the example:
ICMSnew: 12 1
10
100
13 * ,2 +
_
,
82. 000,00
1
13
100
82. 000,00
0, 868
94. 470,05

,2
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9.447,01 (10 % of IPI)


Sales 94.470,05 C
Stored in the Nota Fiscal:
Base
ICMS 12.470,05 12 103.917,05
IPI 9.447,01 10 94.470,05
The FI-posting for purchasing is: (tax is not recoverable in consumption)
Cost account 103.917,00 D
Base
ICMS 12.470,00 12 103.917,00
IPI 9.447,00 10 94.470,00
2.2.3 Usage of goods - industrialization - reduced calculation
base for ICMS
Only a part of the product price is taxed with ICMS. The reduced base affects the tax
calculation and the data transfer to the Nota Fiscal.
ICMS Tax base reduction: 90%
82. 000,00
1
90
100
12
100
82. 000,00
0, 892
91 928,25
_
,
*
.
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9.192,83 (10 % of IPI)

Calculation base is the reduced value:
CalcBase
90
100
91 928,25 82. 735 * . ,43
ICMS amount: - 9.928,25 = 82.735,43 * 0,12

Sales 91.928,25 C
Stored in the Nota Fiscal for selling:
Base
ICMS 9.928,25 12 82.735,43 9.192,82
IPI 9.192,83 10 91.928,25
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ICMS tax 9.928,25 D
Base
ICMS 9.928,25 12 82.735,43 9.192,82
IPI 9.192,83 10 91.928,25
Purchasing: If the purchasing company is using the product in production
ICMS tax 9.928,25 D
IPI tax 9.192,83 D
Base
ICMS 9.928,25 12 82.735,43 9.192,82
IPI 9.192,83 10 91.928,25
2.2.4 Usage of goods - consumption - reduced calculation base for
ICMS
Only a part of the product price is taxed with ICMS. The reduced base affects the tax
calculation and the data transfer to the Nota Fiscal. Calculation of ICMS is done based
on the amount incl. IPI.
ICMS Tax base reduction: 90%
ICMSnew:
90
100
12 1
10
100
11 88 * * , +
_
,
82. 000,00
1
11 88
100
82. 000,00
0, 8812
93 054

,
. ,93
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9.305,49 (10 % of IPI)

Calculation base is the reduced value:
CalcBase
90
100
102. 360,42 92. 124 * ,38

Sales 93.054,93 C
Base
ICMS 11.054,93 12 92.124,38 10.236,04
IPI 9.305,49 10 93.054,93
Base
ICMS 11.054,93 12 10.236,04 92.124,38
IPI 9.305,49 10 93.054,93
2.2.5 Rules if ICMS or IPI are not applicable
In some cases of the tax calculation only one of the taxes (ICMS/IPI) has to be
calculated while the other tax is not applicable. To make sure that the information
about both ICMS and IPI calculation is available in all cases even data about the non
applicable tax has to be stored (e.g. for the legal books).
The general rule to handle such cases is to calculate the base amount also for the tax
which is not applicable and to keep this base amount in the field Others of the
respective Nota Fiscal record. The tax amount for this tax then is zero.
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From 3.0F on it is also possible to store the base amount for ICMS and IPI as Exempt
instead of Others. This function is activated by two special indicators on tax code
level.
To simplify the documentation just one case is given as an example. All other case
work similar.
Example: Sales by commercial or industrial establishment - third party
production
IPI is not applicable in this special case !
82. 000,00
1
12
100
82. 000,00
0, 88
93 181 82
. ,

Sales 93.181,82 C
Stored in the Nota Fiscal for selling and purchasing:
Base
ICMS 11.181,82 12 93.181,82
IPI 10 93.181,82
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2.3 Special cases for purchasing
In addition to the standard case in sales and purchasing there are some special cases.
Amounts and rates for the examples:
ICMS : 12 %
IPI : 10 %
2.3.1 Usage of goods - industrialization - vendor = non industry
If the vendor is non IPI paying wholesaler 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. The IPI is not stored and printed in the Nota Fiscal.
82. 000,00
1
12
100
82. 000,00
0, 88
93 181 82
. ,
93.181,82 (invoice value) - the wholesaler does not charge IPI

9.318,18 (10 % of IPI)
4.659,09 50% of the IPI value -> has to be posted as tax credit

IPI credit(50%): - 4.659,09
Inventory value 77.340,91

IPI amount(50%) - 4.659,09
IPI tax 4.659,09 D
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Base
ICMS 11.181,82 12 93.181,82
IPI1 4.659,09 10 46.590,91
IPI2 -4.659,09 10 46.590,91
2.3.2 Usage of goods - consumption - purchasing from another
federal state
If a company buys a product in another state and the product is used for
consumption, then the complement of ICMS has to be calculated and posted. This
special ICMS is the difference between the ICMS rate charged by the vendor and the
ICMS rate which is valid when buying in the same state.
ICMS rate charged by the vendor: 12%
ICMS rate when buying in the same state: 18%
Difference is Comp. ICMS: 6%
ICMS is calculated on the sales price including IPI:
ICMS - charged by the vendor : 12 1
10
100
13 * ,2 +
_
,
Value incl. ICMS

82. 000,00
1
13
100
82. 000,00
0, 868
94. 470,05

,2
IPI is calculated based on the price incl. ICMS (charged by vendor);
Comp. ICMS is also calculated based on the price incl. ICMS:
9.447,01 (10 % of IPI)

Based on the invoice value (including ICMS and IPI) the complement of ICMS is
calculated:
CompIcms Amount incl IPI incl ICMS
CompIcmsRate
( . , . )*
100
CompIcms 103 917
6
100
6235 . ,06 * ,02

Complement of ICMS 6.235,02
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Comp. ICMS expense 6.235,02 C
Comp. ICMS (dummy) 6.235,02 D
Base
ICMS 12.470,05 12 103.917,05
IPI 9.447,01 10 94.470,05
CompICMS 6.235,02 6 103.917,06
2.4 Outgoing/incoming NF with ISS for companies
For services a municipal tax (ISS) is charged. The rate is determined by the city of the
vendor.
Amounts and rates for the example:
Service price : 9.000,00 (excluding tax)
ISS rate : 10 %
9. 000,00
1
10
100
9. 000,00
0,90
10 000,00
.
ISS amount: - 1.000,00

Sales 9.000,00 C
ISS tax to be paid 1.000,00 C
Base
ISS 1.000 10 10.000,00
Expenses 10.000,00 D
Base
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2.5 Outgoing/incoming NF with IRRF for companies (only)
For some services IRRF (income tax) is charged. An automatic determination if IRRF
has to be calculated or not is not possible and foreseen. The applicable percentage
rates has to be set manually per business transaction (by using a certain
withholding tax code).
Service price : 10.000,00
IRRF rate : 2 %

when issuing the Nota Fiscal / SD-billing
IRRF tax 200,00 D
Sales 10.000,00 C
when receiving the invoice / invoice verification
IRRF tax to be paid 200,00 C
These postings mean that the tax is withholded by the receiver of the goods.
The vendor just gets the invoice value reduced by the IRRF amount. The clearing on
the outgoing side is done at the end of the year according to the tax information
delivered by the company which withholded the IRRF tax.
Base
2.6 Outgoing/incoming NF with ISS and IRRF for companies
IRRF can also be charged in combination with ISS. The same rules as for ISS and IRRF
only apply.
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Service price : 9.000,00 (excluding tax)
ISS rate : 10 %
IRRF rate : 2 %
ISS calculation:
9000,00
1
10
100
9000,00
0,90
10 000,00
.
ISS amount 1.000,00

when issuing the Nota Fiscal / SD-billing
IRRF tax 200,00 D
Sales 9.000,00 C
ISS tax to be paid 1.000,00 C
Base
ISS 1.000 10 10.000,00
Base
See also example for IRRF only (see chapter Outgoing/incoming NF with IRRF for
companies (only) )
2.7 Incoming NF with INSS/IRRF or INNS/ISSF/IRRF for natural
persons
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If the vendor of a service is a natural person, taxes have to be withholded by the
company buying the service. If the vendor has only a CPF and is registered in the city
where he provides the service must pay the ISS to the city. This is done according to
the ISS rate of the city but does not affect our calculation.
If the vendor of a service is a natural person, taxes have to be withholded by the
company buying the service. If the vendor has only a CPF and is NOT registered in
the city where he provides the service in addition to INSS and IRRF also the ISS has to
be withholded by the company which buys the service. This is done according to the
normal ISS calculation. The withholded ISS is then called ISSF. The ISSF amount does
not affect the calculation of the other taxes.
INSS is a social security tax which the company has to pay when receiving the
service. INSS is no withholding tax. The calculation of INSS is like ISS.
For IRRF the tax amount and the base amount is cumulated per month and in each
posting of a month the already posted invoices of the vendor are taken into account
to calculate the IRRF which has to be withholded in the current posting.
As the base amount for IRRF the gross amount minus the INSS amount is used.
A special rules applies if the vendor is married. Then for each dependent member of
his family a fix amount is deducted from the tax base amount. This amount is
currently R$ 90,--.
IRRF rate table (given by the government):
Service amount Rate Base amount deduction
until R$ 900,00 exempt (0%) 0
R$ 900,01 to R$ 1800,00 15 % R$ 900,00
over R$ 1800,00 25 % R$ 1800,00
INSS rate: 15 %
ISS(F) rate: 5 %
Base deduction for each dependent family member: R$ 90
2.7.1 Incoming NF with INSS/IRRF - vendor not married
To show the impact of the cumulation of the IRRF amount and the base amount the
example consists of three posting done in the same month and a fourth posting in the
next month.
1. posting (05/01/96): (first vendor invoice in month 01)
Service price 1.200,00
Base amount for INSS 1.200,00
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INSS - 180,00
Base amount for IRRF 1.020,00

IRRF amount 18,00 ( 900,00 - 0) * 0 % +
(1.020,00 - 900) * 15 %
Expenses 1.020,00 D
INSS expenses 180,00 D
Base
2. posting (25/01/96):
INSS - 450,00

Base amount of prev. inv. 1.020,00
Base amount for calculation 3.570,00

IRRF amount 577,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(3.570,00 - 1.800) * 25 %
IRRF amount of prev. inv. - 18,00
IRRF amount to be paid 559,50

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Expenses 2.550,00 D
Base
3. posting (27/01/96):
INSS - 300,00


IRRF amount 1.002,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(5.270,00 - 1.800) * 25 %

Expenses 1.700,00 D
Base
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4. posting (03/02/96):
INSS - 450,00

Base amount of prev. inv. 0,00

IRRF amount 322,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(2.550,00 - 1.800) * 25 %

Expenses 2.550,00 D
Base
2.7.2 Incoming NF with INSS/ISSF/IRRF - vendor not married
next month.
Service price 800,00
Base amount for INSS 800,00
INSS - 120,00
Base amount for IRRF 680,00

IRRF amount 0,00 ( 900,00 - 0) * 0 %
Base amount for ISSF 800,00
ISSF amount 40,00 800,00 * 5%
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Accounts payable 760,00 C
ISSF tax to be paid 40,00 C
Expenses 680,00 D
Base
2. posting (15/01/96):
INSS - 150,00


IRRF amount 94,50 ( 900,00 - 0) * 0 % +
(1.530,00 - 900) * 15 %

ISSF amount 50,00 1000,00 * 5%
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Expenses 850,00 D
Base
3. posting (28/01/96):
INSS - 450,00


IRRF amount 705,00 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(4.080,00 - 1800) * 25 %

ISSF amount 150,00 3000,00 * 5%
Expenses 2.550,00 D
Base
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4. posting (06/02/96):
INSS - 180,00


IRRF amount 18,00 ( 900,00 - 0) * 0 % +
(1.020,00 - 900) * 15 %

ISSF amount 60,00 1200,00 * 5%
Expenses 1.020,00 D
Base
2.7.3 Incoming NF with INSS/IRRF - vendor married - 4 family
members
next month.
INSS - 180,00
Subtotal 1.020,00
Deduction 360,00 ( 4 * 90,00)

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IRRF amount 0,00 ( 900,00 - 0) * 0 %
Expenses 1.020,00 D
Base
2. posting (25/01/96):
INSS - 450,00
Subtotal 2.550,00
Subtotal 3.570,00
Deduction - 360,00 ( 4 * 90,00)

IRRF amount 487,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(3.210,00 - 1.800) * 25 %

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Expenses 2.550,00 D
Base
3. posting (27/01/96):
INSS - 300,00
Subtotal 1.700,00
Subtotal 5.270,00
Deduction - 360,00 ( 4 * 90,00)

IRRF amount 912,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(4.910,00 - 1.800) * 25 %

Expenses 1.700,00 D
Base
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4. posting (03/02/96):
INSS - 450,00

Subtotal 2.550,00
Deduction - 360,00 ( 4 * 90,00)

IRRF amount 232,50 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(2.190,00 - 1.800) * 25 %

Expenses 2.550,00 D
Base
2.7.4 Incoming NF with INSS/ISSF/IRRF - married - 2 family members
next month.
Service price 800,00
Base amount for INSS 800,00
INSS - 120,00
Subtotal 680,00
Deduction - 180,00 ( 2 * 90,00)

IRRF amount 0,00 ( 900,00 - 0) * 0 %
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ISSF amount 40,00 800,00 * 5%
Expenses 680,00 D
Base
2. posting (15/01/96):
INSS - 150,00
Subtotal 850,00
Subtotal 1.530,00
Deduction 180,00 ( 2 * 90,00)

IRRF amount 67,50 ( 900,00 - 0) * 0 % +
(1.350,00 - 900) * 15 %

ISSF amount 50,00 1000,00 * 5%
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Expenses 850,00 D
Base
3. posting (28/01/96):
INSS - 450,00
Subtotal 2.550,00
Subtotal 4.080,00
Deduction 180,00 ( 2 * 90,00)

IRRF amount 660,00 ( 900,00 - 0) * 0 % +
(1.800,00 - 900) * 15 % +
(3.900,00 - 1800) * 25 %

ISSF amount 150,00 3000,00 * 5%
Expenses 2.550,00 D
Base
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4. posting (06/02/96):
INSS - 180,00
Subtotal 1.020,00
Subtotal 1.020,00
Deduction 180,00 ( 2 * 90,00)
Base amount for calculation 840,00

IRRF amount 0,00 ( 900,00 - 0) * 0 %

ISSF amount 60,00 1200,00 * 5%
Expenses 1.120,00 D
Base
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3. Additional tax requirements
3.1 Discounts
In Brazil there are three different situations for discounts:
Discount not included in the Nota Fiscal (Commercial Discount)
Discount included in the Nota Fiscal (Commercial Discount)
Cash Discount
Discount not included in the Nota Fiscal (SD only)
In SD (pricing) discounts can be given before calculating the tax base amount. These
discounts are not included in the Nota Fiscal.
There is no effect on the tax base amount. These kind of discounts are just part of the
company internal pricing strategy and do not appear on any documents.
Discount included in the Nota Fiscal (SD and MM)
The discounts can be given before calculating the tax base amount and included in
the Nota Fiscal. The legal requirement how these discounts affect the tax calculation
are:
For ICMS the discount is not included in the base amount. ICMS is
calculated on the discounted amount.
For IPI the discount is included in the base amount. IPI is calculated on
the not discounted (full) amount.
Cash Discount
Cash discounts are handled in the A/P and A/R modules. When giving cash discounts
the taxes are always calculated over the full value because the cash discount is not
known in the MM (invoice verification) or the SD (billing). A correction of the taxes
based on the price after the cash discount in A/P or A/R is not foreseen.
That means that the Brazilian company codes have to be set up with:
Tax base is gross value
Cash discount base is gross value
3.1.1 Discount not included in the Nota Fiscal (SD only)
Amounts and rates:
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Gross price : 91.111,11 (excluding tax)
ICMS : xx %
IPI : xx %
Discount not in N.F. : 10 % on gross price
Calculation of price with discounts not included the Nota Fiscal:
Gross value: 91.111,11
Discount 10%: 9.111,11
Price in the Nota Fiscal 82.000,00

The discount has no effect on the tax base amounts and the FI document. For the
accounting the gross sales amount is the discounted amount.
All further processing is done exactly in the same way as if there is no discount. The
price for the following processing the Price in the Nota Fiscal = Sales price. The
normal processing is documented in chapter 2.2.1 (Industrialization) and 2.2.2
(Consumption) of this document.
3.1.2 Discount included in the Nota Fiscal
Amounts and rates:
ICMS : 18 %
IPI : 10 %
Discount in N.F. : 5 % on Nota Fiscal price
Discount included in the Nota Fiscal - Usage = Industrialization
Net value before discount: 82.000,00
ICMS amount on net: - 18.000,00
Price incl. ICMS 100.000,00 (1)

N.F. discount (5%) 5.000,00
Price incl. ICMS - discount 95.000,00 (2)

IPI amount: 10.000,00 IPI calculated from (1)
ICMS amount: 17.100,00 ICMS calculated from (2)
Price incl. ICMS - discount 95.000,00
IPI amount 10.000,00
Sales price 105.000,00

- ICMS 17.100,00
- IPI 10.000,00
Real net value: 77.900,00

Sales 100.000,00 C
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Sales Deduction 5.000,00 D
IPI tax 10.000,00 D
Base
ICMS 17.100,00 18 95.000,00
IPI 10.000,00 10 100.000,00
Discount included in the Nota Fiscal - Usage = Consumption
Net value before discount: 82.000,00
ICMS amount on net: - 20.244.39 ICMS over IPI
Price incl. ICMS 102.244,39 (1)

N.F. discount (5%) 5.112,22
Price incl. ICMS - discount 97.132,17

IPI amount: 10.244,44 IPI calculated from (1)
Sales price 107.356,61 (2)

ICMS amount: 19.324,19 ICMS calculated from (2)
Sales price 107.356,61
- ICMS 19.324,19
- IPI 10.244,44
Real net value: 77.807,98

Sales 102.244,39 C
Sales Deduction 5.112,22 D
Base
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ICMS 19.324,19 18 107.356,61
IPI 10.244,44 10 102.244,39
Base
ICMS 19.324,19 18 107.356,61
IPI 10.244,44 10 102.244,39
3.1.3 Cash Discount
Amounts and rates:
ICMS : 18 %
IPI : 10 %
Discount not in N.F. : 10 % on gross price
Cash discount : 4.100,00
Calculation of price:
Gross value: 91.111,11
Discount 10% not in N.F. 9.111,11
Price in the Nota Fiscal 82.000,00

The discount has no effect on the tax base amounts and the FI document related to
the Nota Fiscal.
All further processing is done exactly in the same way as if there is no cash discount.
The price for the following processing the Price in the Nota Fiscal = Sales price. The
normal processing is documented in chapter 2.2.1 (Industrialization) and 2.2.2
(Consumption) of this document.
Cash discount processing takes place when the incoming/outgoing payment is
posted:
The FI-posting for payment from customer with discount is:
Accounts receivable 102.500,00 C
Discount 4.100,00 D
Bank 98.400,00 D
The FI-posting for payment to the vendor with discount is:
Accounts payable 102.500,00 D
Discount Received 4.100,00 C
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Bank 98.400,00 C
3.2 Freight
Expenses on purchasing and selling like freight are handled in two different ways in
Brazil:
freight in a separate Nota Fiscal called conhecimento
freight included in the Nota Fiscal of the material.
Having a conhecimento is the most common way to handle freight in Brazil. In the
conhecimento only ICMS or ISS but no IPI is calculated.
3.2.1 Freight in a separate conhecimento in MM
As a general scope decision, conhecimentos will only be supported on the incoming
side (MM). Therefore only these requirements are documented here.
3.2.1.1 Intramunicipal Freight
If the transportation is done within the same municipal area, the only applicable tax is
the ISS.
BASE AMOUNT freight price including ISS,
RATE is determined by the city of the carrier.
Example :
Freight price : 9.000,00 (excluding tax)
ISS rate : 10 %
9. 000,00
1
10
100
9. 000,00
0,90
10 000,00
.
ISS amount: - 1.000,00
Freight price: 9.000,00

If the freight is used for material which is used for industrialization, the freight amount
has to be posted to an inventory account. If the freight is charged for a delivery of
sales products to a customer an account for freight on sales must be used for debit.
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Technically these posting have to be done manually in the invoice verification. If a
distribution on different materials is necessary even this has to be done by hand.
Base
3.2.1.2 Intrastate and Interstate Freight - no base value reduction
If the transportation is done within the same state or between states, the only
applicable tax is ICMS. Therefore the calculation in case of industrialization and
consumption is the same. The only difference between these case is how the ICMS is
posted in FI and the conhecimento.
BASE AMOUNT freight price including ICMS,
RATE is determined using the states involved (normal ICMS procedure).
For example : Intrastate So Paulo = 12%, So Paulo - South &
Southeast =
12% , So Paulo - other regions = 7%.
Example :
ICMS : 12 %
IPI : Not applicable
82. 000,00
1
12
100
82. 000,00
0, 88
93 181 82
. ,
Freight price: 82.000,00

Usage of goods on the related Nota Fiscal - industrialization
Inventory 82.000,00 D (distributed)
Note that the inventory posting must be distributed between all the received
materials, according to manual, volume or value criteria.
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Base
ICMS 11.181,92 12 93.181,82
Usage of goods on the related Nota Fiscal - consumption
Expense account 93.181,82 D
Base
ICMS 11.181,92 12 93.181,82
Note that in the case of buying freight for the delivery of goods to customers, an
account for freight on sales should be used for debiting the freight.
3.2.1.3 Intrastate and Interstate Freight - base value reduction for carrier (80%)
The carrier has the option of choosing reduction of the base amount. In that case, the
ICMS to be paid by the carrier may be calculated over 80% of the freight price. The
consequence of this choice is that the carrier will not be able to recover ICMS in the
purchase of goods that are used in the transportation (e.g. gasoline, tires etc.).
This special rule leads to the fact that a vendor dependent base reduction for the
ICMS calculation is required. The calculation itself work similar to normal base
reductions for ICMS.
Example :
ICMS : 12 %
IPI : Not applicable
Base amount reduction for carrier to 80% !
Usage of goods on the related Nota Fiscal - industrialization
ICMS tax 8.707,96 D
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Base
ICMS 8.707,96 12 72.566,37 18.141,59
Usage of goods on the related Nota Fiscal - consumption
Base
ICMS 8.707,96 12 18.141,59 72.566,37
3.2.2 Freight included in the Nota Fiscal
The calculation and posting of freight in the Nota Fiscal is not in scope of the
localization.
If the freight is included in the price and has not to be mentioned somewhere in the
Nota Fiscal, the standard processing in SD and MM fulfills the requirements. All other
ways of freight in the N.F. are not supported in the integrated solution.
For further information please check the requirement analysis
created by the Brazil development link team.
3.3 Zona Franca
For domestic products which are sold to Zona Franca for industrialization/resale
special processing of ICMS and IPI takes place. On the Nota Fiscal the amount
including ICMS is printed and a special discount equal to the ICMS amount has to be
given. IPI is not calculated at all. If products are sold for consumption taxes are
charged in the normal way.
Imported products are processed in the normal way. The decision if a product is
imported has to be done by the vendor because this rule is also valid via several sales
steps.
When buying from a company located in Zona Franca the normal processing of taxes,
... takes place.
Example: Usage of goods - industrialization
Amounts and rates:
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ICMS : 12 %
82. 000,00
1
12
100
82. 000,00
0, 88
93 181 82
. ,
Discount in Z.F. 11.181,82

Sales 93.181,82 C
ICMS tax 11.181,82 C
ICMS tax discount Z.F. 11.181,82 D
ICMS tax expense 11.181,82 D
Base
ICMS 11.181,82 12 93.181,82
ICZF -11.181,82 12
IPI 0 0 93.181,82
3.4 Change of usage (industrialization <-> consumption)
When changing the usage of a product form industrialization to consumption or vice
versa some special processing has to be done.
Industrialization -> consumption
An internal Nota Fiscal with taxes has to be issued. The price of the material does not
change. The taxes are calculated considering either
- MAP moving average price or
- price of last purchase.
Consumption -> industrialization
Manual correction postings of tax credit have to be done.
For further information please check the requirement analysis
created by the Brazil development link team.
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3.5 Substituicao Tributaria (S.T.)
S.T. is the ICMS amount due on a surcharge to the original price including ICMS and
IPI or on a fixed price per unit.
In SD S.T. depends on the customer. Not for every customer S.T. has to be calculated.
In MM S.T. depends on the plant. Not every company/plant has to pay S.T.
The calculation of S.T. generally depends on:
Customer (SD) or Plant (MM)
Usage of the goods
State of origin of the goods
State of destination of the goods
Product (not NBM-code)
This data determines if S.T. is charged or not and if yes, how S.T. is calculated.
The processing logic is:
1 Check if the customer (SD - determined by flag in customer master) or the plant
(MM - determined by tax code) is due to pay S.T. at all. If not no calculation is
necessary.
2 If S.T. has to be calculated according rule 1
state of origin/state of destination/material
determine again if S.T. has to be calculated at all and if yes, how the base amount
for the calculation is determined:
- percentage rate
- fixed price (per unit)
Additional rules:
Percentage rate for ICMS calculation on surcharged value (ICMS rate
for S.T.):
The percentage rate to calculate the ICMS amount on the surcharged value is
taken from the state of destination. If the processed material has a special ICMS
rate in the state of destination this rate has to be used to calculated the ICMS on
the surcharged value.
S.T when selling to Zona Franca
The calculation base for S.T. is the material value. The calculated normal
ICMS value must be discounted when selling to Zona Franca. Therefore this
ICMS value is not deducted from the ICMS value calculated on the surcharged
value.
Reduced calculation base for S.T.
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For S.T. also the reduction of the calculation base is possible. This reduction
affects the amount on which the ICMS for S.T. is calculated. The amounts which
are reduced are:
- Invoice value + surcharge
OR
- Fixed price given
depending on the way S.T is calculated. The reduction rate is taken from the
material dependent ICMS table from which also the S.T. rate is determined.
Freight included in the price
If S.T. is calculated for a Nota Fiscal line S.T. is also calculated for the freight
value included in the line item.
In Case 1 to Case 6 listed below some of the possible S.T. scenarios are given
The general calculation rules for S.T. are:
S.T. surcharge as a percentage rate - standard calculation
Sales price (excl. taxes)
+ ICMS amount1
+ IPI amount
Invoice value (without S.T.)

- ICMS amount1
+ IMCS calculated with 100% base
Subtotal
+ Surcharge (% rate / calculated prev. subtotal)
Subtotal
- Base reduction for S.T. (e.g. 80% of prev. subtotal)
Subtotal (base for IMCS amount2 calculation)

ICMS amount2 (calculated on Invoice value + % surcharge)
- ICMS amount1
Amount of S.T.
+ Amount of S.T.
Invoice value (incl. S.T.)

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S.T based on a fixed price per unit - standard calculation
Sales price (excl. taxes)
+ ICMS amount1
+ IPI amount

Fixed price per unit
- Base reduction for S.T. (e.g. 80% of fixed price)
Subtotal (base for IMCS amount2 calculation)

ICMS amount2 (calculated on prev. subtotal)
- ICMS amount1
Amount of S.T.
+ Amount of S.T.
Invoice value (incl. S.T.)

Case 1 and Case 2: Selling/buying of goods with S.T. for industrialization
Amounts and rates:
ICMS : 12 %
IPI : 10 %

Case 1:S.T. surcharge as a percentage rate
Surcharge rate : 20 %
ICMS % rate for S.T. : 18 %
Invoice value without S.T.: 102.500,00
Surcharge: + 20.500,00 20% on 102.500,00
Subtotal: 123.000,00
ICMS amount 2 22.140,00 18% on 123.000,00
ICMS amount 1 - 11.181,82
ICMS Sub. Trib. 10.958,18

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ICMS Sub. Trib. + 10.958,18
Invoice value incl. S.T.: 113.458,18

Sales 93.181,82 C
SubTrib ICMS tax to be paid 10.958,18 C
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
SubTribICM
S
10.958,18 18 123.000,00 123.000,00
The FI-posting for purchasing (for industrialization) is:
SubTrib ICMS - tax expense 10.958,18 D
IPI tax 9.318,18 D
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
SubTribICM
S
10.958,18 18 123.000,00
The FI-posting for purchasing (for reselling) is:
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
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SubTribICM
S
10.958,18 18 123.000,00
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Case 2: S.T based on a fixed price per unit
Number of units : 10
Fixed price per unit : 11.000,00
Price given: 110.000,00 10 units * 11.000,00
ICMS amount 2 19.800,00 18% on 110.000,00


Sales 93.181,82 C
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
SubTribICM
S
8.618,18 18 110.000,00
IPI tax 9.318,18 D
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
SubTribICM 8.618,18 18 110.000,00
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S
Base
ICMS 11.181,82 12 93.181,82
IPI 9.218,18 10 93.181,82
SubTribICM
S
8.618,18 18 110.000,00
Case 3: Selling to Zona Franca with S.T. for industr. - surcharge as a
percentage rate
Amounts and rates:
ICMS : 7 %
IPI : 0 %
ICMS amount: 6.172,04
ICMS discount: - 6.172,04
IPI amount: - 0,00

Surcharge: + 16.400,00 20% on 82.000,00
Subtotal: 98.400,00
ICMS amount 2 16.728,00 17% on 98.400,00
ICMS amount 1 - 0,00


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Sales 88.172,04 C
ICMS - discount Z.F. 6.172,04 D
Base
ICMS 6.172,04 12 88.172,04
ICZF 6.172,04 12 0
IPI 0 0 0
SubTribICM
S
16.728,00 18 98.400,00
Case 4: Selling/buying of goods with S.T. for consumption - surcharge as a
percentage rate
Amounts and rates:
ICMS : 12 %
IPI : 10 %

Surcharge: + 20.783,41 20% on 103.917,06
ICMS amount 2 22.446,08 18% on 124.700,47


Sales 94.470,05 C
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Base
ICMS 12.470,05 12 103.917,05
IPI 9.470,01 10 94.470,05
SubTribICM
S
9.976,03 18 124.470,47
Base
ICMS 12.470,05 12 103.917,05
IPI 9.470,01 10 94.470,05
SubTribICM
S
9.976,03 18 124.470,47
Case 5: Selling/buying of goods with S.T. for industrialization - Reduced base
for ICMS
Amounts and rates:
ICMS : 12 %
ICMS base : 80 %
IPI : 10 %
Calculation base 100%: 93.181,82
Calculation base 80%: 72.566,37

Surcharge: + 19.955,75 20% on 99.778,76
ICMS amount 2 21.552,21 18% on 119.734,51
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Sales 90.707,96 C
Base
ICMS 8.707,96 12 72.566,37 18.141,59
IPI 9.070,80 10 90.707,96
SubTribICM
S
12.844,25 18 119.734,51
ICMS tax 8.707,96 D
IPI tax 9.070,80 D
Base
ICMS 8.707,96 12 72.566,37 18.141,59
IPI 9.070,80 10 90.707,96
SubTribICM
S
12.844,25 18 119.734,51
The FI-posting for purchasing (for consumption) is:
ICMS tax 8.707,96 D
Base
ICMS 8.707,96 12 72.566,37 18.141,59
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IPI 9.070,80 10 90.707,96
SubTribICM
S
12.844,25 18 119.734,51
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Case 6: Selling/buying of goods with S.T. for industrialization - Reduced base
for S.T.
Amounts and rates:
ICMS : 12 %
ICMS base : 80 %
IPI : 10 %

S.T. base : 80 %
Surcharge: + 20.500,00 20% on 102.500,00
Calc.base 80% 98.400,00 80% on 123.000,00
ICMS amount 2 17.712,00 18% on 98.400,00


Sales 93.181,82 C
Base
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
SubTribICM
S
6.530,18 18 98.400,00
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IPI tax 9.318,18 D
Base
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
SubTribICM
S
6.530,18 18 98.400,00
Base
ICMS 11.181,82 12 93.181,82
IPI 9.318,18 10 93.181,82
SubTribICM
S
6.530,18 18 98.400,00
4. Design and implementation of tax calculation
The basic idea for the tax calculation in Brazil is the usage of an external calculation
routine which determines the amounts for the several tax types
IPI
ICMS
CompICMS (Complement of ICMS
SubTribICMS (Substituicao Tributaria)
ISS
The calculation of IRRF will be covered by the new solution for withholding taxes.
The tax calculation consists of three major parts which are:
Interface of the current tax calculation methods to an external calculation
function (in MM/FI and SD). For the ext. calculation the external tax interface
(created initially for the USA) will be used as a common business API.
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Calculation of the tax amounts, tax rates and tax base values per line item
according to the rules given in chapters 1. to 3. of this document.
Transfer of calculated tax amounts per line item to Nota Fiscal and in MM return
of manually changed tax items back to R/3 standard.
4.1 Interface to the external tax calculation (External tax
interface)
For the external tax calculation the new External tax interface is used as a common
business API. Basis for the tax calculation in the interface is the tax jurisdiction code
to determine the ship-to and also the ship-from location of a tax relevant business
transaction. The structure of the tax jurisdiction (levels of tax calculation and size of
the level-codes) is be defined in the customizing.
The External tax interface consists of two main functions which are:
Automatic determination of tax-jurisdiction codes
Calculation of the tax amounts
Contents of this chapter is the description how the external tax calculation procedure
is connected to the standard procedures in MM/FI and SD, which kind of system setup,
and which kind of customizing is necessary.
4.1.1 Connection of external tax calculation procedure to standard
R/3
The basic idea of the external interface is the usage of calculation exits for conditions
in a tax procedure instead of calculating everything within the procedure. In these
calculation-exits the external processing is called and condition amount and
percentage rate for the different tax types are calculated and returned to the
standard processing. All tax values are calculated at the same time within one
function-call and then stored in global variables for later assignment to the single
conditions by other calculation-exits.
A simple layout of a calculation procedure with the external interface is therefore:
Ste
p
Condition Name fro
m
stati
s.
Formul
a
Acc. key
100 BASB Base Amount
105 Formula call / ext. calc. X 300
200 IPI1 IPI Industrialization 100 301 VS1
210 ICM1 ICMS Industrialization 100 302 VS2
... ... ... ... ... ...
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4.1.2 Standard customizing of the external tax interface
To activate the external tax interface some customizing has to be done:
Table T005 R3TR VDAT V_005_E
Country Vehicle code Language TaxProcedure Shortname
BR BRA P TAXBRJ BRAZIL
In table T005 the tax calculation procedure for MM/FI is assigned to the country code
which is then assigned to a company, a plant, a customer, a vendor.
Table TTXD R3TR VDAT V_TTXD
Tax
Procedure
Description L1 L2 L3 L4 LI Ex.
TAXBRJ Brazil: External tax calc. 3 X B
In table TTXD the activation of the external tax calculation with tax jurisdiction if
done. If an entry for a procedure in TTXD exists and the EX indicator is set, the
calculation is active. This means that the check logic goes via several tables. E.g. for a
company code the check is done in the order T001-LAND1 -> reads T005 -> T005-
KALSM -> TTXD.
Additionally the TTXD controls if the calculation of taxes is done per line item (as
required in Brazil) or per tax code. In Brazil the flag for the calculation per line item
has to be set to X.
The tax jurisdiction code for Brazil is build as a one-level jurisdiction which just
consists of a 3 character tax region code. For further information see chapter .
Table TTXC R3TR TABU TTXC
Ex EVENT Function module Destination
B JUR J_1BDETERMINE_JURISDICTION
B TAX J_1BCALCULATE_TAXES
If the external calculation is active, the system uses a function-call to determine the
jurisdiction code of plant, customer, vendor and cost center. The function-call is
processed, if in the master file maintenance of these objects the appropriate country
is used. Also for the calculation of the taxes a function-call is used.
The names of these function-calls are stored in table TTXC for each external system
indicator from table TTXD. The different event for the function calls are:
JUR function to determine tax jurisdiction from address information
TAX function to calculate tax amounts
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4.1.3 Layout of tax calculation procedure in MM/FI
In the tax calculation procedure in MM/FI it is necessary to distinguish between taxes
which are posted to separate accounts and taxes which are distributed to the line
items. The information to decide which kind of FI-posting is done, is the usage of the
goods, and the industry equivalent indicator (which is defined in the vendor master
extension).
Because of this different posting logic depending on the usage it is not possible to use
the same tax code for both industrialization and consumption in MM.
In the tax calculation procedure for each way to post the tax (to special tax account or
distributed to the line items) a condition has to be defined. Each of these conditions
has a formula to determine the condition value, and percentage rate. The calculation
function calculates the amounts for all active conditions and returns them to the
calculation procedure.
The types of taxes which are calculated on the incoming side (MM) are
determined by the tax codes. Every tax code represents a certain combination of
taxes to be calculated.
The usage of the material on the incoming side (MM) is determined by the tax
code. For each tax code the usage has to be defined which means that a tax code can
either be used to trigger the tax calculation for industrialization or for consumption.
The layout of the tax calculation procedure for Brazil is fix and must not be changed.
If different requirements have to be implemented a copy of the standard calculation
procedure has to be used.
Calculation procedure: NEW development Brazil
R3TR VDAT V_T683
R3TR VDAT V_T683S
Ste
p
Cond
.
type
Name from st
ati
s.
Cond.
formul
a
Base
formul
a
Accoun
t
key
100 BASB Base Amount
105 Formula call / ext. calc. X 300
200 Level 200 - Industrialization X
210 IPI1 IPI Industrialization In 100 301 301 VS1
230 ICM1 ICMS Industrialization In 100 303 303 VS2
240 ICS1 Substituicao Tributaria In 100 304 304 VS3
250 ICMF ICMS S.T. freight offset 100 307 307 IC1
260 IP1C IPI Ind. clearing 100 301 301 IPC
265 IP1O IPI Ind. clearing offset 210 IPC
270 IC1C ICMS Ind. clearing 100 303 303 ICC
275 IC1O ICMS Ind. clearing offset 230 ICC
300 Level 300 - Consumption X
310 IPI2 IPI Concumption In 100 302 302 NVV
320 ICM2 ICMS Concumption In 100 303 303 NVV
350 ICOP ICMS complement 100 305 305 ICP
360 ICOX ICMS complement 100- 350 ICX
500 Level 500 - SD outgoing X
510 IPI3 IPI from SD Out 100 301 301 MW1
520 ICM3 ICMS from SD Out 100 303 303 MW2
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530 ICS3 Substituicao Tributaria Out 100 304 304 MW3
540 ISS3 ISS from SD Out 100 306 306 MW4
550 ICZF ICMS Reverse (Z.F.) 100 305 305 ICZ
700 Other taxes X
710 INSS INSS incoming 100 VST
720 INSX INSS offset (100-) 710 INX
Condition types: NEW development Brazil
R3TR VDAT V_T685A
The condition types determine which types of taxes can be calculated at all. The
definition of the condition types follows the standard definition of condition types for
the external US tax calculation. All conditions are defined in the same way. Fields in
the condition definition not mentioned in the following table are initial / not marked.
Condition
type
Access
sequence
Conditio
n class
Calc.type Cond.
category
Item
cond.
Manual
entries
IC1C MWST D A 1 Yes D
IC1O =
ICM1 =
ICM2 =
ICM3 =
ICM3 =
ICMF =
ICOP =
ICOX =
ICS1 =
ICS2 =
ICS3 =
ICZF =
INSS =
INSX =
IP1C =
IP1O =
IPI1 =
IPI2 =
IPI3 =
ISS3 =
Cond. formulas: STANDARD (300-306)
NEW development Brazil (307-309)
The cond. formulas are used to determine the condition value - tax value. Every
formula represents a certain type of tax. If a type of tax (like IPI) can occur twice in a
posting two different formulas are necessary. Otherwise the same formula can be
used for all conditions related to this tax type. The formulas used in the brazilian
calculation procedure are defined as follows:
Frm
.
Description
300 Call to the external tax calculation
301 IPI for the industrialization case (301 + 302 may occur together)
302 IPI for the consumption case (301 + 302 may occur together)
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303 ICMS for all cases
304 Substituicao Tributaria
305 ICMS complement (in MM) and ICMS Zona Franca discount (in SD)
306 ISS (only calculated in SD)
307 ICMS Sub.Trib. on freight offset
308 not used
309 Zero value
Base. formulas: NEW development Brazil
The base formulas are used to determine the base value for a condition. Every base
formula belongs to a condition value formula. Therefore the base formula has to be
used always in combination with the corresponding condition value formula. The
formulas used in the brazilian calculation procedure are defined as follows:
Frm
.
Description
301 IPI for the industrialization case (301 + 302 may occur together)
302 IPI for the consumption case (301 + 302 may occur together)
303 IMCS for all cases
304 Substituicao Tributaria
305 ICMS complement (in MM) and ICMS Zona Franca discount (in SD)
306 ISS (only calculated in SD)
307 ICMS Sub.Trib. on freight offset
308 not used
309 Zero base
Account keys: STANDARD
The account keys are used to determine how the tax amounts are posted in FI.
Key
.
Description Type Non
deduct.
Posting Std.
VS1 Sales Tax 1 / input Input Yes Sep. line item Yes
VST Sales Tax / input Input Yes Sep. line item Yes
NVV Non-d.input tx dist. Input Yes Expense/revenue Yes
MW1 Sales Tax 1 / output Output No Sep. line item Yes
Remark for VSx account keys:
The account keys VSx are marked as non-deductible in the standard. This setting is
only relevant for some standard tax reporting and does not affect any processing.
Therefore it is not necessary to change this for Brazil or to create new account keys
for input tax.
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Account keys: NEW development Brazil
R3TR VDAT V_T007B
R3TR VDAT V_T687
Key
.
Description Type Not
deduct.
Posting Std.
IC1 ICMS offset No tax. Yes Sep. line item No
ICC ICMS clearing No tax. Yes Sep. line item No
ICP ICMS complementar Add. Yes Sep. line item No
ICX ICMS comp. offset No tax Yes Sep. line item No
ICZ ICMS reversal (Z.F.) Output Yes Sep. line item No
INX INSS offset No tax. Yes Sep. line item No
IPC IPI clearing No tax. Yes Sep. line item No
4.1.4 Definition of tax codes
In the Brazilian localization tax codes are used to determine
- which type of taxes are calculated for a line item,
- the usage of the material on the incoming side (MM),
- and how the taxes are posted in FI (separate line items or not).
To simplify the documentation only the active lines per tax codes are listed. The tax
codes are defined as follows.
Note: Any other setup of tax codes can lead to wrong calculation of taxes. The only
valid and properly tested setup of tax codes is given in this chapter. Any
other combination can lead to unexpected results.
4.1.4.1 Tax codes for non taxable transactions
For non taxable transactions special tax codes have to be defined on company code
level. In the properties of these tax code the field Relevant to tax must be set to 2:
Tax code IE
Input: Tax exempt transactions
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
IPI Industr. VS1 IPI1
Tax code SE
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Output: Tax exempt transactions
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
4.1.4.2 Tax codes for incoming movements - Industrialization
For each of the industrialization tax codes the field Usage of the brazilian tax code
enhancements to be set to Industrialization.
Tax code I0
Input: Industrialization: No tax
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Tax code I1
Input: Industrialization: ICMS only
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
ICMS Industr. VS2 100,000 ICM1
Tax code I2
Input: Industr.: ICMS + Sub.Trib.
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Sub.Tributaria VS3 100,000 ICS1
Tax code I3
Input: Industrialization: ICMS +
IPI
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
IPI Industr. VS1 100,000 IPI1
Level 300
IPI Consumption NVV 100,000 IPI2
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Tax code I4
Input: Industr.: ICMS + Sub.Trib.
+ IPI
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Level 300
Tax code I5
Input: Industrialization: IPI only
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Level 300
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Tax code I6
Input: Ind.: ICMS+IPI: Reselling
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Level 300
Tax code I7
Input: Ind.: ICMS+Sub.Trib.+IPI :
Reselling
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Level 300
4.1.4.3 Tax codes for incoming movements - Consumption
For each of the industrialization tax codes the field Usage of the brazilian tax code
enhancements to be set to Consumption.
Tax code C0
Input: Consumption: No tax
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
Tax code C1
Input: Consumption: ICMS + ICMS
comp.
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
ICMS Consumption NVV 100,000 ICM2
ICMS complementar ICP 100,000 ICOP
ICMS complementar 100- ICX 100,000- ICOX
Tax code C2
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Input: Cons.: ICMS + ICMS comp.
+ S.T.
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
S.T. Consumption NVV 100,000 ICS2
Tax code C3
Input: Cons.: ICMS + ICMS comp.
+ IPI
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
Tax code C4
Input: Cons.: ICMS+ICMS comp.
+IPI+S.T.
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
S.T. Consumption NVV 100,000 ICS2
Tax code C5
Input: Consumption: IPI only
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
4.1.4.4 Tax codes for incoming movements - ICMS Sub.Trib. on freight
For the processing of ICMS Sub.Trib. on freight special tax codes are necessary to
support the required posting logic. Depending on the material usage of the respective
material a different tax code must be used (industrialization / consumption). The
calculation and posting of the tax is the same for both tax codes:
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Tax code IF
Input: Ind.: ICMS (S.T. on freight)
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
ICMS S.T. freight offset IC1 100,000 ICMF
Tax code CF
Input: Consump.: ICMS (S.T. on
freight)
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
ICMS S.T. freight offset IC1 100,000 ICMF
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4.1.4.5 Tax codes for incoming movements - Future delivery purchasing /
Consignment
Tax code K0
Future Delivery purchasing G/R
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
ICMS Industrialization VS2 100,000 ICM1
ICMS Ind. clearing offset ICC 100,000- IC1O
Tax code K1
Future Delivery purchasing I/R
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
IPI Industrialization VS1 100,000 IPI1
ICMS Ind. clearing ICC 100,000 IC1C
Tax code K5
Consignment - Shipment G/R
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
IPI Industrialization VS1 100,000 IPI1
ICMS Industrialization VS2 100,000 ICM1
IPI Ind. clearing offset IPC 100,000- IP1O
ICMS Ind. clearing offset ICC 100,000- IC1O
Tax code K6
Consignment - Invoice I/R
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
IPI Ind. clearing IPC 100,000 IP1C
ICMS Ind. clearing ICC 100,000 IC1C
4.1.4.6 Tax codes for incoming movements - Services - ISS and INSS
For the incoming services tax code the field Service of the brazilian tax code
enhancements has to be marked.
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Tax code I9
Input: ISS
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 200
For INSS the tax code must contain the proper tax rate (here: 15% INSS)
Tax code IN
INSS 15%
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 300
INSS Incoming VST 15,00 INSS
INSS offset (100-) INX 100- INSX
4.1.4.7 Tax codes for outgoing movements - Ind.+Cons. posted in SD
For each of these tax codes the field Usage of the brazilian tax code enhancements
to be set to Industrialization as a default. In SD the usage of the product by the
customer is always taken from the Brazil specific SD tax code in the sales order item.
Tax code SD
Output-SD tax: IPI/ICMS/Sub.Trib.
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
IPI from SD MW1 100,000 IPI3
ICMS from SD MV2 100,000 ICM3
Substituicao Tributaria MV3 100,000 ICS3
Tax code SZ
Output-SD tax: ICMS Zona Franca
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
Substituicao Tributaria MV3 100,000 ICS3
ICMS Reversal (Zona Franca) ICZ 100,000 ICZF
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Tax code S0
Output-SD tax: No tax
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
IPI from SD MW1 IPI3
ICMS from SD MV2 ICM3
Substituicao Tributaria MV3 ICS3
ISS from SD MV4 ISS3
For the outgoing services tax code the field Service of the brazilian tax code
enhancements has to be marked.
Tax code SI
Output-SD tax: ISS
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
ISS from SD MV4 100,000 ISS3
4.1.4.8 Tax codes for transfer postings - outgoing movements - Ind.+Cons.
For the MM-IM transfer postings the following tax codes can be used for outgoing
movements. For incoming movements the normal codes Ix and Cx can be used.
Tax code A0
Output: Industrialization: No tax
Tax type Acc.
key
Rate Condition type
Base amount BASB
Tax code A1
Output: Industrialization: ICMS
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
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Tax code A3
Output: Industrialization: ICMS +
IPI
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
IPI from SD MW1 100,00 IPI3
Tax code B0
Output: Consumption: No tax
Tax type Acc.
key
Rate Condition type
Base amount BASB
Level 500
4.1.5 Determination of the tax jurisdiction codes
In the external interface the ship-from and ship-to processing is implemented using
tax jurisdiction codes according to the structure defined in table TTXD. Tax
jurisdictions are available in the following master files
vendor
customer
plant
cost center
The maintenance of the tax jurisdictions is done by automatic determination from the
respective address in the master file. The trigger to start the automatic determination
is the country which is entered in the address (using tables TTXD and TTXC).
Address.Country = BR -> Determine tax jurisdiction automatically
Jurisdiction determination for Brazil:
The tax jurisdiction for Brazil is a one level jurisdiction which consists of a 3 digit Tax
region. Tax region is the entity used for the maintenance of ship-from / ship-to
dependent tax rate tables.
The determination of Tax region is done by the standard Region maintained in the
address of the master files. Each Region can have one or more Tax regions. If a
Region has just one Tax region the system automatically assigns a Tax region. If a
Region has more than one Tax region the user has to choose one from a list.
The tables for Tax region are:
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J_1BTREGX Tax region
Field Key DE Type L Chk. table Description
MANDT X MANDT CLNT 3 T000 Client
LAND1 X LAND1 CHAR 3 T005 Country key
TXREG X J_1BTXREG CHAR 3 Tax region
BLAND REGIO CHAR 3 T005S Region
J_1BTREGXT Tax region description
SPRAS X SPRAS CHAR 1 T002 Language key
TXREG X J_1BTXREG CHAR 3 Tax region
TXT J_1BTXREG
T
CHAR 20 Tax region descr.
If a the system cannot find a Tax region for a Region, the jurisdiction code cannot
be determined and the system issues a message during the master file maintenance.
The be sure that a jurisdiction code exists in all cases the Tax region table has to be
maintained correctly.
In the screen layout for the master file maintenance the field Region should be a
mandatory field.
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Jurisdiction determination for foreign customers:
In Brazilian tax calculation, tax rates are partly dependent on the ship-from and ship-
to region of goods (e.g. ICMS rates). Within Brazil, the ship-from and ship-to region is
implemented as a tax jurisdiction code in the customer, vendor, and plant master
data.
The jurisdiction code/tax region is automatically derived from the geographical region
when creating new master data for Brazilian customers/vendors/plants.
If master data for foreign customers/vendors is created, the jurisdiction code is not
automatically determined via Brazilian functions. Furthermore, there might be even a
different use of this code by other countries.
According to the requirements it is possible to define and assign special tax regions
for any country which is not Brazil. With this functionality it is also possible to group
countries together so that they use the same special tax region.
If the Brazilian tax processing is called in conjunction with a foreign customer or
vendor the tax region is then dynamically determined from this table (depending of
the country code). This happens even if the foreign customer/vendor has a jurisdiction
code maintained in the master data.
The table for Tax regions for foreign customers/vendors is:
J_1BTREGC Tax reg. foreign
countries
COUNTRY X J_1BTXEXP
C
CHAR 3 T005 Foreign country
TXREG J_1BTXREG CHAR 3 J_1BTREGX Tax region
4.1.6 Other standard customizing in MM/FI
Company code setup:
On the company code level for Brazilian company code the flags
Tax base is net value
Discount base is net value
have to set to SPACE (not marked).
Plant setup in MM:
For each plant in country BR the tax jurisdiction has to be assigned properly. The
assignment is done in the material management customizing Define tax jurisdiction;
transaction OMGJ; table T001W maintained with view V_001W_JD.
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Vendor master / customer master / cost center:
Maintain/check maintenance of tax jurisdiction in those master files defined for
country BR.
4.1.7 Tax part of pricing procedure in SD
In the SD the external tax calculation is done within the normal pricing procedure. To
get the connection to FI the tax-conditions must have the same name as the
according conditions in FI. Additionally there is a kind of lead-condition necessary to
call the external tax calculation.
Brazilian tax processing part of SD pricing procedure:
R3TR VDAT V_T683
R3TR VDAT V_T683S
Level Cond
.
type
Name Fro
m-
To
Sta
t.
Ma
n-
ual
Sub
To
Alt.
calc.
type
Alt.
base
value
Acct
Keys
... ... ... ...
290 Price excl. ICMS X K
300 ICMI Price+Tax (for NF) 323 323 ERL
... ... ... ...
600 IBRX Brazil tax calc. 600 X 300
610 IPI3 IPI X 301 301 MW1
620 ICM3 ICMS X 303 303 MW2
630 ICS3 Sub. Tributaria X 304 304 MW3
640 ISS3 ISS from SD X 306 306 MW4
650 ICZF ICMSReverse Z.F. X 305 305 MWS
700 Total tax 610-
690
720 ICMO ICMS offset 620 BRI
730 ICSO ISS offset 640 BRI
... ... ...
For more details check the example pricing procedures RVXBRn (n= 1,2,A,E,F,K,L)
Condition types: NEW development Brazil
R3TR VDAT V_T685A
The condition types used in SD have to be defined in the same way as in FI but
without access sequence. The only exception is the lead condition which triggers the
external calculation function. There is no equivalent condition in the FI procedure.
Fields in the condition definition not mentioned in the following table are initial / not
marked.
Condition
type
Access
sequence
Conditio
n class
Calc.type Cond.
category
Item
cond.
Manual
entries
IBRX IBRX D A 1 Yes D
IPI3 D A 1 Yes D
ICM3 like IPI3
ICS3 like IPI3
ISS3 like IPI3
ICZF like IPI3
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Additional condition which are defined for the Brazil pricing procedure are:
Condition
type
Access
sequence
Conditio
n class
Calc.type Cond.
category
Item
cond.
Manual
entries
ICMI B C Yes D
ICMO IBRR A A H Yes D
ICMP A A Yes D
ICMR B C Yes
ICSO IBRR A A H Yes D
IPIC IBRR A A H Yes D
IPIO IBRR A A H Yes D
Access sequence: NEW development Brazil
The access sequence defines how the tax codes are determined for the FI posting.
The access sequence IBRX is defined as follows:
Access sequence IBRX Ext. Tax calculation Brazil
AcNo Table Requirement Exclusive
1 2 Domestic Taxes
For the special ICMS treatment the access sequence is used to create the additional FI
postings .The access sequence IBBR is defined as follows:
Access sequence IBRR Brazil: 100% reversals
AcNo Table Requirement Exclusive
1 390 Brazil: 100% reversals
Account keys: NEW development Brazil
R3TR VDAT V_T687
Key
.
Description Std.
BRI Offset posting NO
4.1.8 Other standard customizing in SD
Some additional customizing in SD is necessary to activate the tax processing and to
determine the FI tax code which is necessary in the billing process to create proper FI
document.
To complete the customizing the following steps in the SD customizing have to be
done:
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Definition of tax determination rules:
R3TR VDAT V_TSTL
After creating the conditions and the access sequence, the tax category by country
has to be maintained. IMG: Define tax determination rules -> Control: tax types per
country; Transaction OVK1, table TSTL maintained with view V_TSTL.
Tax country Seq
.
Tax category
BR Brazil Tax-Test 1 IBRX Brazil tax calc.
Allocation of delivering plants for tax determination:
The allocations of delivering plants should not be done in SD. The maintenance of the
plant table T001W should only be done from the MM-side because only there the
necessary determination of the tax jurisdiction is implemented in a proper way.
Maintaining the region code for a plant using the SD customizing transaction OVK6
(view V_T001W_RE can lead to unexpected wrong results in the tax calculation.
Definition of tax relevancy of master records:
R3TR VDAT V_TSKM
R3TR VDAT V_TSKD
To determine a tax code (for the transfer to FI), tax classifications assigned to the
customer and the material are used.
To make a difference between tax calculation with IPI/ICMS/Sub.Trib. and the
calculation of ISS two different tax codes SD and SI are defined in the FI
customizing. Depending on which tax types are calculated one of these tax codes
have to be determined by the pricing. This determination is done depending on the
tax classification of the material. Therefore the possible tax classifications for Brazil
are:
For materials: Transaction OVK4; view V_TSKM
Tax category Tax classification
IBRX Brazil tax calc. 1 IPI/ICMS/Sub.Trib.
IBRX Brazil tax calc. 2 ISS
For customers: Transaction OVK3; view V_TSKD
Tax category Tax classification
IBRX Brazil tax calc. 0 Not taxable
IBRX Brazil tax calc. 1 Normal taxes
IBRX Brazil tax calc. 2 Zona Franca - ICMS
Note: In the customer and material master data the tax classifications have to be
maintained. Otherwise the system cannot determine a proper tax code in the
pricing procedure.
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Create conditions for tax determination in SD:
According to the access sequence brazilian taxes in SD, tax rates and tax codes have
to be maintained.
Country Category
Customer
Category
Material
Rate Tax code
BR 0 1 0 S0
BR 01 2 0 S0
BR 1 1 100,00 SD
BR 1 2 100,00 SI
BR 2 1 100,00 SZ
BR 2 2 100,00 SI
4.1.9 Other Brazil specific customizing in SD
A brazilian requirement is that taxes are calculated in a different way depending on
the usage of the sold good by the customer who ordered the product. In the standard
R/3 sales order line item there is no option to enter this information and to hand it
over to the tax calculation.
Additionally there is the need to decide per sales order line item which taxes
(IPI/ICMS/Sub.Trib./ISS) are calculated for this item and which not.
In MM these informations are delivered by the tax code which is entered per line item.
In SD the tax code is determined automatically depending on the customer and the
material. A manual choice like in MM is not possible.
To fulfill the brazilian requirements a new input field for an so called SD tax code is
added to the sales order line item. This SD tax code defines two things:
Does the customer use the product for industrialization or consumption?
Which taxes are calculated for this line item/product?
The definition of the SD tax code is done independent of the standard tax codes.
The tables for SD tax code are:
J_1BTXSDC SD tax code
Field Key DE Type L Chk. Description
TAXCODE X J_1BTXSDC CHAR 2 SD tax code
CUSTUSAGE J_1BTXSDU CHAR 1 SD tax code: Usage
ICMS J_1BTXSDIC CHAR 1 SD tax code: Calc. ICMS
IPI J_1BTXSDIP CHAR 1 SD tax code: Calc. IPI
SUBTRIB J_1BTXSDST CHAR 1 SD tax code: Calc. S.T.
ISS J_1BTXSDIS CHAR 1 SD tax code: Calc. ISS
ICMS_EX J_1BTXICEX CHAR 1 ICMS stored as exempt
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IPI_EX J_1BTXIPEX CHAR 1 IPI stored as exempt
J_1BTXSDCT SD tax code
-description
Field Key DE Type L Chk. Description
TAXCODE X J_1BTXSDC CHAR 2 SD tax code
TXT J_1BTXSDCT CHAR 50 SD tax code description
4.2 External calculation of taxes
Contents of this chapter is the description how the external calculation is done and
how the processing can be implemented in SAP R/3.
4.2.1 Interface parameters / parameter determination in standard R/3
To be able to calculate the taxes (externally) the following information is basically
necessary:
For IPI:
Field Source Purpose
NBM-code Material master extension (table
MARA) and material group
extension (table T023)
Determination of rate, exemption, base
reduction and tax law for IPI
Customer due to pay IPI Customer master extension (table
KNA1)
Determines in SD (outgoing side) if IPI is
calculated at all..
Vendor industry
equivalent
Vendor master extension (table
LFA1)
Determines in MM (incoming side) if IPI is
split into 50% recoverable tax and 50%
tax which is added to the material price.
Only relevant if Usage is
industrialization
Usage of the goods In MM: different tax codes in
purchase order or invoice
verification
In SD: different SD-tax codes in
sales order
In MM: Determines how the tax is
calculated and how the FI posting is done
(separate line items for tax or tax value
added to material value)
In SD: Determines how the tax is
calculated
For ICMS:
Material Line Item Determination of rate, exemption, base
reduction and tax law for ICMS
State of origin (tax
region)
Tax jurisdiction code (tax region)
of delivering plant in SD or vendor
Determines ship-from region for the
region dependent ICMS rate definitions
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in MM
State of destination (tax
region)
of receiving plant in MM or the
customer in SD
Determines ship-to region for the region
dependent ICMS rate definitions
Customer due to pay
ICMS
Customer master extension (table
KNA1)
Determines in SD (outgoing side) if ICMS
is calculated at all.
verification
sales order
In MM: Determines how the tax is
calculated and how the FI posting is done
(separate line items for tax or tax value
added to material value)
In SD: Determines how the tax is
calculated
For Complement of ICMS (only MM):
Material Line Item Determination of exemption, base
reduction for certain states
region)
in MM
Determines ship-from region to
determine of complement of ICMS has to
be calculated at all
region)
customer in SD
Determines ship-to region to determine
if complement of ICMS has to be
calculated at all
verification
In MM: Determines if complement of ICMS
is calculated at all
For Substituicao Tributaria:
Material Line Item Determination of calculation rules for
Sub.Trib.
region)
in MM
Determines ship-from region for the
region for the Sub.Trib. rules
region)
customer in SD
Determines ship-to region for the region
for the Sub.Trib. rules
Customer due to pay
ICMS
Customer master extension (table
KNA1)
Determines in SD (outgoing side) if
Sub.Trib. is calculated at all
verification
sales order
Determines if Sub.Trib. is calculated at all
For ISS:
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ISS calculation In MM: tax code enhancement
In SD: special SD tax code and
material
Determination if ISS is processed instead
of ICMS and IPI
Material - in SD Line Item Determination if ISS is charged and if yes
determination of the ISS rate
The standard interface structure for the external tax interface is a DDIC structure
named COM_TAX which contains the following fields:
SAP Field Name Length In Out Comment
CLIENT char03 X SAP Client (note: this field might be used for
separation of audit file records, if a company uses
more than one SAP client with the external tax
interface
COMP_CODE char04 X Company code (note: this field will be filled always by
the SAP company code)
DIVISION char04 X Division Code (note: this field will be filled with the
actual SAP business area when available)
COUNTRY char03 X country key (ISO code to be expected)
DOC_NUMBER char10 X Document number of the financial or sales document
(No. of financial doc document = No. of SD billing
document), used for updating the audit file/sales tax
register
POS_NO char06 X Item number of the financial or sales document (No. of
financial doc document = No. of SD billing document),
used for updating the audit file/sales tax register
ACCNT_NO char16 X Customer (A/R) or vendor (A/P) account number
ACCNT_CLS char10 X Customer (A/R) or vendor (A/P) account class (note:
this field is currently not supported by SAP, it can be
filled in an SAP User-Exit by the customer)
TAX_DATE char08 X Date for tax calculation
TXJCD_ST char15 X Tax Jurisdiction Code of the ship-to
TXJCD_SF char15 X Tax Jurisdiction Code of the ship-from
TXJCD_POA char15 X Tax Jurisdiction Code of the point of order acceptance
(note: this field is currently not supported by SAP, it
can be filled in an SAP User-Exit by the customer)
TXJCD_POO char15 X Tax Jurisdiction Code of the point of order origin (note:
this field is currently not supported by SAP, it can be
filled in an SAP User-Exit by the customer)
TXJCD_IND char01 X X Indicates which tax jurisdiction code is used(note:
values: '1' = ST, '2' = SF, '3' = POA, '4' = POO; this
field is currently not supported by SAP, it can be filled
in an SAP User-Exit by the customer)
PTP_IND char01 X Indicates which Jurisdiction is the Point of Title
Passage(note: values: '0' = ST, '1' = SF; this field is
currently not supported by SAP, it can be filled in an
User-Exit by the customer)
APAR_IND char01 X Indicates, whether the actual transaction is an
accounts payable or an accounts receivable
transaction. The value is filled from SAP T007A;
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values: 'A' = accounts receivable, 'V' = accounts
payable)
TXJCD_L1 char02 X Length of first structure element of the Tax Jurisdiction
Code (usually used for the state code)
TXJCD_L2 char02 X Length of second structure element ot the tax
jurisdiction code (used for state or Zipcode)
TXJCD_L3 char02 X Length of third structure element of the tax jurisdiction
code (used for Geocode or Citycode)
TXJCD_L4 char02 X Length of fourth structure element of the tax jurisdiction
code (probably used for the city in/out indicator)
TAX_TYPE char01 X X Type of tax -sales/use/service/lease/... (note: values:' '
or '0' = Sales Tax, '1' = Consumer Use Tax, '2' =
Service Tax, '3' = Rental/Lease Tax, other values could
be later defined)
MATNR char18 X Material number
PROD_CODE char10 X Product code (from SAP-table TTXP - user defined)
QUANTITY char13 X Item quantity (note: this value is not available for all
SAP transactions i.e. not for financial documents)
UNIT char03 X Unit of item quantity (note: this value is not available for
all SAP transactions i.e. not for financial documents)
AMOUNT char15 X Gross Amount
CURRENCY char05 X Document currency (note: ISO currency code to be
expected)
CURR_DEC char03 X Number of decimals used for the currency in the SAP-
system (note: value comes out of TCURX-CURRDEC)
FREIGHT_AM char15 X Freight Amount (note: this field is currently not used by
SAP)
EXEMPT_AMT char15 X Tax exempt amount (note: this field is currently not
used by SAP)
EXEMPT_IND char01 X Tax exempt indicator (note: values: ' ' or '0' = decision
about taxability always external, '1' = transaction is
taxable, '2' = transaction is non-taxable;this field is
currently not used by SAP,SAP defaults '0')
CREDIT_IND char01 X Indicates whether the transaction is doing a tax credit
or tax debit (note: this is used for the update of the
sales tax register/audit file; values: ' ' or '0' = debit, '1' =
credit)
UPDATE_IND char01 X Update indicator (note: 'X' = update, ' ' = no update to
sales tax register/audit file)
OVRWRT_IND char01 X Overwrite indicator (note: this indicator tells the
external tax systems not to recalculate the taxes but to
use the given amounts and rates; this is used for the
update of the sales tax register/audit file only)
TAXPCT0 char15 X X Federal tax percentage (note: Within SAP only used for
display purposes; currently not used by SAP)
TAXPCT1 char15 X X State tax percentage (note: Within SAP only used for
display purposes)
TAXPCT2 char15 X X County tax percentage (note: Within SAP only used for
display purposes)
TAXPCT3 char15 X X City/local tax percentage (note: Within SAP only used
for display purposes)
TAXPCT4 char15 X X District/secondary county tax percentage (note: Within
SAP only used for display purposes)
TAXPCT5 char15 X X Secondary city tax percentage (note: Within SAP only
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used for display purposes)
TAXPCT6 char15 X X Other tax percentage (note: Within SAP only used for
display purposes)
TAXPCOV char15 X X Overall combined tax percentage (note: currently not
used by SAP)
TAXAMT0 char15 X X Federal tax amount (note: currently not used by SAP)
TAXAMT1 char15 X X State tax amount
TAXAMT2 char15 X X County tax amount
TAXAMT3 char15 X X City/local tax amount
TAXAMT4 char15 X X District/secondary county tax amount
TAXAMT5 char15 X X Secondary city tax amount
TAXAMT6 char15 X X Other tax amount
TAXBAS0 char15 X X Federal tax base amount (note: Within SAP only used
for display purposes; currently not used by SAP; only
to be filled if different from AMOUNT field)
TAXBAS1 char15 X X State tax base amount (note: Within SAP only used for
display purposes; only to be filled if different from
AMOUNT field)
TAXBAS2 char15 X X County tax base amount (note: Within SAP only used
for display purposes; only to be filled if different from
AMOUNT field)
TAXBAS3 char15 X X City/local tax base amount (note: Within SAP only used
for display purposes; only to be filled if different from
AMOUNT field)
TAXBAS4 char15 X X District/secondary county base amount (note: Within
SAP only used for display purposes; only to be filled if
different from AMOUNT field)
TAXBAS5 char15 X X Secondary city tax base amount (note: Within SAP
only used for display ; only to be filled if different from
AMOUNT field)
TAXBAS6 char15 X X Other tax base amount (note: Within SAP only used for
display purposes; only to be filled if different from
AMOUNT field)
display purposes; currently not used by SAP; only to be
filled if different from AMOUNT field)
EXMATFLG char02 X Product exemption flag (note: only output parameter,
indicates material exemption reason, currently not used
by SAP)
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EXCUSFLG char02 X Customer exemption flag (note: only output parameter,
indicates material exemption reason, currently not used
by SAP)
EXAMT0 char15 X Federal exempt amount (note: currently not used by
SAP)
EXAMT1 char15 X State exempt amount (note: currently not used by
SAP)
EXAMT2 char15 X County exempt amount (note: currently not used by
SAP)
EXAMT3 char15 X City/local exempt amount (note: currently not used by
SAP)
EXAMT4 char15 X District/secondary county exempt amount (note:
currently not used by SAP)
EXAMT5 char15 X Secondary city exempt amount (note: currently not
used by SAP)
EXAMT6 char15 X Other exempt amount (note: currently not used by
SAP)
SAP)
SAP)
SAP)
EXCODE0 char02 X Federal+G41 exempt code (note: currently not used by
SAP)
EXCODE1 char02 X State exempt code (note: currently not used by SAP)
EXCODE2 char02 X County exempt code (note: currently not used by SAP)
EXCODE3 char02 X City/local exempt code (note: currently not used by
SAP)
EXCODE4 char02 X District/secondary county exempt code (note: currently
not used by SAP)
EXCODE5 char02 X Secondary city exempt code (note: currently not used
by SAP)
EXCODE6 char02 X Other exempt code (note: currently not used by SAP)
EXCERTIF char25 X Number of tax exemption certificate (note: forseen for
later use)
EXREASON char02 X Reason for tax exemption (note: forseen for later use)
USER_DATA char50 X User defined field (for reporting purposes)
For the calculation the following input parameters of COM_TAX are used:
AMOUNT Price (excluding taxes)
MATNR Product-/Materialnumber
TXJCD_SF State of origin (jurisdiction code)
TXJCD_ST State of destination (jurisdiction code)
TAX_DATE Date to find time dependent tax rates
COUNTRY Source country
QUANTITY Quantity for Sub.Trib. calculation on fixed price basis
CURR_DEC Number of decimals stored in currency text fields
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The transfer of other input parameter for the tax calculation is done by a modification
which transfers all information from FV64A300 to the external tax calculation for
Brazil. The transfered data is:
KOMK Pricing header information
KOMP Pricing line item information
XKOMV Pricing processing table
T007A Tax code data
Information from these structure is partly used because not all information is
available in COM_TAX. Used information is:
MWSKZ Tax code in COM_TAX from 3.0B
MATKL Material group
LIFNR Vendor number easier to determine from KOMK
KUNNR Customer number easier to determine from KOMK
Additionally the XKOMV table is used to determine the active tax conditions in the
pricing/tax procedure.
The calculation then fills the following output parameters:
Tax amount per tax type (TAXAMT1 to TAXAMT9)
Tax rate per tax type (TAXPCT1 to TAXPCT9)
Tax base per tax type (TAXBAS1 to TAXBAS9)
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Brazil Localization - Taxes

Version 0.99 (Draft)

102.500,00 (invoice value)

Sales price: 82.000,00

103.917,06 (invoice value)

Sales price: 82.000,00

101.121,08 (invoice value)

Sales price: 82.000,00

102.360,42 (invoice value)

Sales price: 82.000,00

Sales price: 82.000,00

93.181,82 (invoice value) - the wholesaler does not charge IPI

Sales price: 82.000,00

Inventory value 77.340,91

Value incl. ICMS

103.917,06 (invoice value)

Sales price: 82.000,00

Sales price: 9.000,00

Sales price: 10.000,00

Sales price: 9.000,00

Base amount for IRRF 1.020,00

Base amount for IRRF 2.550,00

Base amount for calculation 3.570,00

IRRF amount to be paid 559,50

Base amount for IRRF 1.700,00

Base amount for calculation 5.270,00

IRRF amount to be paid 425,00

Base amount for IRRF 2.550,00

Base amount for calculation 2.550,00

IRRF amount to be paid 322,50

Base amount for IRRF 680,00

Base amount for IRRF 850,00

Base amount for calculation 1.530,00

IRRF amount to be paid 94,50

Base amount for IRRF 2.550,00

Base amount for calculation 4.080,00

IRRF amount to be paid 610,50

Base amount for IRRF 1.020,00

Base amount for calculation 1.020,00

IRRF amount to be paid 18,00

Base amount for IRRF 660,00

Base amount for calculation 3.210,00

IRRF amount to be paid 487,50

Base amount for calculation 4.910,00

IRRF amount to be paid 425,00

Base amount for IRRF 2.550,00

Base amount for calculation 2.190,00

IRRF amount to be paid 232,50

Base amount for IRRF 500,00

Base amount for calculation 1.350,00

IRRF amount to be paid 67,50

Base amount for calculation 3.900,00

IRRF amount to be paid 592,50

Base amount for calculation 840,00

IRRF amount to be paid 0,00

Price in the Nota Fiscal 82.000,00

Price incl. ICMS 100.000,00 (1)

Price incl. ICMS - discount 95.000,00 (2)

Sales price 105.000,00

Real net value: 77.900,00

Price incl. ICMS 102.244,39 (1)

Price incl. ICMS - discount 97.132,17

Sales price 107.356,61 (2)