Table of Contents

Introduction
Chapter 1 – Legal Requirements
Brazil Tax Reports
DACON
GIA
GISS
DCTF
DIRF
SINTEGRA
IN86/AUDI
SPED
LALUR/DIPJ
Fiscal Obligation list
Detailed table

Chapter 2 – Initial Set up

Scope
Out of Scope
Pre – Requisites
List of Activities
Create a Country Version Mode
Create a main Company Code
Enterprise structure
Define Valuation level
Define Organizational entities
Define Company Code Global Parameters
Installing a Country Version
Execute Localization CATTs
Define Number Range for Internal Nota Fiscal document number
Define External Number Range for External Nota Fiscal number

Chapter 3 – The Nota Fiscal Configuration

Nota fiscal Table - TAXBRA
Define Nota Fiscal Output data
Define Printing Parameter Assignment
IMG Path
NF Sample
Configure CFOP
Create sample NCM codes
Tax Calculation set-up
Assign Country to Calculation Procedure
Specify Structure for Tax Jurisdiction Code

2
Define Tax Jurisdiction Codes
Define Tax Regions
Define Logical Destination for Tax Jurisdiction Code Determination
Jurisdiction Code
Activate External Tax Calculation
Assign Postal Codes to Tax Jurisdiction Codes
Tax Laws and Tax Situations
ISS, PIS and COFINS Tax Law and Tax Situation
Below follows a list of activities for CBT
Migrate Tax Groups into Access Sequences
Assign Tax Codes for Non-Taxable Transactions
Stock-Transport Order
Services Management
Withholding Taxes
Rounding in SD

Chapter 4 – Tax and Withhold Tax

VAT – Brazil
Federal VAT (IPI)
State VAT (ICMS)
Service Tax (ISS)

Chapter 5 - Understanding the Law

The Brazil Tax Regime
Tax Calculator

Chapter 6 – Brazil Nota Fiscal (NF- e) Compliance for SAP R/3

Global Electronic Invoicing: Compare & Contrast to Brazil
DANFE sample
5 Step Process – Is your organization prepared?

Chapter 7 – NF-e Applicative Providers

SAP GRC
Crossgate
MasterSAF /Thompson Reuter

Chapter 8 - Electronic Nota Fiscal FQA

Chapter 9 - General Ledger Taxes Postings

Chapter 10 – AP and AR
AR Reports
AP Reports

3
Chapter 11– Bank and Boleto

Chapter 12 – Material Ledger, Actual Cost

Functions of Material Ledger
Costing Methodology
Actual Costing
Parallel currencies and/or valuations of material stocks
IMG Patch – Actual Costing Material Ledger
Standard Reports - Actual Costing Material Ledger

Chapter 13 – Asset Accounting

Chapter 14 - Master Data Changes

4
 Introduction

This e-book is results of my experience in Brazil Localization implementations for many global play-
ers, during my 20 years career. I intent to gather my expertise and organize a basic guide for experi-
enced consultants.
This book is not intended for novice users or beginning consultants. The main reason is that Tax in
Brazil is the most complicated configuration in the entire world and has separate legal reports that
differ from standard SAP ERP. Due to such uniqueness, global templates must be adapted to be suc-
cessful implemented. Survey conducted annually by the World Bank (Doing Business 2010), within
183 countries, aiming to assess the ease of doing business, add Brazil to the 127th position overall.
Specifically, in the field of taxation: 2600 hours are spent annually for tax compliance, contrasting
with an average…Second, the terminology and language generally accepted among the consultancy
industry which sometimes may be confusing to newcomers. Third, this guide does not walk through
the entire Accounting module configuration also because some of the parameters of configuration
are standard SAP configurations.
Legal changes happen quite often, and it is a constant difficulty with Taxes in Brazil. The main project
ramps up at this time (Dec 08 to Jul 10) is called SPED, it involves, Accounting, Tax and Electronic Nota
Fiscal. The tax authority SEFAZ is in charge, working side by side with Receita Federal, Secretarias
Estaduais e Secretarias Municipais de Fazenda. The goal is transform the tax accounting, fiscal obli-
gation, and audit totally digital, to optimize the tax law enforcement. But SPED is not covered in this
document. Please refer to central SAP Note 1000130 for further information on this solution.
The main modules involved in the SAP Brazil solution are FI, SD and MM, once the sales tax main con-
cept is VAT equivalent, but ICMS is unique, just looks like VAT or PST in Canada. ICMS involves good
movement and Services, and the methodology of calculation also is different.

5
The Material Ledger functionality will allow completing the three ways match concept feeding the
withholding tax and the Actual Price will generate statutory reports, capturing from Purchase Order
the taxes comes in the vendor Electronic Nota Fiscal.
The most updated release ECC 6.0 will be used as example in shot screens and we will focus the
standard transactions. If the business process requires special compliances as a must, I highly rec-
ommend using local technicians to handle it.
This basic guide seeks to provide a simple yet comprehensive step-by-step list of activities that need
to be performed in order to install a Brazilian Localization model in a new system. Please use it as
such; a helping hand, never as a project reference or central document.
If your original installation started prior SAP R/3 Release 4.0B, I do recommend extra attention to
start Brazilian country version, you should have a maintenance team in charge of it.

6
 Chapter 1 – Legal Requirements

This chapter is very complex, because Brazil legislation obligates some Account procedures in month-
ly base to accomplish all accounting regulation and fiscal obligations. Plus the Sarbanes–Oxley Act
of 2002 if the headquarter is under SEC jurisdiction. The good news is SAP comes in the box with all
standard reports to do it. To performance you have to use some applicative e.g., as I mentioned be-
fore, the SPED will modify the main fiscal obligations.

Language in CoA and GL Portuguese, extra GL for Brazilian Taxes and Gross revenue;

We must follow the fundamental principles of accounting, and also meet the legal requirements and
corporate polices. In this respect refers to the law of income tax of legal entities (Law # 1.598/77),
which requires the company to maintain a system of integrated cost with the rest of bookkeeping.
Otherwise the government could arbitrate the value of stocks for the purpose of calculating the in-
come tax and social contribution, ignoring the bookkeeping.

Brazil Tax Reports

DACON

- Monthly Report to IRS

- Related to PIS and COFINS (both AR and AP)
- From AP, this is restricted to Corporate only and limited to expenses for line of business (dealt
with using cost centers)

GIA

- To complete this requirement, it is important to use CFOP code for both Customer and vendor.
CFOP (Codigo Fiscal de Operacoes) check SAP Note 81892 and related ones
- This is a monthly interface
- This is available in Country version of Brazil [Modelo 1, 2, 9 and 10]

7
GISS

- Related to ISS
- Monthly Report
- This is available in Country version of Brazil [ISS Report]
- Need to double check the layout of the report with layout available in SharePoint
- On AP side, Nielsen can either pay ISS to Government directly or pay via Vendor

DCTF

- Monthly Report
- Information is manually input into Government system based on the report
- Certain codes need to be captured with transactions, in order to draw this report

DIRF

- Annual Report
- Covered by Country version (DIRF)
- This report has two components:
- Payroll
- Service Invoices from Company’s Suppliers
- SAP shall only provide the report relating to Service Invoices from Company’s Suppliers
- If the Company contracts with an ABC Company for example Rent of Property, and the contract
states that the property belongs to an Individual XYZ. This ABC Co would send the invoice for Rent
to Our Co, and us settles the invoice, after taking into account relevant taxes. There is a require-
ment that while making this DIRF report, we should state the XYZ person name along with ABC Co
name against the invoice.

SINTEGRA

- This is related to ICMS tax

- So far Nielsen have never sent this information
- This is a monthly electronic interface
- Country version provides a report [Modelo 9]. Need to check if this is in form of layout expected
by government

8
IN86/AUDIT

- Report produced Monthly

- Country version provides this report (IN86)
- The report is sent to Government in a CD Medium, when asked for
- This report output (IN86) is checked thru another program AUDIT prior to sending to government.

SPED

- Country version provides this

- Government requirement to push transactions online/real-time into SPED server
- There are two parts in SPED:
- SPED CONTABIL: for GL Transactions
- SPED FISCAL: for Tax transactions i.e. AP and AR
- SPED program in SAP will push the transactions into SPED server immediately on their getting
posted;
- OSS Note 1000130 (SPED)

LALUR/DIPJ

- This system helps:

- Calculate Corporate Income Tax
- Print a record of Deductible/Non-Deductible Entries. This printed record has to be signed by Con-
troller and kept in office (subject to Government audit)
- Interfaces to DIPJ
- SAP to interface to LALUR on a monthly basis

9
10
 Chapter 2 – Initial Set up

Once you have the ECC 6.0 working in yours headquarter you have to check some key points to allow
you to activate country version. Coping from other existent Company Code definitely is the wrong
way to start.
You have to precede a complete copy from Company 000 and create Brazilian Company, besides this
process sometimes especially in releases such as 4.6, 4.6c and 4.7 to activate the tax table TAXBRA
check if the OSS Notes 123124 is current updated.
If the TAXBRA is not populating, you can use LSMW to do it. The best procedure is deactivated it, load
and activate again then run the data migration. Actually, all OSS notes have to checked if applicable
to update the release before starting the configuration. Take a look in this one it is very helpful SAP
Note 641257.
For example, the country key procedure will guarantee to the system to check tables such as Postal
code length, bank account number, and physical address per example.
Also, you have to check same space such as price conditions in case you have used at large in your
previous global templates, for Brazil installation you will need extra price conditions in SD Module.
The following guidelines instruct on how to install localization in a new system.
As already outlined in the abstract, this basic guide seeks to provide a simple but at the same time
comprehensive step-by-step list of activities that need to be performed in order to install a Brazilian
Localization model in a new system.
It’s recommended using it as a mere helping hand, never as a project reference or central document.
It’s also indicated as a checklist or reference guide to aid Localization implementation projects.
Generic Notes relevant for Brazil: 39472; 602901; 1246420; 641257; 81892; 65934; 63805; 63631. To
check the most update OSS Notes for Country Version, see SAP Service.

Scope

In Scope: assist customizing in ERP systems where Brazilian Localization systems should run for SD
and MM modules.

Out of Scope: bypass project planning.

Pre-requisites

Considering the involved system changes, some activities are easier having the following SP levels
in your system:
• 4.70, SP22 or SAP note 852302 fully installed
• 5.00, SP05 or SAP note 852302 fully installed
• 6.00, any SP

11
List of Activities;

1. Environment preparation:
2. Create a new client;
It’s highly recommended that you create a new client XXX as a copy from 000. This facilitates Localiza-
tion installation as client 000 contains standard-delivered customizing entries, which through client
copy will be available in the new system. SAP delivers various tables entries in client 000. So, if it’s not
possible to do the suggested client copy, a client compare (transaction SCU0) may be done to adjust
the localization client with standard delivered data.

Hint: Please find more information about client compare tool in SAP Notes 91096 e 85087

Create a Country Version Model

This can be done by running transaction o035 for Country ‘BR’. This transaction creates a model en-
terprise structure to be used a reference for the organizational entities definition.
Before running it, be sure to read and understand the documentation for the following IMG activity:

Create a main Company Code;

The new Company Code should be a copy from the model generated through o035. As a sugges-
tion, you may create BR99 as a copy from 0001.

Important: You should not change the settings for Company Code 0001, which is a model organi-
zational entity. Use it as a mere reference.

Every time you execute o035 subsequently, all 0001 entities will be overwritten with the content
from the chosen country. So, if you have run o035 for Brazil, 0001 organizational structure entities
will be set for Brazil. If you later run it for Argentine, 0001 organizational structure will be set for
Argentine.

12
Define Valuation level

It’s recommended that you use Valuation level = ‘Plant’.

With this, the price determination occurs based on inter-plant movements, and not only on Compa-
ny Code movements. This is used by most Brazilian organizations.

Storage Location valuation level is not possible.

Define Organizational entities

Define the following organization structure entities…:

• Business Places (One per plant)
• Plants
• Purchasing Organization
• Storage Location
• Sales Organization
• Distribution Channel
• Sales Area

Co-relate Organizational entities

Perform at least the following assignments…:
• Plant to Company Code
• Distribution Channel to Sales Organization
• Division to Sales Organization
• Purchasing Organization to Company Code
• Plant and Division to Business Area

Define Company Code Global Parameters

This activity will create the financial account data for the Company Code. This is the central data that
will spread across the entire organizational structure appended to the Company Code. Specific fields
on business partner master data (tax identifications: CNPJ, CPF, State Inscription, City Inscription, Tax
classification, type of business)

Be sure to maintain, inside the Company Code data, at least the following content…:
• The address (at least Country, Region and Jurisdiction Code),
• CNPJ root (official Federal Company number),
• Fiscal year variant.

13
 Customizing sets

Installing a Country Version

The following SAP Help document describes most important activities that need to be followed in
order to have Brazilian Localization objects and data available in your system

So as to facilitate the SAP Help guidelines, and correlate them with this document, the relevant steps
are also explained below. So, you may choose either to use this document or the one from the link
above. Both are likely to have the same content in a different presentation fashion. While this one is
a help guide, the one from the link is the official

Execute Localization CATTs

Use transaction SCAT for that. This transaction will use pre-defined function modules to move Brazil-
ian specific data to system tables. It will make available two sets of data:

Localization Movement Types, on MM side, and SD content (document types, incompleteness proce-
dures, etc…)

a. P40XXXX_CU_BR (MM Movement Types)

Also see SAP Note 123124 for further information on this CATT.

b. P99CUST_SD_BR (SD data)

To see the list of updated tables, check function module J_1B_SD_CUSTOMIZER. This module is exe-
cuted when the CATT is called.

Define Number Range for internal Nota Fiscal document number

Internal document number refers to field J_1BNFDOC-DOCNUM. This is not the external document
number, that is, the official Nota Fiscal number. This one will be explained next.

Important:

For DOCNUM, only intervals ‘01’ is used in case of normal NF. Other intervals may be used for Nota
Fiscal Eletronica (except ‘01’). For documentation, please refer to the following coding section:
Function module J_1B_NF_DOCUMENT_NUMB_GET_NEXT
* NF document number is taken from NR 01 IF i_nr_range IS INITIAL. lv_nr_range =’01’.
lv_object = c_nf. ELSE.
* for NFe flexible numbering is possible.
* but never use NR 01!!
lv_nr_range = i_nr_range.
lv_object = c_nfe.

14
ENDIF.

Define External Number Range for External Nota Fiscal number

In this activity you specify one or several number ranges that will be used to generate the external
official Nota Fiscal number. Here you will define the leading NF number, that is, the first 6 positions.
You define the first 6 digits based on the number groups, better described in section 0.
The rest of the extended number (series and subseries) is built-up based on the settings from the
following section 0.

15
 Chapter 3 – The Nota Fiscal Configuration

Nota fiscal Table - TAXBRA

Below tables are where NF gets stores and related details. This will help during this project. Use Tax
Manager’s Workplace:

The NF number format is the following one:

Important: this format is not valid for Nota Fiscal Eletronica. For NF-e, please read section “Nota Fis-
cal Eletronica”.

16
 Define Nota Fiscal Output data

Forms: system delivers two standard forms: NF01 (outgoing) and NF02 (incoming). You may refine
the NF printout by defining more forms. These forms must be assigned to the Nota Fiscal Types,
which will trigger printout. (Please see SAP Help link from section 0 for further information).

Number Groups: system delivers standard group 0101UN. These groups are sub-objects of the
main NF external number range. You may as well define more groups to refine NF external num-
bering.

Define Printing Parameter Assignment

Nota Fiscal numbering is based on the combination of the involved Company Code, Branch and
Output

Form

In this activity, you should define the output settings for each of the possible combinations. Two
activities must be maintained to allow NF printout:
Assign Numbering and Printing Parameters: here you specify the number group, range, series and
subseries, as well as the desired printer to be used.
Condition Records: here you must create condition records for the output types linked to the NF
form. It’s recommended to create these records based on ‘Condition Tables for Output Nota Fiscal’,
to match the definitions from the previous activity.

Hint: For an enhanced NF printing, read also SAP Note 743361.

17
IMG Path

18
19
NF Sample

20
 Configure CFOP

To implement CFOP, you should follow SAP Note 571848. Basically, the following activities will have
to be performed along this note implementation:

• Execute report J_1BFILLRECTYPES

This report which will create default entries in table J_1BNFITMRULEV, used basically for CFOP auto-
matic determination and tax presentation in the Nota Fiscal

• Execute report J_1BCFOP_MIGRATE

This report will create default entries in the CFOP tables.

Important: Be sure to have file CFOP_2003.txt downloaded into your computer drive before running
J_1BCFOP_MIGRATE. This document is available as an attachment to SAP Note 571848.
For further information on the CFOP solution, please read SAP Note 571848 completely.

Create sample NCM codes

NCM Code is used to identify the material. Brazilian Government makes available an official list of
NCM codes, with thousands of entries. You may upload into the system the ones your company uses
or set up some dummy entries (e.g. NCM1, NCM2, etc) just to allow material identification in the sys-
tem.

Tax Calculation set-up

The following activities are found under the ‘Basic Settings’ sub list, found at the IMG path indicated
below:

Hint: Some activities can also be found in transaction J1BTAX.

Assign Country to Calculation Procedure

There are two tax calculation procedures in Brazil: TAXBRJ (also called classic) and TAXBRA (also called
CBT). In this activity you must choose which one you want to use. You may only use 1 of them. Both
are delivered in client 000.

21
Specify Structure for Tax Jurisdiction Code

The following settings must be done for both TAXBRJ and TAXBRA procedures:
Important: In Brazil, tax calculation occurs at item level. So, be sure to mark the flag ‘Tx In’ for the
used tax calculation procedure, which will activate line-by-line tax calculation.

Define Tax Jurisdiction Codes

Tax Jurisdiction code uniquely identifies the location of organization structure entities. E.g.: Plant,
Branch, Vendor, Customer, etc. Its information fundamentally required for tax calculation in Local-
ization.
There are 2 views that need to be maintained regarding Tax Jurisdiction Codes: V_TTXJ and J_1BTX-
JURV.
You should maintain both of them. Data to be used as reference for Jurisdiction Code tables filling
can be retrieved from Brazilian Geography institution IBGE.

Define Tax Regions

In this activity you define the tax regions for Brazil. Each tax region must have a corresponding geo-
graphical region, which stands for the actual province/state/department where the goods movement
takes place. There can be several tax regions assigned to the same geographical region. This is useful
in case, for example, your company has different taxation inside the same province, or if there is a
tax free zone inside the same geographical location (e.g. Zona Franca de Manaus). System delivers
default entries in this table.
In case your company also imports/exports directly to/from foreign partners, a Localization tax ju-
risdiction code must be defined for them as well. To allow that, you must define dummy codes to
identify external partner locations. Example entries in Tax Regions for Foreign Customers/Vendors
(default) are shown below:

Define Logical Destination for Tax Jurisdiction Code Determination

The logical destination is used for Jurisdiction Code auto-determination and for classic tax calculation
(TAXBRJ). So, if you’re using TAXBRA, only the entry for Event ‘JUR’ is needed. Nevertheless, its rec-
ommended having all the above entries, in case mixed scenarios exist in your system. The defined
functions are called automatically according to the event. E.g.: when creating a vendor master, after
filling in the region and postal code, J_1BTAXJUR_DETERMINE_NEW will be called to automatically de-
termine the right

22
 Jurisdiction Code

Activate External Tax Calculation

Here you link the used procedure to the external events.

Additionally, you may choose whether you want the system to automatically re-determine wrong ju-
risdiction codes or if an error message should be output when the chosen jurisdiction code doesn’t
match the address data. For the first behavior, turn on the flag ‘TC’ (recommended). Otherwise, set it
off.

Assign Postal Codes to Tax Jurisdiction Codes

In Brazil, Jurisdiction Codes can be automatic determined based on the combination of postal code
(ZIP code, also called CEP in Brazil).
To allow that, table J_1BTREG_CITYV must be customized. In this table, you can define a Jurisdiction
Code to a range of Postal Codes for a given Region.

Example entries would be:

Define Sequence for SD Tax Law Determination

In SD, flexible tax law determination is possible. To choose how they should be determined, you must
customize this activity. The recommended sequence is the following one:

Tax Laws and Tax Situations;

Tax laws are system-specific keys used to specify which type of tax calculation occurs at item level.
Each tax law has a related tax situation, which is an official code. In the system, ICMS and IPI have
default tax situations delivered by standard. No activity is this required for them.
On the other hand, ISS, PIS and COFINS tax laws and tax situations must be defined manually. This is
better explained next.

ISS, PIS and COFINS Tax Law and Tax Situation

ISS: ISS tax laws and tax situations can be defined without any required pre-requisites.
PIS/COFINS: before defining PIS/COFINS tax situations and tax laws, you must install SAP Note
981123.

After installing it, you can define them. The corresponding IMG activity can be found under the ‘Ba-
sic Settings’ activity sub list or in transaction J1BTAX.
Assign Company Code to Document Date for Tax Determination

23
Tax calculation in Brazil is based on the tax rates and bases retrieved from the Brazilian tax tables,
which among key fields, has a validity date for the condition records. By default, system will use the
‘Posting Date’ of the document to search for valid tax rates.

However, in case you want to use the ‘Document Date’ (i.e., date of the document creation), you
must choose that option under Financial Accounting -> Financial Accounting Global Settings -> Tax on
Sales/Purchases -> Calculation - > Assign Company Code to Document Date for Tax Determination.

CBT-specific settings

This section is required only for CBT (TAXBRA).

In order to cope with requirements to allow Condition-Based Tax Calculation (CBT TAXBRA), you must
additionally to the above activities, perform also the ones specified in SAP Note 664855 attachment
(Docu_CBT_302.doc), hereon referred to simply as ‘CBT document’.

Taking into account that this is a very extensive SAP Note, the most important requirements are sum-
marized below, with the respective CBT Document sections.. This seeks to ease the CBT implemen-
tation.

Important:

Nevertheless, keep in mind that this document does not substitute SAP Note 664855 in any way.
You still must refer to that documentation as a formal and official reference.

Below follows a list of activities for CBT

IMG Path: Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchases ->
Basic Settings -> Brazil -> Condition - Based Tax Calculation.
• Activate Condition Generation
• Specify Calculation Procedures for Condition-Based Tax Calculation
• Create Tax Codes
Please refer to CBT document sections, “5.14 customizing FI/MM Tax Codes” and “10.13 Tax Codes”.
The later instructs on how to set up the tax codes.

Important:

The tax codes creation has to be done manually. It’s not possible to create them automatically, due
to technical restrictions from table T007A.
Same way, transporting tax codes among systems is not possible. Thus, tax code transport report
RFTAXIMP also cannot be used.
In case there are multiple clients where CBT Localization needs to be implemented, this activity (tax
code creation) has to be repeated in each of them.

24
Tax calculation in Brazil is based on the tax rates and bases retrieved from the Brazilian tax tables,
which among key fields, has a validity date for the condition records. By default, system will use the
‘Posting Date’ of the document to search for valid tax rates.

However, in case you want to use the ‘Document Date’ (i.e., date of the document creation), you
must choose that option under Financial Accounting -> Financial Accounting Global Settings -> Tax on
Sales/Purchases -> Calculation - > Assign Company Code to Document Date for Tax Determination.

CBT-specific settings

This section is required only for CBT (TAXBRA).

In order to cope with requirements to allow Condition-Based Tax Calculation (CBT TAXBRA), you must
additionally to the above activities, perform also the ones specified in SAP Note 664855 attachment
(Docu_CBT_302.doc), hereon referred to simply as ‘CBT document’.

Taking into account that this is a very extensive SAP Note, the most important requirements are sum-
marized below, with the respective CBT Document sections.. This seeks to ease the CBT implemen-
tation.

Important:

Nevertheless, keep in mind that this document does not substitute SAP Note 664855 in any way.
You still must refer to that documentation as a formal and official reference.

Below follows a list of activities for CBT

IMG Path: Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchases ->
Basic Settings -> Brazil -> Condition - Based Tax Calculation.
• Activate Condition Generation
• Specify Calculation Procedures for Condition-Based Tax Calculation
• Create Tax Codes
Please refer to CBT document sections, “5.14 customizing FI/MM Tax Codes” and “10.13 Tax Codes”.
The later instructs on how to set up the tax codes.

Important:

The tax codes creation has to be done manually. It’s not possible to create them automatically, due
to technical restrictions from table T007A.
Same way, transporting tax codes among systems is not possible. Thus, tax code transport report
RFTAXIMP also cannot be used.
In case there are multiple clients where CBT Localization needs to be implemented, this activity (tax
code creation) has to be repeated in each of them.

25
• Set ‘Tax Relevance = 2’ for tax codes SE and IE

Through SE16, table T007A modify field TXREL for MWSKZ ‘SE’ and ‘IE’. Set TXREL = ‘2’. This requires
SAP* profile.

• Create default condition records for conditions BIC6 and BCI1

Access transaction FV11 and create +100% records for Condition Types BIC6 and BCI1.

• Create default tax rates in J_1BTXDEF

These table entries are used as a reference for some condition records generation. Therefore, you
must have default rates for ISS, ICMS and IPI predefined. Example:

• Create condition table 601

Please refer to CBT Document, section “10.1.1 Create Condition Table 601”.

• Adjust Access Sequences:

The following access sequences need to be adjusted through J1BTAX, as indicated in the informed
sections from the CBT Document.

Application TX (MM):

• BRS1 (see Table 10-16: Access Sequence BRS1 – steps and field assignment)
• BRS2 (see Table 10-17: Access sequence BRS2 – steps and field assignment)

Application V (SD):

• ISS1 (see Table 10- 42: Access Sequence ISS1 - steps and field assignment)
• ISS2 (see Table 10- 43: Access Sequence ISS2 - steps and field assignment)

Create Dynamic Tax Groups

In transaction J1BTAX, click on

Consider section “5.5 Tax Groups of Dynamic Exceptions” of the CBT Document to perform this ac-
tivity.

26
Assign Dynamic Tax Groups to Condition Table

Please refer to CBT Document section “10.10 Assignment of Tax Rate Tables to Condition Tables”.

• Create Tax Table entries

After setting up the framework to use CBT, you are able define the tax rates, bases and other set-
tings for each tax type calculation. This is done inside transaction J1BTAX, in table J_1BTX*.

Migrate Tax Groups into Access Sequences

Every time you create a new dynamic tax group, the following activity has to be performed.
You can find further information under the CBT Document, section “5.6 Access Sequences”.

• Migrate Tax Tables into Condition Records

Every time you create a new tax table entry, having turned on ‘Condition Generation’ will automat-
ically generates corresponding condition records. This activity, though, needs to be run once after
finalizing the above customizing, in order to convert into condition records any existing entries from
tax tables. You should also run it after performing massive changes in tax tables (e.g. tax rates, tax
laws, tax code, etc).
You can find further information under the CBT Document, section “5.17.2 Convert Tax Data to Con-
dition Records”

• CBT Consistency Check

Having performed all the above steps for CBT, you may check for the customizing consistency using
standard report J_1B_CBT_CONSIST. Please find richer information on how to use this report in SAP
Note 686780.

• Additional SAP Notes required for CBT:

After concluding the customizing, also install the following SAP Notes (including customizing)
• SAP Note 748252
• SAP Note 770860
• SAP Note 1061205

27
Create manual condition records for Taxes in SD

Some SD condition records must have manual records created. How to do that is explained in the
following SAP Help thread: Maintaining Conditions for Taxes in SD

Important: You won’t be able to generate these condition records until you create tax codes in the
system. This is valid for TAXBRJ and TAXBRA methodologies. If you want to use Brazilian IS-OIL func-
tionalities, then it is mandatory that you use TAXBRJ instead of TAXBRA (CBT).

Assign Tax Codes for Non-Taxable Transactions;

To allow tax law determination for tax-exempt processes (e.g. subcontracting component shipment),
you must define a default tax code to the company code. Do to that, access Transaction OBCL and
assign tax codes IE and SE to Incoming/Outgoing non-taxable transactions in the defined Company
Code.

Notes Installation;

Having performed all the above steps, still it’s recommended installing the following SAP Notes in
your new system. Their implementation activities, of course, will vary according to your SP level. In
some cases, just the customizing will be needed. In other cases also DDIC/repository objects creation
and coding installation will be needed. So, be sure to read the indicated SAP Notes before actually
considering it installed. Account keys for Tax Posting SAP Note 630603 this SAP Note regards to Ac-
count Keys customizing in the system. Use transaction OBCN to check the note indications.

DIFAL;

• SAP Note 679372 this note delivers basic DIFAL scenarios.

Before installing this note, you must have previously created report ZBKCOPYMVTBR as explained in
SAP Note 679371.

• SAP Note 844630 this note is required only in case you’re running on TAXBRJ. It delivers addi-
tional DIFAL scenarios to different business processes. For TAXBRA, the scenarios for DIFAL there
described are not support (although you can adapt them by yourself).

28
Stock-Transport Order;

SAP Note 199233 this note instructs on how to set-up a Stock-Transport Order process using Nota
Fiscal in Brazil. For TAXBRA system, SAP Note 888805 is also required.
After customizing the system, also perform the following additional customizing:

• Assign a Vendor Master to goods supplying plants: XK01 -> Purchasing Data -> Assign Plant to
Vendor
• Assign a Customer Master to goods receiving plants: IMG -> Materials Management -> Purchas-
ing -> Purchase Order -> Set up Stock Transport Order

• Customized LE/MM interface IMG -> Materials Management -> Purchasing -> Purchase Order ->
Set up Stock Transport Order

Services Management;

SAP Note 947670 this note delivers the Localization for Services Management. The required activi-
ties that need to be followed after the coding implementation are described in the note attachment
(USER_GUIDE_MMSRV_BR).

Withholding Taxes;

There are basically two scenarios for withholding taxes: Normal and Accumulated. The first one re-
fers to the conventional withholding taxes whereas the second refers to the scenario where the val-
ues are summed to a minimum level to trigger withholding.
The following activities are required to use each of the scenarios.

Important: for the accumulation scenario, also the normal customizing is required.

a. Normal Withholding

To use the normal withholding, you must follow the customizing guide from SAP Note 747607 attach-
ment (Classic or CBT tax calculation), thoroughly.

Important: Even though some customizing object entries are delivered with client 000, some data
may not be available in your system. Therefore, a complete check-up is recommended, comparing
the mentioned document guidelines and your system.

29
b. Accumulation

To use accumulation withholding, proceed as follows:

• Install SAP Note 1006866 and SAP Note 815720

Important: If you’re using TAXBRA, the customizing settings indicated in this note attachment are not
required. In this case, you should stick only to the DDIC objects creation, as well as repository and
coding implementation.

Do the customizing only if you’re using TAXBRJ.

• Install SAP Note 916003

Important: only TAXBRA

• Withholding Tax Base definition

The withholding taxes base calculation is flexible. You may choose which taxes should compose the
tax base by following the instructions from SAP Note 779617.

Purchase for Resale with PIS and COFINS

• Scenario I

SAP Note 947218

• Scenario II

SAP Note 1063650 and SAP Note 1088901

Rounding in SD

Rounding logic in SD is better explained in central SAP Note 791240.

It’s highly recommended reading it, as some rounding scenarios are just now workable. Take special
attention to the ‘Limitation’ section of this note.
Other relevant SAP Notes on this subject are: 904935, 1111697, 1116026 and 1222950.

30
 Chapter 4 – Tax and Withhold Tax

VAT - Brazil

Profit Participation Contribution (PIS) and Social Security Financing Contribution (COFINS)
• PIS and COFINS are federal taxes imposed monthly on gross revenue. A PI is a mandatory em-
ployer contribution to an employee savings initiative and COFINS is a contribution to finance the so-
cial security system. The rates of PIS and COFINS under the Lucro Real system are 1.65% and 7.6%,
respectively.
• Under the deemed profit regime, the rates are reduced to 0.65% and 3.0%, respectively.
Are these added to customer and vendor invoices? Yes, these taxes are included in the sale price of
the product. But they are not discriminated in the invoice. Anyone handling taxes should be familiar
with rates, so these taxes can be recouped.

• The importation of goods and services is subject to PIS and COFINS at a combined rate of 9.25%.
•
Please confirm rate and identify breakdown. Yes, the rate for PIS is 1.65% and for COFINS is 7.6%

Federal VAT (IPI)

• IPI is a federal-level single-stage VAT-type tax levied on the manufacture of goods in Brazil and
the import of goods. Exports are exempt. For IPI purposes, the taxpayer is the manufacturer or the
importer. The term “industrialization” for IPI purposes comprises assembly, transformation, packag-
ing and reconditioning, among other activities. IPI rates depend on the applicable rate in accordance
with the Harmonized Tariff Code and vary according to the nature of goods.
•
• What rates are relevant for Siemens? Each product has its own rate. See attached table which
includes the products relevant to Siemens. IPI applies to imported goods.

State VAT (ICMS)

• ICMS is a VAT levied by the Brazilian states on the circulation of goods and the provision of in-
terstate and inter-municipal transportation and communications services. The tax applies even when
a transaction and the provision of services start in another country.

31
• A non-cumulative tax, ICMS is collected by most states at the rate of 17%, except for São Paulo
and Minas Gerais, whose tax rates are 18%. There are also interstate rates of 12% and 7%, depending
on the location of the recipient.

• Is this relevant for Champion? Are we active in these states? Yes it is relevant to Champion. At
present, Champion is just beginning operations in Brazil and has presence in one state only, but
there might exist the need to purchase material from other states. The ICMS rates vary from 0% to
25% depending on the state. The rate in Rio de Janeiro where Champion is located is 19%. Importa-
tions are assessed ICMS tax.
• We need to discuss interstate activity.

Service Tax (ISS)

• The tax on services or ISS, a municipal tax, is imposed on the supply of services, other than
those subject to ICMS. The list of relevant services is found in Complementary Law #116/03 issued by
the federal government. The taxable basis of ISS is the price of the service rendered.

• Please confirm - this is relevant for services only while ICMS is relevant for goods. My under-
standing is that ICMS is for both products and services.

• Do we provide any services in Brazil? Services in Latin America are rendered as part of the sale
of chemical. Champion does not invoice services apart from the invoicing of product.
• ISS is generally levied by the municipality in which the company that provides the service is
established. In exceptional cases, ISS may be levied by the municipality where the services are per-
formed.

• ISS rates may vary between 2% and 5%, depending on the city and the type of service rendered.

• What rate(s) will be relevant for Champion? I have not received information on this. Will advise
rate for Champion if applicable.

• The importation of services is subject to ISS. The exportation of services may be subject to ISS
depending on whether the benefit of the services is within Brazil.

• ISS is not a creditable tax like IPI and ICMS. However, it is charged monthly to the customer as
part of the contract sale price.

• On the Accounts Payable side, it appears then that IPI and ICMS can be credited against the tax
paid on customer invoices, but this is not the case for ISS. It simply goes to expense. From the infor-
mation I have this seems to be correct. The ISS is not recoverable

32
 Chapter 5 - Understanding the Law

Tax computations in Brazil for the sale or procurement of materials are widely viewed as complex.
Complexity is often perceived when there is lack of awareness or lack of direct experience in a spe-
cific tax setting.

Brazilian taxes fall into two broad categories including a national tax on the sale or procurement of
goods. One tax is called Imposto Sobre Produtos Industrializados or Taxes on Industrialized Prod-
ucts. This tax is commonly referred to as IPI tax. The other tax is the Impostos Sobre Circulação de
Mercadorias e Prestação de Serviços or Taxes on the circulation of goods and services. This tax is
commonly referred to as ICMS.

IPI tax is the national excise tax imposed on products. In general, IPI tax is only charged one time in
the life cycle of a product. It is therefore not a value-added tax per se, but a tax on the final value at-
tained at the time when it is proper to charge IPI.

ICMS tax, on the other hand, operates as a true value-added tax imposed on each sale or resale of a
material at higher and higher prices as value is added, ICMS tax is charged on those circulations of
goods. In other words, whenever a product is sold or bought, ICMS tax will be charged on the value.
Over time and through the normal production value added process, ICMS tax is higher with each sale.

ICMS tax, under most circumstances, is remitted to the government by each company only on the
value-added portion of the tax. For example, if a company buys a product and pays $100 in ICMS
tax in that procurement and then sells the product at a higher price after adding some additional
value, thus charging $120 in ICMS tax to the purchaser, the net value-added tax due to the govern-
ment from this company is $20. Throughout the entire lifecycle of the product, the government will
collect the entire ICMS amount charged by collecting the net amounts due from all providers in the
value-added stream.

Two additional taxes implemented in 2004 called Programa de Integração Social or

Program for Social Integration commonly call PIS, and Contribuição para o. Financiamento da Segu-
ridade Social or Contribution to Social Security Financing, commonly called COFINS, are embedded
into quoted product prices and remitted to the government by companies on a net value-added ba-
sis. And in Contribuições sociais sobre o lucro líquido (CSLL) Corporations optantes pelo lucro real: a
alíquota de 9% será aplicada sobre o LAIR (Lucro antes do Imposto de Renda).

The law in Brazil is in itself very clear. The main issue is in helping clients understand that often times
all stakeholders simply need to read and understand the law. This requires translation and working
together.

Understanding the law requires understanding the mathematical process of calculation under the
principle legal constructs. Many people find themselves confused at this stage

33
often wanting to understand the logical thinking that went into deciding the different calculation
treatments rather than simply accepting the logical calculation realities of the math involved.
The laws are designed to capture IPI taxes under appropriate circumstances and to provide for some
benefit to locally manufactured goods. Complete understanding of the SAP system and the law helps
consultants move faster.

The Brazil Tax Regime

IPI tax is included in the base when calculating ICMS tax when the sale of the product is to a final cus-
tomer. If the sale is to a customer that will then resell or add additional manufacturing processes to
the product, IPI will not be included in the base when calculating ICMS.
When calculating PIS and COFINS taxes, the rules also describe that under various circumstances IPI
may or may not be included in the PIS and COFINS base amount. Consultants implementing business
processes in Brazil should be versed in all of these principles.
Another tax process that is increasing in its use is the ICMS Substitute Taxpayer collection system.
This process collects all ICMS taxes that would ever become due on a product based on a presumed
and established final value mark-up percentage. The rules for calculating this tax are simple in the
base case but become complex under certain circumstances. I am bringing not only the technical
experience, but also the business and legal understanding that enable us to move quickly in placing
the Brazilian tax requirements into business processes in an SAP setting.
The best way to put your Brazilian business leadership teams at ease is to begin with tools that
demonstrate the process of tax calculations under various legal rules. Following are four rules and
the calculation process that helps clients become comfortable with the calculation logic.

34
To provide extra help for SA, MM and FI Consultants see attached the spread sheet Tax Calculator
from the site www.localization.com password (LOCFORUM).

35
 Chapter 6 – Brazil Nota Fiscal (NF- e)
Compliance for SAP R/3

As of 2007, the Brazilian government introduced electronic notas fiscais (NF-e) to replace the conven-
tional, hard-copy notas fiscais. Before NF-e are printed and sent with goods, the state tax authority
(SEFAZ) of the state of origin of the NF-e (or, in certain cases, the federal authority) must grant au-
thorization then for logistic document you have to generate DANFE. Please refer to central SAP Note
989115 for further information on the solution and OSS1139220 (dedicated messaging product SAP
GRC NFE).
Complying with Nota Fiscal Eletronica (NF-e), the Brazilian Government’s requirement for an elec-
tronic bill of lading is not easy. Under the new law, the NF-e will gradually replace the conventional,
hard-copy nota fiscals with an electronic counterpart which must be digitally signed and shaped into
a particular government specified XML format.
This document is then integrated into daily business operations at a very deep level of detail. For ex-
ample, before goods are allowed to be released for movement, this XML file must first be transmitted
to the state Ministry of Finance (Ministerio da Fazenda or SEFAZ) for review and approval. Once ap-
proved, the official NF-e file is transmitted back to the company for archiving for up to 5 years. Then
it is e-mailed to the receiver for tracking and awareness while they wait for delivery. Finally, a copy
of the XML NF-e must also be converted into a human readable format called a DANF-e which must
be printed and carried as part of the documentation pack accompanying the shipment. At any point
along the way, the truck can be pulled aside by police or customs officials, who will scan the barcode
on the printed DANF-e to validate that the goods movement has been sanctioned by the government.
There are additional responsibilities and requirements at the receiver’s end as well.
Since most ERP, warehouse and logistics systems were obviously not designed for such extensive reg-
ulation, there is a huge need for companies operating in Brazil to find add-ons or extensions to their
IT systems to handle these requirements. In order to avoid excessive delays, these systems need to
work in as near to real-time as possible and they must provide for seamless entry and recovery from
“contingency mode” operations when things slow down.
Moreover, since SEFAZ integration is implemented as a complex set of asynchronous service calls
(that can be batched for greater approval throughput under certain circumstances), many companies
find it best to leverage a service provider to manage the traffic flow as an outsourced service. In this
way, they can continue their existing paper-based NF processes pretty much unchanged while del-
egating the responsibility for converting, signing, archiving and monitoring the integration with the
SEFAZ to a specialized partner solely focused on these tasks.

36
Global Electronic Invoicing: Compare & Contrast to Brazil

Depending upon your point of view, Brazil is the most advanced (and certainly the most stringent) set
of requirements in global e-Invoicing today. Unlike some of the EU countries, which in most cases still
allows for unsigned B2B transactions between consenting parties, Brazil imposes a defined electron-
ic standard format that all companies must adhere to closely.
This “Nota Fiscal Electronica” (NF-e) format officially recognized as the sole and only invoice docu-
ment of record for tax compliance purposes. There may be paper based reformatting of this XML file,
but that is for “human comfort” only – it’s the signed, approved NF-e XML file that constitutes the of-
ficial record. It is digitally signed and archived and aims to documenting the movement of goods and
services anywhere into, out of or throughout the country. A legally valid NF-e document is associated
with the issuer’s (seller’s) digital signature and guarantees receipt by tax authorities before the actual
shipment of goods or delivery of services.
Comparison of Brazil to other Invoicing Processes

1. Traditional Paper Invoice

• Paper document that closes a commercial transaction;

• Details the products and services provided, including costs, taxes, freight
• May also include coding used to assign costs within an organization
• Used by Government Tax Authorities for Value Added Tax compliance

2. Basic Electronic e-Invoice

• Electronic version of paper document, containing all of the same information

• Digitally signed by emitter to provide non-repudiation and authentication to receiver • Validated by
receiver to ensure the integrity of message remains in tact
• Electronic file is the legal invoice – paper visualizations for human comfort only 3. Brazil Enhanced
e-Invoicing
• Real time integration with Brazilian Tax Authority (SEFAZ)
• Invoices must be registered and approved before being sent
• Printed DANFE must accompany goods in transit for validation en route
• NF-e received electronically by recipient in advance. Must be validated and any returns accounted
for via “return order process”
• Each outbound e-Invoicing solution must also provide for inbound processing as well

OSS Note 989115 (overview note for Nota Fiscal Eletrônica implementation - backend)

37
DANFE sample

Procurement and Logistics Execution - NF Integration in Procurement / Inventory Management:

- Regular procurement with Nota Fiscal in invoice verification

- Special procurement processes
- Future delivery with Nota Fiscal fatura in invoice verification and Nota Fiscal remessa at goods
receipt
- Subcontracting
- Subsequent debit
- Returns to vendor
- Stock transfer (two step via MM)
- Stock transfer with stock transport order
- Third party processing
- Planned and unplanned freight processing
- Service Management
- Returnable packaging

38
5 Step Process – Is your organization prepared?

1. Vendor must be able to produce the appropriate XML document from their ERP system
a. Consideration includes:

I. Adjustments to the ERP system, patches to ensure NF-e is produced in the process flow prior to
release of goods
II. XML structure created
III. System should validate mandatory attributes within XML schema
IV. Real-time integration via Web Service to the SEFAZ
V. Back-up plan in case Web Service is down at SEFAZ

b. Implementation requirements:

I. Digital Signature Server

II. ERP integration iii. Middleware for Web Service Call

2. SEFAZ in real time will validate and assign NF-e which must be posted back to ERP prior to release
of goods

3. DANFE which is a paper representation is printed and attached with shipment, traditionally in-
voice is sent to buyer as well via electronic means

4. Government officials including Customs agents and patrolling police have real-time access into
validity of shipment by scanning the DANFE. If shipment doesn’t match released NF-e by SEFAZ,
server penalties can be imposed

5. Buyer receives goods and checks in at unloading dock;

39
 Chapter 7 - Applicative Providers

The main applicative in the marketing are SAP GRC, Crossgate and MasteSAF /Thompson Reuter. I
select them using some parameters to recommend such as:
• Very tied solutions, not just software providers;
• Provide the support for transaction and solution update;
• Support in local language and are Global Players;

SAP GRC

In May 16, 2008 - SAP, the world’s leading business applications, launched its solution to the market
for electronic invoice, the product SAP NFE 1.0, developed by SAP GRC (Governance and Compliance
Risky). The new solution is fully ready to serve customers who need to fit the new process Brazilian
tax, so unique, automated and ensures the integrity of data between your SAP ERP system and the
Department of Finance.
SAP has been following this project since 2005, also participating in the start of the pilot phase of the
Brazilian electronic invoice, which happened in 2006, with 19 companies, 11 of which were SAP cus-
tomers.

Thus, SAP Brazil anticipated part of the process changes, such as “Customer Specific”, always aligned
with the solution that was being developed in Germany. Thus, the company was able to prioritize and
help meet the demands of clients who had legal deadlines agreed with the Brazilian Government.
Then, in April 2007, the company posted the required update in SAP ERP for all customers in Brazil.

Today, the second part of the solution, SAP NFE 1.0, reaches customers seamlessly and with 100% of
the support provided by SAP AG, in terms of products, processes, legal and technological changes.

The main technical characteristics of the solution NFE SAP 1.0 include:

• Native integration with SAP ERP NF-e;

• Possibility of integration with other ERP (SAP interface in the Integration Process)
• Technical validation of the XML file;
• Batch Assembly (with prioritization of Notes);
• Status Monitoring and administration via the Portal;
• Digital signature of the native XML messages;
• Control of all communication processes;
• Storage of XML messages authorization, cancellation and destruction;
• Integration for B2B communication between business partners.

40
Besides all these features included in the solution NFE 1.0, SAP is already working to meet the de-
mands of other projects SPED, which are the digital bookkeeping and fiscal bookkeeping digital as
well. The requirement for submission of accounting and fiscal obligations are scheduled for 2009
(calendar year 2008) and, therefore, SAP is working on extracting the ERP programs for these new
features can be delivered to customers within the deadline set by the Government.

Crossgate (Crossgate)
SAP AG is a Shareholder (October 2008).

Under Brazilian law, the NF-e is replacing the conventional, hard-copy nota fiscals with an electronic
counterpart which must be digitally signed and shaped into a particular government specified XML
format. For many organizations, this switch must be accomplished by December 31, 2011. Cross-
gate’s on demand NF-e solution is the fastest and most reliable way to meet these quickly approach-
ing deadlines.

Since most organizations are not equipped to comply with such extensive regulation, there is a huge
need for companies operating in Brazil to find extensions to their IT systems to handle these require-
ments. In order to avoid potential non-compliance fines and potential implementation delays, many
companies find it best to leverage a service provider to manage the traffic flow as an outsourced ser-
vice. With the assistance of Crossgate, organizations now have a partner that handles the responsi-
bility for converting, signing, archiving and monitoring the integration with the SEFAZ.

Crossgate’s On Demand NF-e Service includes:

• Fully Complies with the Nota Fiscal Eletronica initiatives;

• Real-Time Integration with SEFAZ;
• Fully Integrated with SAP R/3;
• Eliminates expensive ERP Augmentations;
• Turn-key enablement, investment protection, meet December 31, 2011 Mandate;
• One On Demand Service that supports over 40 countries in the EU and Latin America;

MasterSAF /Thompson Reuter – (MasterSAF)

The biggest solution provider for SPED and Electronic Nota Fiscal in Brazil is part of the global player
Thompson Reuter.

The MasterSAF NF-e solution processes the electronic invoices made available by the ERP integration
component, processing the digital signature and preparing invoice (Nota Fiscal) information accord-
ing to the official layout defined by the fiscal authority. An XML file format is then generated to be
sent to the each official state Treasury Department.

The solution is also responsible to search and collect from the Treasury Department official website
the authorization to use the fiscal document, being then able to print the DANFE (Documento Auxil-
iar da Nota Fiscal Eletrônica – Electronic Invoice Auxiliary Document), send the XML to the customer
(business partner) and present the results of the whole process in a Monitoring Panel, where the user
will have full control over all operations.

41
The NF-e system stores all processing logs for each electronic invoice issued. This log can be accessed
in the Electronic Invoice History functionality and will present date and time of each invoice process-
ing step.

The solution is also prepared to perform the other flows that are part of the process, like Cancelling
and Skipping of NF-e. Upon the authorization to issue electronic invoices it is also obligatory to com-
municate the SEFAZ (State Treasury Department) of each invoice cancellation previously authorized.
The flow between ERP and MasterSAF NF-e is pretty much the same of the issuing process. ERP sends
the cancellation order to NF-e that transmits it to SEFAZ and collects the return and makes it available
to ERP.

Besides the cancelling of NF-e, there is also a new process that will be the Skipping of invoices. Nu-
meration eventually skipped due to rejected NF-e or other reasons must be also informed to the
SEFAZ.

In the monitoring panel, all invoices can be queried and viewed using field filters like: Company,
Branch, Issue Date, Invoice Status, CFOP, Customer, etc.

Rejected, cancelled and refused invoices can also be viewed in the monitoring panel. It is also capable
of skipping NF-e numbers.

Solution is provided in two different distinct offers: In-House and SaaS (Software as a Service). In the
SaaS solution the costs are based on the volume of invoices issued every month. Client transfers the
operation risks to MasterSAF who will be responsible in defining architecture and IT infra-structure,
as well as for all support and maintenance of such structure, guaranteeing the levels of service, up-
dating the application whenever new functionalities are released.

MasterSAF is a solution developed using a JAVA open platform. It is necessary to utilize the following
third-party software’s for its correct operation: Java Development Kit 6.0 (JDK 6.0) or superior, appli-
cation server Glassfish v2x.

ERP sent invoice information to MasterSAF NF-e that processes it, generating the digital signature a
preparing the XML file, that is subsequently sent to the state Treasury Department (SEFAZ), waiting
for the answer and the availability of each authorization. It collects the authorization protocol and
returns the information to the source ERP system, automatically printing the DANFE and sending the
XML/DANFE file to the customer, finishing the whole process.

MasterSAF NF-e has a native integration with SAP. SAP must be updated with the latest patches to
generate the electronic invoice (model 55).

42
 Chapter 8 - Electronic Nota Fiscal FQA

1. Is it still necessary to obtain an AIDF (authorization document printing tax) beforehand with the
new NF-e?

A: For the NF-and there is no more to figure AIDF, since there is no more graphic printing of tax docu-
ments. The procedure for authorizing the use of tax document becomes automatic and executed for
each invoice issued. If the company is obligated to issue, also other types of tax documents (e.g. bill
of sale to consumer), AIDF should ask for these documents.

2. Must I generate the RIEX, SINTEGRA, GIA, tax records, etc, with the new NF-e? Will there be integra-
tion of the NF-e software with such statements?

A: At this time, all ancillary obligations are held to which taxpayers are currently subjected to. The
exception is AIDF when issuing electronic invoices.
With the gradual introduction of the NF-e, as well as other subprojects of Public Digital Bookkeeping
System (SPED) - Tax and Bookkeeping digital - the trend is that in the future, several ancillary obliga-
tions, as mentioned, are gradually replaced or dispensed.

3. The Department of Finance already accepts the new NF-e. Would I still be required to give the same
information of the NF-e to tax authorities in the delivery of electronic files of bookkeeping?

A: No, the additional obligations that taxpayers are subjected to should also include the information
already transmitted through the electronic invoice.

With the gradual introduction of the NF-e, as well as other subprojects of Public Digital Bookkeeping
System (SPED) - Tax and Bookkeeping digital - the trend is that in future all such information is al-
ready covered in the various system modules. Until the effective implementation of these modules,
the information should still be provided to the IRS under applicable law.

4. Is it true that, as the Finance Department has received the NF-and the issuer no longer needs to
keep the NF-?

A: No. The issuer and the recipient must maintain a digital file of the NF-e’s for the period specified
in the tax law to guard the tax documents. When prompted, submit digital files to the tax administra-
tion.
If the recipient (buyer) is unable to receive the digital file, you should store the DANFE the preclusive
deadline.

43
5. Should companies (issuers and recipients) carry some type of document (NF-e or DANEF)?

A: The general rule is that the issuer and the recipient must maintain a digital file of the NF-deadline
and the tax legislation to guard the tax documents should be submitted to the tax authorities when
requested. Thus, the issuer must store only the digital file.

If the addressee of goods and NF-e, and that is the issuer of NF-e, it also does not need to keep the
DANFE, but only the digital file received.

If the recipient is not a taxpayer accredited to issue NF-e, the recipient may, alternatively, keep on file
the DANFE on NF-operation and the preclusive deadline established by law, must be submitted to the
tax authorities when requested.

We emphasize that the recipient should always verify the validity and authenticity of the NF-existence
and Authorization for Use of NF-and he has received the digital file and the NF-DANFE or accompa-
nying the goods.

6. In case of accident or loss of NF-electronic file and these would be available for recovery by the
SEFAZ or SRF?

A: No, just as the archive of hard copies invoices is the responsibility of the taxpayers, will be also in
charge of custody of electronic documents. It should be noted that the resources needed to keep the
digital document, including backup, have a much lower cost than the physical custody of documents,
and allows the rapid recovery of the file and information.

7. How is the issue of the entry of NF-e issued for the Manaus Free Trade Zone - will be available au-
tomatically as soon as the goods enter the country of destination

A: SUFRAMA developed a version of the System of National goods transport - SIGN-compatible with
NC and that facilitates the process of sending tax documents, registration and inspection of goods to
the area administered by SUFRAMA encouraged.

The new process provides a greater control of the process of admission of goods by the issuers of
NF-e, resulting in simplification and greater flexibility in the process of proof of admission of goods
for the area administered by SUFRAMA encouraged.

See the website for more information SUFRAMA

8 - The Company is obliged to keep the NF-e through the period required by law. Can they be stored
in the files database? (Included in 1.1.09)

A: The NF-and the XML file are digitally signed with its own aggregated authorization for use. These
are elements that must be stored in the same format that have been transmitted and authorized.

The maintenance of information in the database is up to the taxpayer. These databases are import-
ant for the company’s operational issues, but do not replace the obligation of keeping the NC-and
XML.

44
 Chapter 9 - General Ledger Taxes Postings

In the case of taxes payable (from customer invoices) - we make an entry to taxes payable and we
charge the customer.

• In most cases, there is ONE liability account and the particular tax type/governmental authority
to be paid is identified in another way.

• In the case of Brazil (at least), we need to be opening to re-visiting this concept. Yes, I have not
received an answer on this from Brazil.

In the case of taxes paid from a vendor invoice, there are a few different ways to go:

• If the tax is recoverable/deductible (that is it can be netted against tax payable from customer
invoices), we post it to a balance sheet account which is included in the reporting for tax payable.

• Generally, there is ONE general ledger account - this may also need to be re-visited for Brazil.

• If the tax is not recoverable/deductible (and goes to expense), there are two different types of
postings that can occur:

• The tax follows the expense. So, if we have a purchase of office supplies, the tax is posted to the
same general ledger account.

• This is how sales taxes in the US and PST in Canada are posted. Tax that is not recoverable is
posted to expense also.

• The tax is posted to a special general ledger account. (This is not done in the US or Canada.);

• This may be desired treatment where you have taxes that cannot be deducted for income tax
purposes. They could be segregated into their own general ledger account.

Hint:

Financial Accounting:
Specific accounts (e.g. for taxes)
Gross revenue posting

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 Chapter 10 – AP and AR

Payments:
Febraban, Itaú and Bradesco formats

Accounts Receivable:

DME: Remittance file (arquivo remessa); confirmation file (arquivo retorno); bank statement (arquivo
extrato); Febraban (Segment, P,Q,T,U); Itaú (CNAB400); Bradesco (Layout Cobrança Bradesco 400)
Borderô printing (list of payments);
Boleto printing (payment form)

AR Reports

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 Accounts Payable:

DME: Remittance file (arquivo remessa); confirmation file (arquivo retorno); bank statement (arqui-
vo extrato); Febraban (Segment A,B, J); Itaú (SISPAG); Bradesco (PAGFOR)
Borderô printing (list of payments);
Check printing
DME for HCM payment

Bank communication: Boleto Bancário; Borderô; Duplicata; Vendor Operation; SPB (Sistema de Pag-
amento Brasileiro).

AP Reports

47
 Chapter 11– Bank and Boleto

Boleto Bancário is a financial document, a pre-filled bank slip, which Customer uses to make pay-
ment to bank.

Boleto Sample.

Field wise Functional Specification:

1. Citibank Logo – To Hard Code

2. 745–5

First 4 digits of REGUH – UBNKL (House Bank Number), Fourth digit need to be separated with Hy-
phen (-5), as shown above.

3. Local de Pagamento (Place of Payment) – To Hard code the following text:

Pagavel em qualquer banco até o vencimento

4. Vencimento (Due Date)

Take the value from structure REGUD - AUSFT

5. Cedente/Sacador (Merchant):

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Read Company code from input and pass it to T001 – BUKRS and get ADRNR. Input this ADRNR into
ADRC and Print NAME1.

Take City from ADRC-CITY1.

6. Agência/Código Cedente (Agent Number):

Hard code the value 001/0059151037

7. Data do Documento (Document Date)

Pass on the following information to REGUP to get the document date:

REGUH- LAUFD – Date on which the program is run

REGUH- LAUFI - Additional Identification
REGUH-ZBUKR - Paying company code
REGUH- ABSBU - Sending company code
REGUH-VBLNR - Payment Document Number

Document Date = REGUP- BLDAT in format DD/MM/YYYY

8. Nº Documento (Document Number)

Input as per step 7

Document Number = REGUP- XBLNR followed by line item number REGUP- BUZEI

Format: XXXXXXXX-001

9. Espécie Doc. – Default “DMI”

10. Aceite – Hard Code N

11. Data do Movimento (Date of Movement)

REGUH-LAUFD - Run Date

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12. Nosso Número (Our (Boleto) Number)

REGUD – CHECT (11 Digit Number). The result of following check digit calculation has to be added
as 12th Digit:

Instructions:

A – Write down the cheque number as shown above

B – Multiply of the right for the left each number for the weights of 2 and 9, initiating itself from n. º
2 until reaching n. º 9
C – Total up all values in this row e.g. 18+12+18+14=62
Divide the total value by 11 e.g. 62 /11
Quotient 5 Reminder 7
Subtract the reminder value from 11 e.g. 11-7 = 4 is the digit verifier or 12th digit number.

If the remaining portion of division is equal to ‘0’ or ‘1’, then the digit verifier or 12th digit value
would be ‘0’.

13. Uso do Banco (Use of Bank) – Blank field

14. Carteria (Card - Potfolio)

REGUD – TEXT3 (OR)

Input the following parameters in T012A table and get the carteria number - VORGA:

REGUH – ZBUKR into T012A - BUKRS

REGUH – HBKID into T012A - HBKID
REGUH – HKTID into T012A - HKTID

15. Espécie Moeda (Forms of Payment)

If REGUH – WAERS = BRL then print “R$”

If REGUH – WAERS = USD then print “U$”

16. Quantidade (Quantity) - Blank Field

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17. Valor (Value) – Blank Field

18. Valor do Documento (Document Value)

REGUH – REBTR (Amount in Document Currency)

19. Instruções (Instructions) – Hard Code the following:

Após o vencimento acesse www.citibank.com.br/vencidos ou ligue 0800-7018701 /

(-) Outras Deduções (11) 2135-9510 e obtenha boleto pagável em qualquer banco. Se preferir pa-
gue no Citibank, HSBC, BMB, Rural, BIC e Cooperativas do Sicoob. (+) Mora/Multa
Juros por dia de atraso: R$

Amount at the end (after R$) has to be taken as below:

(REGUH – REBTR X 2 %) / 30

20. Desconto/Abatimento, Outras Deduções, Mora/Multa, Outros Acréscimos, Valor Cobrado

Blank Fields

21. Sacado (Client / Drawee)

Pass REGUH – KUNNR into KNA1 – KUNNR and get address number KNA1 – ADRNR

Pass the above address number into ADRC – ADRNR and print Customer Name and Address using
the Address Print function module ADDRESS_INTO_PRINTFORM

Name1 has to be followed by tax number KNA1 – STCD1

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 Chapter 12 – Material Ledger, Actual Cost

Functions of Material Ledger:

1. Obtain an understanding of the actual costing function in the material ledger.

2. Know how to revaluate inventories of semi finished products, and finished products with cal-
culated actual costs or accrue variances.
3. Cost accounting using actual prices;
4. Storing values of stock in three different valuations (legal valuation, valuation for reporting
purposes, and profit center valuation) in multiple currencies;

Specific fields on material master (tax relevant material classifications: NCM [Mercosul tax tariff
code]; origin of goods, usage of goods, type of material)

Costing Methodology;

• Standard: Constant price without considering usage or invoices. Material stock valued at the
same price over an extended period. Price variances are posted to price difference accounts; not
affecting the standard price.

• Actual Cost: Price that changes in consequence of usage and entry of invoices. It is calculated
by dividing the value of material by the quantity in stock. Automatically recalculated based on activ-
ity.

Actual Costing;

During the period, valuation of all goods movements is done with the preliminary valuation price
which is normally the standard price. All variances from the preliminary valuation are maintained in
the ML. At period end, revaluation of ending inventory can be performed with the determined actu-
al price.

Parallel currencies and/or valuations of material stocks;

All goods movements in the ledger can be maintained in 3 currencies. The values are translated
into other currencies using the historical exchange rates, and the prerequisite for usage of transfer
pricing functionality.
The most powerful transaction is CMK3 and AKE5

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General Vision – TCode OB22
Results – MB5L
Report - S_P99_41000062
TCode - CKMLCP

IMG Patch – Actual Costing Material Ledger

Standard Reports - Actual Costing Material Ledger

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 Chapter 13 – Asset Accounting

Specific depreciation chart

Tax incentive on asset investments (CIAP) - SAP Service Marketplace, under the Quick Link globaliza-
tion; choose Country Information, Country-Specific Documentation.
Its country template SAP includes a reference Chart of Depreciation for Brazil (0BR), which has pre-
determined Depreciation Areas according to Brazilian regulations.

Chapter 14 - Master Data Changes

There are changes to master data necessary in order to correctly effectuate the new tax calculation.
Vendors (Transaction XK02)

Assign all WHT types and codes that are applicable.

Update address with new tax jurisdiction code for correct ISS calculation.

Customers (Transaction XD02)

Assign all WHT types and codes that are applicable.

Update address with new tax jurisdiction code for correct ISS calculation.

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