LB_Brazil_localization_workshop.ppt

© The Lubrizol Corporation 2011, all rights reserved
SAP Latin America Implementation

Agenda
 Localization principles
 SAP R/3 country solution for Brazil
 Brazil-specific elements in SAP R/3
– Hierarchy
– Master Data
– Nota Fiscal & Taxes
 Process Integration for SD
 Process Integration for MM
 Process Integration for FI/CO
 Bolt-on’s (Legal Books and Import/Export)
 SPED & NF-e
 Appendix: Brazilian tax base calculation

Localization Principles
What makes Brazil specific?

Where do all these requirements come from?
 Culture of bureaucracy
– reality since very early in Brazil’s history
– continued regardless of many attempts to modernize
 Long period of high inflation
– during the last two decades mainly before 1994
– required complex calculation rules
 High historic level of tax evasion
– creation a very complex set of rules and regulations

.. Mainly the requirements are concentrated on tax calculation and
reporting, new document flow (“nota fiscal”) and specific
accounting rules (p.e., product costing)
.. There are specific SAP hierarchy elements and some additional
customizing required for Brazil in a R/3 implementation
Legal and Tax Requirements for Brazil
What are their impacts on a SAP R/3
implementation ?

SAP’s Globalization Knowledge Base acknowledges
the complexity of Brazilian localization
• Drivers of complexity drivers include current
complexity, as well as the frequency of changes and
interpretation of law

Brazil Localization
Benchmark data based on IBM Roll Out Experiences
Based on several SAP R/3 roll out projects in Brazil, IBM
has learned the following:
 Over 300 process variants can be impacted by localization
requirements
 Typical impact on “international templates” (developed without
Brazilian requirements) for implementation in Brazil
SAP Module Impact
SD Very High
MM High
CO Medium
FI Medium
PP Low
 Some processes not fully supported by standard SAP R/3
– Foreign trade document flow & documentation
– Tax reports for different regions and/or for specific requirements of the
business
– some aspects of Payroll, External Warehouse, Bank EDI, etc ...
* impact varies significantly considering client specific business’ requirements, therefore, data should be used as a
benchmark reference only

SAP R/3 Country Solution for Brazil

What is a Country Solution?
 A country solution is a solution provided within the standard SAP
R/3 system (as of Rel 4.0), that follows global best business
practices, with specific functions and features to account for
varying national and local tax laws, accounting laws, and
manufacturing regulations in a specific country.
 Currently over 40 country versions exist in SAP R/3, which can
be run simultaneously in the same system.
 Each country solution is delivered with a template / ‘pre-
configured’ client, which can be used to set up your own
organizational units for use in that country.

A Country Solution contains:
 Country specific functions
– Essential general legal requirements are functionally covered
– Country specific functions required by most customers using
the SAP software
 Country specific customizing
– Chart of accounts, balance sheet, tax calculation procedures,
doc types, …
– Country installation program for pre-configured settings
 Country specific documentation
 Country specific IMG (Implementation Guide)
activities and functions

The SAP R/3 Country Solution for Brazil contains the
following specific elements:
 Development to support Brazil-specific requirements
around tax calculation and reporting, additionally
required documents and document flow (“Nota
Fiscal”), and specific accounting rules (e.g. product
costing)
 Brazil-specific configuration elements to support the
above development, e.g. Brazil-specific hierarchy
elements (“Branch” or “Business Place”)

SAP R/3 Country Solution for Brazil comes with:
 Data Dictionary Objects:
– 147 new Database tables containing a total of 1013 fields
– 93 new Structures containing a total of 1718 fields
– 56 new Table Views, containing a total of 366 fields
– 577 new Data elements (new field definitions)
– 150 new Domains
 Development Objects:
– 71 new ABAP Programs
– 22 new Include Programs
– 29 new Function Groups
– 202 new Function Modules
– 16 new Transactions (but no menu structure)
– 42 new Screens
*Ref. SAP Release 4.7

Brazil-specific elements in SAP R/3

Brazil-specific elements in SAP R/3
 Hierarchy elements
 Master data requirements
– Material Master
– Customer Master
– Vendor Master
 Nota Fiscal & Taxes
 Bolt-on’s

Hierarchy – Business place or Branch
 The “Filial” (branch or business
place)
– Tax reporting
– Nota Fiscal reporting
 Legally represents each physical
address of the company in which
there will take place any tax related
operations
 Important tax data is maintained at
this level
 Nota Fiscal and Legal books are
issued at this level
 A Branch can consist of more than
one site (plant, office, warehouse,
etc.)
Plant
Storage
Location
Company
Plant
1:n
“Filial”

Branch 1 Branch 2
Lubrizol Brazil
Hierarchy – Company Code
 Lubrizol Brazil could be structured as only one Company
Code.
 Reports could be taken at Company Code level, for
Legal and Business requirements.
Company Code

Organizational Structure – Branch (“Filial”)
 CNPJ company (8 digits)
– Cadastro Nacional Pessoa Juridica - Corporate taxpayer's ID; Registry of Legal
Entities. The corporate taxpayer’s ID has to be entered in the customer/vendor
master record if the customer/vendor is a corporation.
 CNPJ Branch (4digits)
– Part of the CNPJ number which indicates the branch number
Example:
2 1 6 3 9 3 7 2 / 0 0 0 1 - 3 2
CNPJ Company CNPJ Branch

Master Data

Master Data Records – Material
 NCM Code – Brazilian naming of goods (compare Commodity
Code). The taxes due percentage rate depends on a product
classification in this table
 CFOP Category – the type of operation
 Material Destination – Industrialization, Resale, Consumption or
Asset
 Material Origin
– Domestic
– Imported
 Produced in-house or not
 Taxes Classification
– ICMS / IPI
– ISS

Material Master Screen

Material CFOP
Category
NBM Code (Control
Code)

Material Origin
Produced in-house
Material Usage

Master Data Records – Vendor
 Natural person or Legal entity indicator
 Legal Information
– Tax code 1: CNPJ number (identification for legal entity) or
– Tax code 2: CPF number (identification for sole proprietor)
– Sole Proprietor (must be set when CPF number is informed)
– Tax code 3: “Inscrição Estadual” (regional tax code – ‘state inscription’)
– Tax code 4: “Inscrição Municipal” (city tax code – ‘municipal inscription’)
– Jurisdiction code: “Domicílio Fiscal” ie. SP – São Paulo state
 Tax split
– The IPI tax value is split up for this vendor. 50% of the calculated IPI tax value
is posted as deductible input tax, 50% is deducted from the inventory posting
or posting to expense account.
 Withholding category indicator
– indicates that a tax will be withheld for payment. ie. IRRF Income tax held at
the origin

Vendor Master Screen
Region
Jurisdiction
Code

Tax code 4
Tax code 3
Tax code 1
Tax code 2
Sole Proprietor
Tax Split

Withholding tax
country
Withholding tax type
Withholding tax code
Liable

Master Data Records - Customer
 Sole proprietor or Legal entity indicator
 Legal Information
– Tax code 1: CNPJ number (identification for legal entity) or
– Tax code 2: CPF number (identification for sole proprietor)
– Tax code 3: “Inscrição Estadual” (regional tax code – ‘state inscription’)
– Tax code 4: “Inscrição Municipal” (city tax code – ‘municipal inscription’)
– Jurisdiction code: “Domicílio Fiscal” ex. SP – São Paulo state
 Legal text codes for ICMS and IPI laws
– texts are printed in the Nota Fiscal
 ICMS and IPI Tax-exempt indicator
 Tax Classification
– 0 : Not Taxable
– 1: Taxable
– 2: Free Trade Zone (Zona Franca de Manaus)
 CFOP Category

Customer Master Screen
Region
Jurisdiction
Code

Tax code 4
Tax code 3
Tax code 1
Tax code 2
IPI exempt
SubTrib Group
ICMS exempt
CFOP Category
ICMS Law
IPI Law

Tax Classification

Nota Fiscal, DANFE & Taxes
Nota Fiscal
DANFE

 Most important fiscal/tax document for
– Invoicing
– Accounting
– Goods movement
 Contains taxes and business requirements
 Pre-printed form and electronic validation (e-NF)
 Sequenced numbers by physical site (branch or business place)
 Audited by local Fiscal Authorities
 Source of key integration data
– Accounting information
– Tax information
Nota Fiscal
Concept

 Nota Fiscal Types
– Nota Fiscal Fatura (invoice)
– Nota Fiscal Complementar (complement)
– Nota Fiscal de Correção (correction)
– Nota Fiscal de Devolução (returns)
– Nota Fiscal de Transferência (transfers)
– Nota Fiscal de Simples Remessa (issue goods without billing)
– Nota Fiscal de Entrada (incoming - e.g. Importation)
– Nota Fiscal de Conhecimento de Transporte (freights)
– Nota Fiscal de Energia Elétrica (energy)
– Nota Fiscal de Telefonia (telecomunications)
 SAP Configuration
– Nota fiscal has internal and external number ranges
– Depends on Sales document type
– Depends on Movement type
Nota Fiscal
Concept

 Taxes are levied on the movement of goods, and not on the sale or
purchase as is customary in most other countries. So, taxes have to
be paid whenever goods are moved outside of the ‘premises’ (I.e.
outside the Branch or ‘Filial’), regardless of whether a sale or
purchase has actually occurred or not.
 Use of tax jurisdiction codes (compare to US: state taxes and state
tax laws)
 Main ones affecting almost all goods movements:
– ICMS - Material Circulation tax
– IPI - Manufacturing tax
– PIS - Social Integration
– COFINS - Contribution for social funds
– ISS - Services tax
– IRRF - Withholding tax
– INSS - Withholding tax social purpose
Taxes
Concept

 IPI is a federal tax and depends on:
– Control code (in Brazil is used as NCM code)
– Material exception
 ICMS is a state tax and depends on:
– Goods movement
– State from (plant) / State to (ship-to) for outgoing
– State from (vendor) / State to (plant) for incoming
– Material exception
 PIS and COFINS:
– Could be customized using sales organization and country
Taxes
Concept

 IRRF is a tax related to natural person (IRPF) and legal entities
(IRPJ) and depends on:
– Vendor for incoming
 INSS is a tax related to natural person and depends on:
 ISS is a city tax and depends on:
– Material number for outgoing
Taxes
Concept

 Tax related transactions should be stored in Fiscal Books (“livros
fiscais”)
– Fiscal Books are more than simple reports.
– There are rules on how to register them
– Requirements for printing and archiving are needed
– Different industries (or even companies) require different reports
 SPED (mandatory in next years per industry)
Tax Reports
Concept

 The R/3 System can create a Nota Fiscal in four different ways:
– Integrated into MM Invoice Verification
– Integrated into MM Inventory Management
– Integrated into SD Billing
– Manually with the Nota Fiscal Writer
Brazil in SAP R/3
Nota Fiscal in SAP R/3

 Nota Fiscal Number Ranges
– The R/3 System stores Notas Fiscais with an internal Nota Fiscal
document number. This document number is a unique key assigned to
each Nota Fiscal.
– For outgoing Notas Fiscais, the external Nota Fiscal number is
assigned in the print program.
– Before you can create a Nota Fiscal, you must maintain the number
range for the Nota Fiscal document number in Customizing.
Brazil in SAP R/3
Nota Fiscal

 Integrated in MM Invoice Verification
– Standard goods receipt
– Freight (“conhecimento de transporte”)
– several tax conditions
 Integrated in MM Inventory Management Movements
– Plant to Plant transfers
– Subcontracting
– Returnable Transport Packaging
– Future Delivery
– Consignment
– Third Party Handling
Brazil in SAP R/3
Nota Fiscal Creation in SAP R/3

 Integrated in SD billing
– Standard Nota Fiscal print
– Cancellation
– Returns
– Special Cases
 Manually via Nota Fiscal Writer
– only when automatic generation is not allowed
– G/L accounting must be done manually
Brazil in SAP R/3
Nota Fiscal Creation in SAP R/3

Brazil in SAP R/3
Taxes – Automatic Calculation
 Automatic calculation of:
– IPI, ICMS, Complement of ICMS
– Substituição Tributária
– ISS (outgoing), INSS
– Withholding taxes (ISSF, IRRF, Funrural/FCPS)
 New Tax Codes must be defined
 Specific Calculation Procedure for FI/MM
 Specific Pricing Procedure for SD
 Determination of tax rates
 Specific GL accounts must be defined for Taxes
 Integrated to stock valuations in Invoice Verification

Brazil in SAP R/3
Withholding taxes – Automatic Calculation
 Automatic calculation and postings when vendor invoice is
created in SAP
 IRRF for companies or natural persons
 ISSF for natural persons
 Funrural / FCPS for purchase from farmers
 Withholding Tax types, Tax Codes and Tax formulas must be
customized in the IMG
 Specific GL accounts must be customized in the IMG
 Activation is necessary at Vendor Master Data and Company
Code level

Brazil in SAP R/3
Nota Fiscal Writer
 The Nota Fiscal Writer can be used to enter Notas Fiscais manually. It is
possible to enter all relevant Nota Fiscal data.
 The Nota Fiscal Writer should only be used if the Nota Fiscal cannot be
generated automatically via the integration in MM or SD.
 It can also be used to:
– Display Notas Fiscais which were automatically created by MM or SD
– Change Notas Fiscais which were automatically created by MM or SD
– Print Notas Fiscais which were automatically created by MM or SD
 No automatic updates in other R/3 modules are done by the Nota Fiscal Writer.
Therefore, it is absolutely necessary, for example, to post taxes and material
movements in FI/MM separately in addition to every Nota Fiscal created by the
Nota Fiscal Writer.
 This is also the case for canceled Notas Fiscais: Cancellation of the relevant
material document is equally necessary in an extra step.
 A reference from the Nota Fiscal to a respective source document (FI, MD, BI)
can be entered manually

Brazil in SAP R/3
Nota Fiscal Writer
 To create a Nota Fiscal via NFWriter, call the transaction code
J1B1N
 You must at a minimum enter the following data on the initial
screen:
– Nota Fiscal type
– Company code and branch
– Partner function and partner ID
– Indicator Incl. ICMS/ISS
– If you set this indicator, it is possible to enter the price including
ICMS tax.
 After you enter the relevant data, and save the Nota Fiscal, the
system automatically creates a print request for the Nota Fiscal
according to the rules defined for the Nota Fiscal form.

Nota Fiscal - Sales
Operation
Description
CFOP
Code
Outgoing or
Incoming
Nota Fiscal
CNPJ
State
Inscrip.
Nota
Fiscal
Number
ICMS item
rates
Observations
Tax related part of
the Nota Fiscal

Nota Fiscal - Symbolic Return
Operation
Description
CFOP
Code
Outgoing or
Incoming
Nota Fiscal
CNPJ
State
Inscr.
Nota
Fiscal
Number
ICMS and
IPI item
rates and
IPI amounts
ICMS and IPI
Texts and
observations
Tax related part of
the Nota Fiscal
NCM
Code
Observation and
Special Rule
description

Brazil in SAP R/3
Process Integration SD

* Documents Type ORB specific for Brazil
Process Integration
Standard Sales Order Process
Accounting
Movement
Sales
Order
Accounts
Receivable
Nota Fiscal
Vendor
Delivery
Billing
Sales
Quotation
ORB LFB
F2B
N1
Accounting
Movement
Sales
Order
Accounts
Receivable
Nota Fiscal
Vendor
Delivery
Delivery
Billing
Sales
Quotation
ORB LFB
F2B
N1

Process Integration
Nota Fiscal in SD
 The system creates a Nota Fiscal for each billing document that is
generated, these being invoices in the below example.
 A Nota Fiscal is also generated from several other SD business
processes

PIS/COFINS calculation
Addt. Condition Record
Price without Tax (PR00)
+/- Discount/Surcharge wo. taxes
+ ICMS
+
Gross Price w.Tax (ICMI) *
(- Discount) *
+ Freight/ Assurance/ Enc.Finc .)
+
Calculus Base
IPI
ICMS
ICMS Subst. Trib.
ISS
Final Sales Price (NF)
+
PIS/COFINS Base
PIS
COFINS
IVA CODE
* Standard Pricing Procedure for Brazil: RVXBRA
Process Integration
Tax Calculation – Calculation Procedure
- IPI calculation:
NCM code / material
-ICMS
Region-from/ Region-to
-ISS
Tax for services

Process Integration
Nota Fiscal in SD - Activation
For SAP R/3 to create a Nota Fiscal item, you need to activate Nota
Fiscal creation on three different levels:
 Specify Nota Fiscal Category
– For each sales document type that is relevant to Nota Fiscal creation,
you need to assign a Nota Fiscal type, for example N1, Nota Fiscal
Outgoing..
 Maintain Billing Types
– For each billing type that is relevant to Nota Fiscal creation, you need
to set the NF rel. (Nota Fiscal Relevance) indicator, and specify
additional information such as the partner ID (for instance RE, bill-to
party) and the maximum number of lines of text permitted for the
header and line item.
 Maintain Billing Document Item Category
– For each combination of billing type and item category, you must
activate Nota Fiscal creation by setting the NF relevance indicator.

Process Integration
Nota Fiscal in SD – CFOP Determination
 CFOP Determination
– To enable automatic Nota Fiscal creation, the system needs to determine
the CFOP code during the sales process in Sales and Distribution (SD).
– CFOP is determined based on a complex table which variables are:
• direction of movement (incoming or outgoing)
• Destination CFOP category (same state, different state or different
country)
• material CFOP category (material, electricity, communication or
transportation)
• Nota Fiscal record type (normal, transfer shipment, returnable
packaging shipment, subcontracting, future delivery, consignment,
third party)
• Customer CFOP category (see exemptions)
– All fields are mandatory for automatic CFOP determination. In addition,
you can specify the following two fields.
• usage of material (resale, industrialization, consumption or asset)
• Branch CFOP category (industry, electric co., communication co.,
transport co., service co., consumer industry).

Process Integration
 CFOP Determination (contnd.)
– The system accesses the information mentioned before to automatically
determine the CFOP code in either the sales order or the delivery, and
then transfers it to the billing document and subsequently the Nota
Fiscal.
– If the system is unable to determine a code using the CFOP
determination table, you must enter one manually in the sales order or
delivery

Process Integration
 CFOP for Materials intended for Consumption
– As it is not allowed to sell materials intended for consumption, the
system does not automatically determine the CFOP for materials
which have ‘consumption’ as usage
 CFOP Determination via Customer master
– If a customer performs certain types of operations, e.g. an electric
company or agricultural customer, a customer CFOP category should
be entered in the customer master record (> General Data > Control
Data). The system then uses this information to determine the correct
CFOP code in the sales order
 CFOP Determination – Selection sequence:
– Read with specified customer category and specified material usage
– Read with blank customer category and specified material usage
– Read with specified customer category and blank material usage
– Read with blank customer category and blank material usage

Process Integration
Nota Fiscal in SD – CFOP Versions and Re-determination
 CFOP Versions
– As a result of legal changes, valid as of a certain date, or due to special
legislation in individual states within Brazil, the system enables you to
define CFOP versions and assign them to the CFOP codes as required
 CFOP Re-determination
– If a new version comes into effect, the system can re-determine the
CFOP code for pending documents in Sales and Distribution (SD).
– For example, you have already entered a sales order or delivery, a new
CFOP version becomes valid, and you later process billing: you need
the new CFOP version in the billing document
 Prerequisites
– New CFOP version must be relevant for redetermination, by setting the
'Redetermination.' (Automatic CFOP Redetermination Following
Version Change) indicator.

Process Integration
Nota Fiscal in SD – Text Determination
 Texts that are printed on the Nota Fiscal can be determined
automatically
 The following texts are applicable:
– Nota fiscal header texts based on the sales order type
• can be defined for each sales order type.
• For each text you can also define an argument (variable) that is to be
incorporated into the text, such as the order reason or the exchange
rate.
– Tax laws
• default IPI and ICMS tax law texts
– Manual texts
• The system can transfer any texts entered manually (header or item
level) from any document prior to creation of the Nota Fiscal (e.g. sales
order, delivery, or billing document)
– Dangerous goods texts
• number stored in the Hazardous material number field in the material
master
• additional dangerous goods text (3-4 lines)

Process Integration
Nota Fiscal in SD – Foreign Currency
 The Brazilian localization supports the creation of Sales orders in
foreign currency with integrated creation of Notas Fiscais in the
legally required local currency (BRL).
 The exchange rate used in billing for conversion from foreign to local
currency is not copied to a follow-up sales document. Therefore,
when the follow-up sales document is billed, the actual exchange rate
is used
 The exchange rate is available as an argument for the automatic
Nota Fiscal header texts.

Process Integration
Nota Fiscal in SD – Tax Determination
 IPI
– For sales operations IPI is calculated based on:
• NCM code identified at material master
• tax code defined at sales order
– it’s booked in accounting and Legal Books at billing document posting
– any billing document generated without accounting document posting
needs to be released to reflect IPI properly in Legal Books
– tax calculated only at manufactured goods
 ICMS
– For sales operations ICMS is calculated based on:
• Jurisdiction Code defined at customer master data (to define rate)
• Jurisdiction Code define at plant address data (to define rate)
• Tax code defined in sales order
– ICMS is booked in accounting and Legal Books at time of billing
document posting
– Any billing document generated without accounting document posting
needs to be released to reflect ICMS total properly in Legal Books
– ICMS tax is calculated based on goods movement and services (e.g.
freight)

Process Integration
Nota Fiscal in SD – Nota Fiscal Split
 In Brazil, companies must print and report Notas Fiscais on the
business place (Branch/Filial) level.
 In most cases (only those companies possessing a special permit
are exempt from this requirement), a Nota Fiscal split is required by
law when you print Notas Fiscais.
 This means that if the length of the Nota Fiscal exceeds one page,
the business place must issue as many Notas Fiscais as pages are
required.
 The system enables this by means of a Nota Fiscal split.
 It’s legally allowed to print multi-page Notas Fiscais (1 NF with
multiple pages)
DANFE?

Process Integration
Nota Fiscal in SD – Batch Management
 The localized fields in the accounting part of the material
should have the same content for all batches of the material.
 When the batches are identified in the shipping process, they
are summarized into one line on the Nota Fiscal and it is,
therefore, not possible to differentiate the prices of the
batches.
 In order to differentiate the prices, the batches must be
identified in the sales order.
 Batches identified in the sales order appear individually in the
Nota Fiscal.

 Nota Fiscal Complementar
 Credit Notes
 Others Corrections of Legal Documents
Document Types are specific for Brazil
Process Integration
Nota Fiscal in SD - Legal Discrepancies

* Document Type DRB is specific
for NF Complementar Process in
Brazil
Does not have
Delivery
Process Integration
Nota Fiscal in SD - Nota Fiscal Complementar
Complement
User
Legal Books
Nota Fiscal
Billing
Price Changes
Reference
Original NF(ORB)
DRB
L2B
Brazil
Accounting
Movement
Complement
User
Legal Books
Nota Fiscal
Billing
Price Changes
Reference
Original NF(ORB)
DRB
L2B
Brazil
Accounting
Movement
Does not have
Delivery

Process Integration
Nota Fiscal in SD - Credit Note
Credit Note
User
Legal Books does
not Change
Carta no DB de
Nota Fiscal
Billing
Price Changes
CRB
G2B
Does not have a Delivery
Accounting
Movement
Credit Note
User
Legal Books does
not Change
Carta no DB de
Nota Fiscal
Billing
Price Changes
CRB
G2B
Does not have a Delivery
Accounting
Movement
* Document Type CRB is
specific for Credit Note Process
in Brazil

 A return can only be created after the preceding Nota Fiscal Saída has
been printed.
 In contrast to the regular delivery, the returns delivery will be billed
directly and not by the returns delivery.
 There are two types of returns:
– Return with customer Nota Fiscal:
• The customer accepted the goods, then rejected them and sent them
back with a new Nota Fiscal. The sales document type REB is
appropriate for this situation. Enter the customer Nota Fiscal number
in the field Reference no. The customer Nota Fiscal is created in the
subsequent billing.
– Return with own Nota Fiscal:
• The customer has directly rejected our Nota Fiscal. The sender
receives his goods with his own Nota Fiscal saída. The sales
document type ROB is appropriate for this situation. A new Nota
Fiscal entrada is created in the subsequent billing
Document Types are specific for Brazil
Process Integration
Nota Fiscal in SD - Returns

Special Storage -
Return
* Document Type REB is
specific for Return in Brazil
Process Integration
Nota Fiscal in SD - Return with customer Nota Fiscal
Accounting
Movement
Goods Receipt by
Delivery Document
LRB
Credit Note
REB
Legal Book
(Receipt)
NF Record
(Vendor)
Special Storage -
Return
Storage
Devolution
Return
REB
Return Legal
Book
Accounting
Movement
Goods Receipt by
Delivery Document
LRB
Credit Note
REB
Credit Note
REB
Legal Book
(Receipt)
Legal Book
(Receipt)
NF Record
(Vendor)
Special Storage -
Return
Storage
Devolution
Return
REB
Return Legal
Book
Devolution
Return
REB
Return Legal
Book
* Document Type REB is
specific for Return in Brazil

• Transfer (between plants)
• Returnable Packing  ?
• Sales for future delivery  ?
• Consignment  N/A for Lubrizol Brazil
• Third Party Sales
• Free Trade Zone (ZFM)
• Export
• Others Deliveries
Process Integration
Nota Fiscal in SD - Other Special Cases

Process Integration
Nota Fiscal in SD - Export
Accounting
Movement
Standard Sales
Order
(Foreign Vendor)
Billing
Exportation NF
Delivery
ORB
LFB
F2B
N1
Legal Book
Nota Fiscal Complementar
por Variação cambial
L2B
N1
DXB
Complemento por
Variação Cambial
Goods Issue
Reference
Billing
Accounting
Movement
Standard Sales
Order
(Foreign Vendor)
Billing
Exportation NF
Delivery
Delivery
ORB
LFB
F2B
N1
Legal Book
Nota Fiscal Complementar
por Variação cambial
L2B
N1
DXB
Complemento por
Variação Cambial
Goods Issue
Reference
Billing

Brazil in SAP R/3
Process Integration MM

Process Integration
Nota Fiscal in MM
 Nota Fiscal Integration in MM Materials Management:
– Integration in Invoice Verification
– Integration in Inventory Management

Accounts Payable
Process Integration
Standard Purchasing Process
Accounting
Purchase
Requisition
User
Nota Fiscal
Vendor
MRP
Purchase
Order
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Quotation Outline
Agreement
Tax
Code
Tax
Code
Accounting
Purchase
Requisition
User
Nota Fiscal
Vendor
MRP
Purchase
Order
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Quotation Outline
Agreement
Tax
Code
Tax
Code

Process Integration
Nota Fiscal in MM
 All incoming Nota Fiscais Incoming (NF Entrada) need to be
registered upon receipt
 Any goods receipt needs to be registered within 24 hours after
registration of the Nota Fiscal
 Incoming Nota Fiscais are normally not printed only recorded
 Nota Fiscal Type
– The Nota Fiscal type is used to determine important attributes of a Nota
Fiscal
– The Nota Fiscal type is specific for a business situation and controls the
filing of documents
– A Nota Fiscal (NF) must have a specified NF type
– The type is either derived automatically or you specify it manually (Nota
Fiscal Writer and Logistics Invoice Verification)

Process Integration
Nota Fiscal in MM - NF Type Configuration
 Indicator Nota Fiscal entrada
– This indicator specifies whether a Nota Fiscal is of the type Nota Fiscal
Entrada (issued by the company itself).
 NF cancel type
– If a Nota Fiscal is canceled, the system creates a new Nota Fiscal of the
type Cancel. The system automatically assigns the appropriate NF cancel
type. Please note that a Nota Fiscal of type Cancel does not appear in any
type of legal reporting.
– A Nota Fiscal can only be canceled if the corresponding FI period is still
open. If the period is already closed, the system will issue an error message.
 Direction of movement
– A Nota Fiscal can be either an incoming or an outgoing Nota Fiscal. The NF
type specifies the direction of movement.
 Document type
– R/3 supports the document types Nota Fiscal, Complementar, Correction,
Conhecimento (single or multiple), Cancel, and Return.

Process Integration
Nota Fiscal in MM - NF Type Configuration (contnd.)
 Information for invoice verification
– NF partner function (main partner for Nota Fiscal header)
– NF partner type:
– Vendor
– Branch
– Customer
– NF record type (for special processes, for example, third-party deliveries,
future deliveries, consignments)
– Text key (determination of automatic texts – IPI return handling)
 Nota Fiscal form
– This form is needed to print the Nota Fiscal (see Nota Fiscal Form).
 Nota Fiscal model
– The Nota Fiscal model is used to create legal files.

Process Integration
Nota Fiscal in MM – Integration in INVOICE VERIFICATION
 Invoice Verification can
automatically create a Nota
Fiscal
 Standard SAP R/3 supports
two different types of invoice
verification. Only Logistics
Invoice Verification (LIV)
supports the integrated
creation of a Nota Fiscal
 Invoice Verification only
creates a Nota Fiscal if a
Nota Fiscal type is entered
in the invoice verification
header screen
– Only one Nota Fiscal is possible for one invoice/goods receipt.
Therefore, it is recommended to use the SAP R/3 function Goods
receipt based invoice verification.

Process Integration
– To make automatic Nota Fiscal creation possible, it is necessary to
determine the CFOP code
 Customizing
– Assign a CFOP code to a combination of the fields:
• Direction of movement
• Destination CFOP category
• Material CFOP category
• Item type
• Special case for CFOP determination
 Substituição tributária
 Normal
– All fields are mandatory for automatic CFOP determination. In addition,
you can specify the following two fields.
• Usage of the material
• Branch CFOP category

Process Integration
 CFOP is determined in invoice verification based on a complex table
which major variants are:
– direction of movement (incoming or outgoing)
– destination category (same state, different state or different country)
– material category (material, electricity, communication or transportation)
– Nota Fiscal record type (normal, transfer shipment, returnable
packaging shipment, subcontracting, future delivery, consignment, third
party)
– usage of material (resale, industrialization, consumption or asset)
– Branch CFOP category (industry, electric co., communication co.,
transport co., service co., consumer industry)
 If Invoice Verification cannot determine a CFOP via the table CFOP
determination, a CFOP must be entered manually. This must be
done during the Nota Fiscal dialog

Process Integration
 Required preparation in Purchase Order:
– Nota fiscal creation in Invoice Verification is only possible with a
reference to a purchase order (direct or indirect reference).
– R/3 requires special Brazilian fields when creating a purchase
order. The information is either derived from the material master
(in case of material items) or must be entered (in case of non-
material items).
– The required fields include:
• Material group to determine NBM code (only for nonmaterial
items)
• Material usage
• Material origin
• Indicator Produced in-house
• Material CFOP category
– Note: These fields are not relevant for service

Process Integration
 For incoming Notas Fiscais, it is necessary to enter the Nota Fiscal
 Number given by the issuer (vendor/supplier)
 There are two ways to enter the Nota Fiscal number:
– Specify the Nota Fiscal number in the Goods Receipt transaction in the field
Delivery note. In this case, the Nota Fiscal number can be used in Invoice
Verification to select the relevant data of the goods receipt. The field value is
transferred automatically to the Nota Fiscal number.
– Specify the Nota Fiscal number in Invoice Verification in the field Reference doc.
This is only necessary for Goods receipts without a Nota Fiscal number. It is
recommended to make the field mandatory for document types which require
input in the field Reference doc.
 Number formatting requirements (Legal) – to be reviewed e-NF
– The following input formats are allowed:
• xxxxxx
• xxxxxx-sss
• xxxxxx-Suu
xxxxxx  Nota fiscal number
sss  Series (without subseries)
S  Series (letter between A and Z)
uu  Subseries

Process Integration
 Tax calculation and posting
– ICMS, IPI and withholding taxes are calculated and booked to
G/L taxes accounts and Legal Books
 IPI
– For purchases operations IPI is calculated based on:
• tax code defined at purchase order
– IPI is booked in accounting and Legal Books at time of invoice
verification posting
– IPI tax is calculated only in case of manufactured goods

Process Integration
 ICMS
– For purchases ICMS is calculated based on:
• Jurisdiction Code defined at vendor master data (to define rate)
– ICMS is booked in accounting and Legal Books at invoice verification
posting
– ICMS is calculated based on goods movement and services (e.g. freight)
 Withholding Tax
– Withholding tax field in Vendor Master identify if WT should be calculated
or not
– Withholding tax can be booked in two different moments:
– Posted during invoice verification / FI invoice posting or at time of Invoice
payment / Down Payment
– Services are classified by fiscal codes (e.g. code 1708, 3205).

Process Integration
 The Nota Fiscal Dialog in Invoice Verification, allows change of the following
Nota Fiscal values:
– Tax law ICMS, Tax law IPI, CFOP code, Tax base amount, excluded base amount,
and other base amount, Tax rate, Tax value, Discount, Insurance, Other expenses,
Observation field (used for instance to refer to external documents), Item texts
 You cannot change values for price, freight and total, because price is
calculated from value and quantity and freight and total are derived from the
invoice. Changing these values is only possible via the invoice verification
screen.
 All changes at Nota Fiscal level are lost if you subsequently change the
invoice data in Invoice Verification after changing Nota Fiscal data. The
system raises a warning when doing so.
 Changes are only possible during the invoice verification dialog. You can not
use the Nota Fiscal Writer (Tx J1B2) to change Notas Fiscais created by
invoice verification, except for the Observation field.
 If the original MM document has already been canceled, you can cancel the
Nota Fiscal that goes with it using the Nota Fiscal Writer

Process Integration
Nota Fiscal in MM –Integration in INVOICE VERIFICATION
 Specifically for changes to Nota Fiscals created via MM-LIV:
– You cannot change the values for price, freight, or total on the Nota
Fiscal screen – since the system calculates the price based on the
value and quantity, and it derives the freight and total from the
invoice. You can, however, change these values on the invoice
verification screen.
– Any changes you make on the Nota Fiscal level will be lost if you
change them subsequently on the invoice level.

Process Integration
Nota Fiscal in MM – Integration in INVENTORY MANAGEMENT
 Goods Movement transactions can automatically create Notas
Fiscais.
 This is required for Nota Fiscal relevant movements that are not
entered in Invoice Verification (MM) or Billing (SD)
 For every material document, only one Nota Fiscal can be generated.
 The Nota Fiscal is automatically created by the Goods Movement
transaction, if the movement type is marked NF Relevant
Goods Movement
Material Document
Nota Fiscal
1:1

Process Integration
 Nota Fiscal creation is activated through the customizing table Nota Fiscal
item relevance and type determination by movement type
Attachment:
Comparison of Brazil-specific movement
types versus standard SAP R/3

Process Integration
– In the case of goods receipt, the R/3 System determines the CFOP in
the same way as in Invoice Verification
– In the case of goods issue, the R/3 System determines the CFOP in
the same way as in Billing
 Nota Fiscal Number
– For incoming Notas Fiscais, it is necessary to enter the Nota Fiscal
number given by the issuer
– Enter the Nota Fiscal number in the field Material slip
– Formatting requirements identical to Invoice Verification
 Reference Nota Fiscal Number for Returns
– In case of returns, it is necessary to specify the reference Nota Fiscal
number. Enter the reference Nota Fiscal number in the field Doc.
header text.
 Purchase order print layout
– Standard layout does not include taxes
– SAP Script development is necessary

Process Integration
 Taxes in Inventory Management
– In certain cases taxes are due when moving goods in inventory
management:
• Plant to Plant Transfer with Taxes
• Future Delivery
• Valuation of Vendor Stock (Consignment, Subcontracting)
– Inventory management can calculate and post taxes in the
accounting document.
– In order to have the system perform tax calculation, a tax code
must be entered in each material document (line) item

Process Integration
 Taxes in Inventory Management (contnd.)
– Several tax codes must be defined to support Brazilian tax
requirements and fiscal operations.
– These configurations include tax calculation and automatic posting
to G/L tax accounts and Legal Books
– Some tax code examples for inbound movements:
• C0 Inp. Consumption: No tax
• C1 Inp. Consumption: ICMS + CompICMS only
• C2 Inp. Consumption: ICMS + CompICMS + S.T.
• C3 Inp. Consumption: ICMS + CompICMS + IPI
• C4 Inp. Consumption: ICMS + CompICMS + S.T. + IPI
• I0 Inp. Industrialization: No tax
• I1 Inp. Industrialization: ICMS only
• I2 Inp. Industrialization: ICMS + Sub.Trib.
• I3 Inp. Industrialization: ICMS + IPI
• Etc.

Process Integration
 The Nota Fiscal dialog integrated in inventory management allows
changes for the following fields.
– Tax law ICMS
– Tax law IPI
– CFOP code
– Tax base amount, excluded base amount, and other base amount
– Tax rate
– Tax value
 Please note that all these fields can be in principle be determined
automatically

Process Integration
MM - Special Cases
 Returns to vendors
 Stock transfers between plants of the same company code
 Subcontracting
 Consignment / Valuation of Vendor stock
 Future deliveries
 Imports
 Returnable transport packaging
 Third party handling / triangle setup customer
 Freight - Conhecimento de transporte
 Stock in third party warehouse
 Inventory write-offs
 Nota Fiscal for Telephone, Electrical Energy and Telecomunications
 Receiving of Notas fiscais complementares and correction letters
 Other receipts not based in Purchase orders (borrowing, free charge, donation,
return of repair, etc)
 Scrapping

Process Integration
Standard Purchasing Process
Accounting
Purchase
Requisition
User
Accounts Payable
Nota Fiscal
Vendor
MRP
Purchase
Order
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Quotation Outline
Agreement
Tax
Code
Tax
Code
Accounting
Purchase
Requisition
User
Accounts Payable
Nota Fiscal
Vendor
MRP
Purchase
Order
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Quotation Outline
Agreement
Tax
Code
Tax
Code

Process Integration
Special Cases – Returns to Vendor
Accounting
Credit Note / Nota
Fiscal
User
Accounts payable
Vendor
Goods issue
Fiscal books
Reference to PO
Accounting
Credit Note / Nota
Fiscal
User
Accounts payable
Vendor
Goods issue
Fiscal books
Reference to PO

Process Integration
Special Cases – Two-Step Stock Transfer
Accounting
Nota Fiscal
Accounting
(Taxes only)
Nota Fiscal
Accounting
Nota Fiscal
Fiscal Books
Tax
Code
Plant 1
Goods Issue
Plant 2
Goods Receipt
Tax
Code
Accounting
(Taxes only)
Nota Fiscal
Fiscal Books
Accounting
Nota Fiscal
Fiscal Books
Tax
Code
Plant 1
Goods Issue
Plant 2
Goods Receipt
Tax
Code
Accounting
(Taxes only)
Nota Fiscal
Fiscal Books

Process Integration
Special Cases – Two-Step Stock Transfer
 A plant to plant transfer is an important example for a Nota Fiscal
relevant inventory management business process involving two NF
relevant movement types:
– Movement type 833: Goods issue from issuing plant.
 Enter tax code A0, A1, A3 or B0 at item level.
– Movement type 835: Goods receipt at receiving plant.
 Enter the Nota Fiscal number as delivery note and the corresponding
tax code I0, I1, I3 or C0 at item level The net item value, which should be
printed on the Nota Fiscal, of the sending plant is defaulted.
 Prerequisites:
– Both a vendor master and a customer master must be defined and
assigned to the plants that use above movements.
– Account assignments for process GBB and offset TRA

Process Integration
Special Cases – Stock Transfer with Transfer Order
Accounting
Nota Fiscal
Purchase
Order
User
Tax
Code
Fiscal Books
Tax
Code
Goods Issue
Plant 1 Plant 2
Goods Receipt
Tax
Code
Nota Fiscal
Fiscal Books
MM
MM SD
SD
Purchase
Order
User
Tax
Code
Fiscal Books
Tax
Code
Goods Issue
Plant 1 Plant 2
Goods Receipt
Tax
Code
Nota Fiscal
Fiscal Books
MM
MM SD
SD

Process Integration
Special Cases – Stock Transfer with Transfer Order
 To use internal stock transfers from plant to plant, 2 new movement
types have been created to post a stock transfer using MRP:
– Movement type 862 for goods issue
– Movement type 861 for good receipt
 To post a stock transfer using MRP:
– Create a stock transfer order in the receiving plant in MM (ME21N)
– Generate a delivery document in SD (i.e.Transaction VL10B)
– Perform picking, packing, and posting of a goods issue in SD
(Transaction VL02N)
– Print the outgoing Nota Fiscal (Transaction J1B3N)
– Post a goods receipt in MM (Transaction MIGO), for example using
movement type 861

Process Integration
Special Cases – Subcontracting
Accounting
Purchase
Order
User
Accounts Payable
Nota Fiscal
(Faturamento
de Materiais +
Retorno
Simbólico de
Componentes)
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Goods Issue
Nota Fiscal de
Simples
Remessa
(Componentes)
Accounting
Purchase
Order
User
Accounts Payable
Nota Fiscal
(Faturamento
de Materiais +
Retorno
Simbólico de
Componentes)
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Tax
Code
Goods Issue
Nota Fiscal de
Simples
Remessa
(Componentes)

Process Integration
Special Cases – Future Delivery
Accounting
Purchase
Order
User
Accounts Payable
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Nota Fiscal
Tax
Code
Accounting
Purchase
Order
User
Accounts Payable
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Nota Fiscal
Tax
Code

Purchase
Order
Process Integration
Special Cases – Imports
Accounting
Purchase
Order
User
Accounts Payable
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Nota Fiscal
Tax
Code
Accounting
Purchase
Order
User
Accounts Payable
Vendor
MRP
Goods Receipt
Invoice
Verification
Fiscal Books
Nota Fiscal
Tax
Code

Brazil in SAP R/3
Process Integration FI/CO

Finance Specific Scenarios
 Accounts Receivable & Collections
 Accounts Payable and Payments
 Product Costing
 Asset Management
 Legal Books and Files Preparation

Accounts Receivable & Collections

Scenario : Accounts Receivable Collections
This scenario describes the activities flow regarding the execution of accounts
receivable collections with files generation and exchange with banks (Itaú and
Bradesco) and Interchange.
Define &
Maintain
Data
Forecast
Order
Handling
Purchasing
Planning Production
Shipping &
Logistics
Invoice &
Payment
Claims &
Feedback
Inquiry &
Quotation
Execute
Work
Inventory
Finance

 Duplicata
– An essential element of accounts receivable in Brazil is the concept of
“duplicata”. For each debit liability the vendor collects the expected money with
the active help of its house banks. For this purpose, information on the liability
must be passed to the respective bank. This information is called “duplicata”.
– Duplicatas can be generated and processed automatically (in local currency),
including duplicatas from installments and credit memos. Duplicatas are
generated regardless of whether the originating invoice was posted automatically
from the SD module or manually entered directly in FI module.
– The “duplicata” information is based on the related open items and is extended
through additional information such as the instruction key. The information
returned by the bank can be electronically processed.
– All duplicata information can be sent through the application of the standard
payment program to selected house banks via payment list (Bordero) or DME
(Arquivo Remessa).
– The information returned by the bank can be electronically processed (Arquivo
retorno). This process is called “cobrança escritural”.
– Interest on overdue invoices can be calculated and posted automatically.

 Customer Master Data
– Customer master maintenance follows standard procedures. However,
for Brazil, you must maintain the following fields:
• Interest calculation indicator
• This indicator is used to charge interest payment for overdue items.
• Individual payment
• This must be entered because a “duplicata” is created for each open
item.
 Fatura
– A company usually issues Notas Fiscais Faturas which double functions
as both Nota Fiscal and Invoice.
– However, few companies create separate Notas Fiscais and separate
invoices (Faturas), which is supported by SAP
– A Fatura can possibly be a summarization of all Notas Fiscais for that
customer for a certain period. This kind of Fatura printing is however not
supported in standard SAP or Country Solution

 Bill of Exchange Payment Request
– Duplicata creation is represented by a standard R/3 payment method,
namely the creation of a bill of exchange payment request. As for any
other R/3 payment method, specifications have to be customized
country and company code dependent.
– When running the payment program for the duplicata creation, one bill
of exchange payment request is created for each open item. This BOE
is only a statistical document in the context of the Brazilian localization.
It has two main function:
• It labels the related item as being processed, meaning it indicates
that the duplicata has been created. Thus, no second duplicata is
created for this specific item when running the payment program
again.
• It carries the information on the selected bank.

 Print Programs and Forms for Payment Transfer Media
– The following Brazilian-specific print program must be entered in
the country dependent customizing of all payment methods that
are used to create duplicatas. As part of localization, payment
methods A is already customizing this way:
• RFFOBR_A
This program prints a duplicata list or a DME (Data Medium
exchange/Arquivo Remessa) file containing all duplicata
information.
The following Brazilian-specific payment transfer media must
be customized per company code.
J_1B_DUPLICATA: Duplicata list

 Data Medium Exchange (Arquivo Remessa)
– Bank File Format
– Cobrança Itaú
– Cobrança Bradesco
– Febraban/Cnab
 Instruction Code
– The instruction code specifies further processing of the duplicata. Basic
instruction codes are part of the localization Brazil. However, if required,
additional instruction codes may be added though customizing.
• Instruction Code 1 = Codigo de ocorrencia
• Instruction Code 2/3 = Instruções de cobrança
– The instruction code can be entered into each individual item, when
creating a duplicata the entered instruction code is transported into the
duplicata. If there is no instruction code entry in the open item, instruction
code defaults (e.g. REMESSA) are set either through the customer master
or the respective house bank.

 SAP Query
– A report on issued duplicates in the form of a SAP Query is part of
the localization for Brazil. This specific SAP Query is called DU. It
is linked to the functional area / SAPQUERY/J1B1 and the user
group /SAPQUERY/XX.
– This report covers the legal requirements for the ´Registro de
Duplicatas a receber´ such as reporting due date, duplicata issue
date, gross amount, customer name/street and amount. The list is
sorted by due date. You can select via customer, company code,
due date, issue date and document number.

Customer
Bank / Interchange
Supplier
Register
Receivables
in SAP
Generate
file to
banks w/o
posting
Collections
Carry out
collection
routine
Generate
collections
file w/ client’s
payments
Integrate
collections file
w/ payment
postings
-Automatic file
generation
Print
”boleto”
Receive
”boleto”
Proceed
”boleto”
payment
Collections
Updated
-Automatic payment
confirmation and posting in
accounting
Sales
Operations

Customer
Bank / Interchange
Supplier
Register
Receivables
in SAP
Generate
file to
banks w/o
posting
Collections
Carry out
collection
routine
Integrate
collections file
w/ payment
postings
Receive
”boleto”
Proceed
”boleto”
payment
-Each bank has its own file
layout
-Configuration and extensive
testing involving bank’s folks
at its system environment for
testing is needed
-Development is required
-Each bank has its own file layout
Configuration and extensive testing
involving bank’s folks and testing
environment
- Sap script
development form
Sales
Operations
Print
”boleto”
Generate
collections
file w/ client’s
payments
Collections
Updated

Account Receivable - Specific Scenarios
Accounts posting
Accounts
Receivable
Nota Fiscal
Customer Boleto
Payment program
Duplicatas file
Bordero
Bank
Bank issues the BOLETO
Accounts posting
Accounts
Receivable
Nota Fiscal
Customer Boleto
Payment program
Duplicatas file
Bordero
Bank
Bank issues the BOLETO

Accounts posting
Accounts
Receivable
Nota Fiscal
Customer
Boleto
Payment program
Duplicatas file
Bordero
Lubrizol issues the BOLETO
Accounts posting
Accounts
Receivable
Nota Fiscal
Customer
Boleto
Payment program
Duplicatas file
Bordero
Lubrizol issues the BOLETO
Bank

Bank Return file
Import R/3
(Treasury)
Automatic posting
Posting
error log
Return file
Bank Return file
Import R/3
(Treasury)
Automatic posting
Posting
error log
Return file

Reminder of Key Points
 Complex payment program configuration for collections
 ABAP development is needed in order to generate files and “boleto”
form
 Extensive testing with banks folks involved since the beginning of
the project.
 High level of interaction with banks is needed
 Electronic/Manual Extracts

Accounts Payable and Payments

Scenario : Accounts Payable and Payments
This scenario describes the activities flow regarding documents registering in
Accounts Payable through the utilization of bar code reader device and also
payments execution with files generation and exchange with banks.
Define &
Maintain
Data
Forecast
Order
Handling
Purchasing
Planning Production
Shipping &
Logistics
Invoice &
Payment
Claims &
Feedback
Inquiry &
Quotation
Execute
Work
Inventory
Finance

Process Integration
Accounts Payable
 The localization Brazil supports Fatura creation and payments
in local currency via pre-numbered checks, Payment list
(Bordero), and DME files (Arquivo remessa).
 The system also supports the optional handling of received
Boletos
 A vendor invoice (Fatura) can be posted automatically from the
MM module or can be manually created directly in FI
 Localization Brazil supports the exchange of files between the
company and local banks, which are responsible for paying
vendor invoices (Faturas)
 Payments can be done manually or automatically by sending a
file to the house bank. This process is called “pagamento
escritural”

Process Integration
Accounts Payable
 Vendor Master Records
– From an A/P perspective for Brazil, you must maintain the
following fields in the vendor master:
• Partner bank type in order to enter the vendor’s bank
into the open item.
• Bank address
• When paying in general individually, use the indicator
Individual payment.
• For vendors that send Boletos, the maintenance of
payment terms with payment block.

Boleto Forms

Bank Transfer
 Bank Transfer:
– The following Brazilian-specific print program must be entered in
the country dependent customizing of all payment methods that
are used to create bank transfers. As part of localization,
payment methods U and N are already customizing this way:
• RFFOBR_U
This program prints a payment list (Bordero) or a DME (Data
Medium exchange/Arquivo Remessa) file containing all payment
information.
• The following Brazilian-specific payment transfer must be
customized per company code.
 J_1B_BORDERO: Payment list
 J_1B_DME: accompanying sheet

Bank File Formats
 Bank File Formats:
– Brazilian localization supports the following bank file formats for
DME:
SISPAG Itaú
PFEB Bradesco
FEBRABAN/CNAB

Payment Forms
The Brazilian localization supports all Brazilian-specific payment forms
summarized in the table below.
For each of the both payment forms 02 and 10, a respective payment method has to be defined
country dependent as a copy of the released payment method U (bank transfer) with a
corresponding entry (02 or 10, respectively) in the field key in code line.
For payments without boleto, that is, for payment forms 01, 02, 03 and 10, any entry in the field
Key in code line overwrites the automatic selection.
However, if the field barcode number is entered into the open item, the resulting Payment form is
30 or 31 pending on the above conditions and the field key in code line is of no relevance.
House bank and partner bank are identified by the first three digits of the entered barcode
number.

SPB - Brazilian Payment System
 SPB
– The law that controls the new Brazilian Payment System is Law 10.214,
March 27th of 2001.
– Payment systems is a set of rules, procedures, instruments and operating
systems integrated used to transfer funds from payer to receiver.
– The objective is to reduce the credit risk and liquidity. The payment
system will make transfers and payments between economic agencies
safer and efficient, with benefits that will be reflected in the companies and
people and in the perception outside of Brazil decreasing the risk for
Brazil.
– Nowadays customers transfer their resources using checks or DOCs. By
this way, the money is just available after the traditional clearing that lasts
at least one day.
– Starting on April, 22nd of 2002, the new Brazilian Payment System allows
the customers to transfer the money, in the same day, for payments and
other purposes in a safer way and it will not take so long as the tradition
clearing system.

 TED
– The new SPB offers a new transfer option from one bank to the
other named as Transferência Eletrônica Disponível – TED.
Through TED the amount will be credited in the bank account
and it will be available as soon as the bank receives the transfer
message.
– Transfer options:
• STR – huge amount interbanks
• Clearing / Payments – big / medium amount via electronic payments
• Compe – checks, DOCs below R$5.000,00 in retail

 Definitions :
– STR – Sistema de Transferência de Reservas
The Transfer of Funds System manages the funds transfer between financial
institutions (STR) in real time, managed by the Central Bank of Brazil. The system
will check the bank fund account balance and rejects the debits greater than the
bank account balance. The customer can transfer funds from his own bank account
to other bank using STR.
– COMPE - Compensação de cheques e outros Papéis
This system is responsible for check clearing and other papers, it is managed by
Banco do Brasil. The objective is to remove from Compe the critical payments or
high value payments, as well as other payments that can be done by STR.
– CIP – Câmara Interbancária de Pagamentos
The payment clearing is managed by the Banks for values higher than R$5.000,00
and the liquidation is done in the end of the day. The objective of Clearing House is
to liquidate payments in a faster way, secure and cheaper than traditional liquidation
system.

Bank / Interchange
Customer
Supplier
Generate
file to
banks w/
posting
Generate
”boleto”
Payments
Carry out
payment
routine
Generate
payment
confirmation
file
Integrate
confirmation
file
-Automatic file generation
-Automatic payment
confirmation of
payments
Purchase/
Goods
Mov.Op.
-Automatic document posting
without typing
Pass
”boleto”
onto bar
code reader
Register
Payable
in SAP

Bank / Interchange
Customer
Supplier
Pass
”boleto”
onto bar
code reader
Generate
file to
banks w/
posting
Generate
”boleto”
Carry out
payment
routine
Generate
payment
confirmation
file
-Each bank has its own
file layout
-Configuration and
extensive testing
involving bank’s folks at
its system environment
for testing is needed
-Each bank has its own file
layout (Itaú, Bradesco and
Interchange)
-Configuration and extensive
testing involving bank’s folks
and testing environment
-Acquire appropriate bar code device
-Configuration and extensive testing
Register
Payable
in SAP
Purchase/
Goods
Mov. Op.
Integrate
confirmation
file
Payments

Reminder of Key Points
 Bar code reader device utilization
 Complex payment program configuration
 Extensive testing with banks involved since the beginning of the
project
 High level of interaction with banks is needed
 Electronic/Manual Extracts

Process Integration
EDI (with Banks) and Financial Functionalities
 Setting up EDI with banks requires a lot of testing to get the sending
and receiving of files with each bank right, mainly because each
bank has a different file lay-out
 SAP does not calculate interest by “Compound Interest" method for
customers invoices overdue
 SPB (The new Brazilian Payment System)
 Financial documents supported, e.g. Boleto, Borderos, etc.

Process Integration
EDI (with Banks) and Financial Functionalities
Accounts Payable A/P
Electronic Bank Statement
EBS
Accounts Receivable A/R
SAP R/3
A/P File
BANK
A/P File
Sent A/P
file to Bank
Receive A/P
error file
from Bank
BANK
EBS File
SAP R/3
Receive EBS
from Bank
Load EBS in
SAP R/3
(Tx FF.5)
SAP R/3
A/R File
BANK
A/R File
Sent A/R file to Bank
(Bill of Exchange)
Return A/R (a):
Boleto
A/R File
Return A/R (b):
Postings
Load in
SAP R/3
(Tx FF.5)
Load in
SAP R/3
(Tx FF.5)
F110
F110

Product Costing

Process Integration
Controlling - Product Costing
 Real Cost Method is mandatory. The use and display of standard
costs in Legal Books is not acceptable from a legal perspective
 Since the solution is based on full absorption cost with every
production material being managed at Moving average price (MAP),
which is actually the legal requirement in Brazil regarding Cost
Accounting, the solution is compliant and can be used for
LUBRIZOL Brazil
 Actual cost can be determined on the end of period (month)
 Possible to collect actual productive cost center balances and
distribute them (proportionally) to the production cost
 Average prices are updated and specific G/L accounts are posted

Asset Management

Process Integration
AM Asset Management
 It’s important to mention that assets control in Brazil is treated
through SAP standard functionality however there is an specific topic
called CIAP. It addresses to the ICMS recovering of assets
purchased for utilization at productive process. It’s a legal
requirement represented by specific legal book and rules for its
calculation.
 AM module can be managed in multiple currencies.
 AM provides acquisitions, write-offs and depreciation calculations
 AM posts automatically monthly depreciation and gain or loss on
assets sales when it happens

Legal Books and Files Preparation

Scenario : Legal Books and Files Preparation
This scenario describes the activities necessaries to address Brazilian Legal and
Tax requirements through legal books and files preparation.
It’s important to mention that most of sales, purchases and goods movement
have tax impact in the books and files and based on these data repositories,
taxes are calculated to be paid.
There are three taxes levels: country, state and city levels.
Define &
Maintain
Data
Forecast
Order
Handling
Purchasing
Planning Production
Shipping &
Logistics
Invoice &
Payment
Claims &
Feedback
Inquiry &
Quotation
Execute
Work
Inventory
Finance

Process Integration
Legal Books and Legal Files
 Long list of legally required tax reports and files
 SAP R/3 provides a number of these reports, but
– Not all legal books and legal files are covered
– Legal books not available for every State (currently only SP Sao Paulo
supported)
– Not in required format (only core part of report, none of additionally required
legal book elements supported)
 Third-party software is available and strongly recommended (versus in-
house development)
 Third-party software does not completely eliminate the configuration
effort in SAP
 SPED is mandatory

Process Integration
Legal Books and Legal Files
 The Legal Books are in fact a number of registers that need to be
maintained related to the Nota Fiscal.
 Must be printed out in various frequencies (e.g. monthly / bi-weekly /
every 10 days), must kept on file, and must be presented to the
authorities in case of an audit.
 All entries in these registers are in principle derived from transactional
data (i.e. Nota Fiscais)
 Some Legal Books do not have to be printed out or retained in paper
format, but can be prepared on request and/or and when necessary
in case of an audit by the Brazilian Tax Authorities.

Customer
Authorities
Supplier
Register
”Nota Fiscal”
at tax tables
within SAP
Send
files as
required
Generate
Legal
Books
Send
”Nota Fiscal”
Send
”Nota Fiscal”
Generate
Legal
Files
Receive
and book
“Nota Fiscal”
Sales
Operations
Purchase /
Goods Mov.
Operations
Calculate
tax to
be paid
Display
books as
required
Accounting
books and
reports
Bolt-on
Prepare
”Guias de
Recolhim.”
Accounts
Payable
- Configuration of all fiscal variations
- Extensive testing of all fiscal variations
of sales and purchases operations
- Bolt-on
implementation in
parallel with SAP
- ABAP development of
Interface between SAP
and Bolt-on (e.g.
Mastersaf, Syncro,
Aspen-Sati)
-Legal files and Books
generation through
Bolt-on
- Manual workaround for
Fiscal and Accounting
issues not treated even by
Bolt-on

The Solution:
Tax configuration with high level of complexity:
 IPI
– for purchases operations IPI is calculated based on:
• Tax code defined at purchase order
• It’s booked in accounting and Legal Books at invoice verification posting
• Tax calculated only at manufactured goods
• Tax accounts by plant
– for sales operations IPI is calculated based on:
• Tax code defined at sales order
• It’s booked in accounting and Legal Books at billing document posting
• Necessity of releasing billing documents which accounting documents weren’t booked
• Tax calculated only at manufactured goods
 ICMS
– for purchases ICMS is calculated based on:
• Jurisdiction Code defined at vendor master data (to define rate)
• Tax code defined at purchase order
• It’s booked in accounting and Legal Books at invoice verification posting
• Tax calculated based on goods movement and services (e.g. freight)

The Solution:
– for sales ICMS is calculated based on:
• Jurisdiction Code defined at customer master data (to define rate)
• Tax calculated based on goods movement and services (e.g. freight)
 Withholding Tax (IRRF and ISS on services purchases)
– WT field in Vendor Master identify if WT should be calculated or not
– WT can be booked in two different moments:
• during invoice verification / FI invoice posting or
• Invoice payment / Down Payment
– Services are classified by fiscal codes (e.g. code 1708, 3205). Standard Sap report
by code is developed to reach this necessity.
 ISS
– for services sales ISS is calculated based on:
• ISS tax code defined at sales order

The Solution:
– Third-party software bolt-on for legal books below:
• Mod-1 Registro de Entradas (List of incoming documents)
• Mod-2 Registro de Saídas (List of outgoing documents)
• Mod-3 Controle de produção (Overview of production and inventory)
• Mod-7 Registro de Inventário (Physical of inventory overview)
• Mod-8 Registro de Apuração do IPI (Directory for calculating IPI tax)
• Mod-9 Registro de Apuração do ICMS (Directory for calculating ICMS tax)
• Listagem Operações Interestaduais (List of interestate goods movements)
• Livro Diário (with historical description)
• Livro Razão (with historical description)
• Razão Auxiliar de Fornecedores (Statement for Vendor accounts)
• Razão Auxiliar de Clientes (Statement for Customers accounts)
• Registro de Duplicatas a Receber (List of open items to receive)
• GIA Guia de Informação e Apuração (Tax payment form)

The Solution (Cont.):
– Third-party software bolt-on for legal files below:
• Arquivo Magnético Convênio ICMS no. 57/95 (file as per law ICMS)
• DIRF
• IN 86 (Master data, documents files and tables)
• LALUR (Taxable Income Control Register)
• DOAR (Source and Funds)
• Mutações do Patrimonio Liquido (Equity Moviment)
• Lucros ou Prejuízos Acumulados (Retained Earnings Demonstration)
• PIS (Employees Profit Participation Program) and COFINS (Tax for Social
Security Financing) calculation
• IR (Income Tax): Provision, normal calculation, and calculation with indirect
benefits
SPED replaced all reports and legal books into one single solution.

Bolt-ons

Bolt-ons
 Legal Books
 Export/ Import

Bolt-ons
 Objectives :
– Generate the Legal Books according to the Federal, State and City laws
– Calculate the amounts to be paid, issue the legal documents (“guias” or
forms) and generate electronic files, when applied
 Notes :
– SAP provides the Legal Books – based on São Paulo state only
– It is necessary to issue the other books / same books for other states
– Most clients decide to use specialized bolt-on systems to support these
legal requirements
– Even with these bolt-on systems it’s absolutely necessary to do all the
configurations in the SAP side
– Bolt-ons just get the information from SAP and put it into the specific
lay-outs, according to the current legislation
Legal Books

Bolt-ons
 Effort :
– Dependant on the fiscal requirements of the company
– Should start at the Realization phase
• Resources :
– Business input – tax resources
– Designers – tax resources
– Specialists – bolt-on specialists
• Options :
– Mastersaf
– Aspen-Sati (Procwork)
– Syncro
– . . .
Legal Books

 Objectives :
– Export Data Bases
– Control Export Orders and Shipments
– Processes Follow-Up
– Issue Documents
– Export Exchange Control
– Issue Reports
– Generate daily and monthly accounting postings
Export
Bolt-ons

 Objectives :
– Import documentation – from the Import Order to the issue of the
Receipt Fiscal Invoice
– Import Data Bases
– Issue Documents
– Follow-up reports
– Import exchange control
– Generate daily and monthly accounting postings
 Note :
– The physical receipt, as well as the fiscal and accounting receipt are
not included in the scope but may be executed in SAP
Import
Bolt-ons

 Effort :
– High
– Should start at the Realization phase
 Resources :
– Business input – import/export resources
– Designers – import/export resources
– Specialists – bolt-on specialists
 Options :
– Bergen
– Aspen – CE (Procwork)
– Bysoft
– Average
– . . .
Export / Import
Bolt-ons

SPED & NF-e

SPED
 Concept
Brazilian Federal project together with other state brazilian authorities such as
State Finance Secretary, Central Bank, CVM (SEC-like), SUSEP, etc., to
harmonize and standardize fiscal and financial information throughout different
states.
 3 key features
– NF-e : Nota Fiscal Eletrônica (Electronic Nota Fiscal)
– EFD : Escrituração Fiscal Digital (Electronic Fiscal Posting)
– ECD : Escrituração Contábil Digital (Electronic Financial Posting)
 Legislation SPED
– Decreto 6.022 de janeiro de 2007, specify the SPED
– Convênio ICMS 143/ 2006, specify the Electronic Fiscal Posting (EFD)
– Ato Cotepe 82/ 2006, specify the generation of EFD file

Electronic Nota Fiscal (NF-e)
DANFE: fiscal protocol to accompany the products
* DANFe - Documento Auxiliar da Nota Fiscal Eletrônica
XML
(Modelo 55)
+
=
DANFE*

Send
NF-e
SEFAZ
SEFAZ Ship
Ship-
-from
from
Ship
Ship-
-from
from Ship
Ship-
-to
to
SEFAZ
SEFAZ Ship
Ship-
-to
to
XML Receiving
and Validation SEFAZ “Ship-From”
sends NF-e to SEFAZ
“Ship-To”
SEFAZ
Authorizes NF-e
Yes
Goods issue with DANFE
No
XML Rejected
or
Authorization
Denied
Contingency
Cancelation
Correction
and resend
Yes
2
1
3
3
4
DANFE
“Security” Pre-
printed Form
5
6
&
& Federal Authority
Federal Authority
X
X
Send
NF-e
SEFAZ
SEFAZ Ship
Ship-
-from
from
SEFAZ
SEFAZ Ship
Ship-
-from
from
Ship
Ship-
-from
from Ship
Ship-
-to
to
SEFAZ
SEFAZ Ship
Ship-
-to
to
XML Receiving
and Validation SEFAZ “Ship-From”
sends NF-e to SEFAZ
“Ship-To”
SEFAZ
Authorizes NF-e
Yes
Goods issue with DANFE
No
XML Rejected
or
Authorization
Denied
Contingency
Cancelation
Correction
and resend
Yes
2
2
1
1
3
3
3
3
4
4
DANFE
“Security” Pre-
printed Form
5
5
6
6
&
& Federal Authority
Federal Authority
X
X

NF-e Process
STATE SECRETARY (SHIP-From->SHIP-To-> FEDERAL DEPT.)
LUBRIZOL BRAZIL (ISSUER)
Order Authorize
Process
Nota Fiscal
NFe-1
PROT
Processed Queue
PROT
REC
NFe-1
Receive Authorize
CUSTOMER
Goods Rec Inv Rec

THANK YOU for your participation!

Appendix
Brazilian Taxes Calculation

Process Integration
Tax Calculation
 Localization for Brazil supports the automatic
calculation of the following taxes:
– IPI
– ICMS
– Complement of ICMS
– Substituição Tributária
– ISS (outgoing)
– INSS
– Withholding taxes
– ISSF
– IRRF
– FUNRURAL/FCPS
 All taxes are dependent on one or more
parameters such as material, NBM code, ship-to
and ship-from location, etc.

 IPI Imposto Sobre Produtos Industrializados
– IPI is a federal tax applied when selling, transferring, etc. goods.
– The percentage rate and the base value of IPI depends on several
factors:
• Usage of the goods
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 taxes are seen as non-deductible. The
IPI amount is added to the value of the material and can not be recovered. If
a material is used for reselling, the IPI tax value is not deductible but added
to the inventory value.
• NBM code:
IPI is applied per product and calculated from the goods value including
ICMS. The rate depends on a product classification called NBM code. For
some products, IPI is calculated on a reduced base.
Process Integration
Tax Calculation – IPI

 Contnd.
– Material:
NBM dependent codes can be overwritten by specific material dependent
codes as exceptions.
– Customer:
Companies can be exempted from IPI. This is only relevant for SD. See the
tax law IPI in blue above.
– Vendor:
If the vendor is not an industry equivalent company, half of the IPI amount is
deducted from the inventory value and the other half of the IPI amount is
posted to deductible IPI. This is only relevant for MM.
Process Integration

Process Integration
 For purchase operations the IPI is derived from
the following parameters and tables:
– FI tax code:
The FI tax code carries the information to determine whether IPI must be calculated.
– Vendor master:
The indicator Not ind. equivalent controls how IPI is posted for vendors which are
not industry equivalent companies.
– IPI rate tables per NBM code and per material:
When calculating the tax, the system tries to first find a material dependent rate. If
no material dependent rate exists, the calculation uses the NBM-code dependent
rate. In both cases, IPI rates are defined date-dependent. You can define the fields
tax rate, tax base, indicator for Other Base, and tax law per material and per NBM
code.
 If no rate can be found in the table IPI rates, the
IPI tax rate is taken from Default rates

Process Integration
 For sales operations the IPI rate is derived from
the following parameters and tables in SD:
– SD tax codes:
The SD pricing procedure uses the indicator Calculate IPI of the SD tax code to
determine whether IPI must be calculated. SD tax codes are specified in the sales
order on line level.
– Customer master:
A customer can be exempted from IPI. Use the indicator IPI exempt for customers
who are not obligated to pay IPI.
– IPI rate tables per NBM code and per material:
When calculating the tax, the system tries to first find a material dependent rate. If
no material dependent rate exists, the calculation uses the NBM-code dependent
rate. In both cases, IPI rates are defined date-dependent. You can define the fields
tax rate, tax base, indicator for Other Base, and tax law per material and per NBM
code.
 If no rate can be found in the table IPI rates, the
IPI tax rate is taken from Default rates.

Process Integration
 IPI Tax Laws
– The IPI tax law is used for generating automatic Nota Fiscal texts and
for Legal Reporting.
– SAP R/3 can automatically determine the IPI tax law in MM and SD.
– Determination Rules in MM:
• The IPI tax law is determined from the tax code enhancement (see
Tax Code Enhancements). It can be overwritten by an entry in at
least one of the tables IPI rates (general) or IPI rates (exceptions).
– Determination Rules in SD:
• The access sequence for tax laws is
1. Sales item category only if tax code is entered
2. Customer master
3. Material (IPI general / IPI exceptions / ICMS exceptions)
4. Sales item category again without checking tax code
• A manual entry in the sales order is also possible.

Process Integration
Tax Calculation - ICMS
 ICMS Imposto s. Circulação de Mercadoria e
Serviços
– ICMS is a state tax applied when selling, transferring, etc. goods. The
percentage rate and the value base of ICMS depends on several factors
including:
• State of origin and state of destination of the goods
• Product codes
• Customer
• Usage of the goods

Process Integration
 Exemptions:
– Product codes
• Exemptions of ICMS for particular products are possible. Exemptions can
either be permanent or only valid until a certain date. Exemptions can be valid
only inside a state or for all states.
• Different/reduced rates of ICMS for particular products. 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 (e.g. 80% of the
goods value is taxed and 20% is not taxed). The reduction of the base can be
valid either permanently or only for a certain time period. Reduced bases are
only used within a state. Therefore, they do not depend on state of origin and
state of destination.
– Customer
• Some companies are not obligated to pay ICMS tax (e.g. some government
companies).

Process Integration
 Exemptions:
– Usage of the goods
• The base value for the calculation of ICMS depends on the usage of the goods.
If a customer buys goods for production or reselling, 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 or reselling, 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.

Process Integration
 In MM ICMS rates are derived from the following
parameters and tables:
– FI tax code
The FI tax code carries the information to determine whether ICMS is calculated.
– Vendor master
R/3 uses the tax jurisdiction of the vendor to determine the ship-from tax region
which is required to read the ICMS rate tables.
– Receiving plant
R/3 uses the tax jurisdiction of the receiving plant to determine the ship-to tax region
which is required to read the ICMS rate tables.
– ICMS general rates
General ICMS rates are defined date-dependent. Rates are maintained per ship-from
and ship-to tax region combination
– ICMS exceptions
General rates can be overwritten by the ICMS exceptions. Exceptions can be defined
per material for a certain time period
 If no rate can be found in the tables ICMS general

Process Integration
 In SD ICMS rates are derived from the following
parameters and tables:
– SD tax codes
The SD pricing procedure uses the indicator Calculate ICMS of the SD tax code to
determine whether ICMS is calculated. SD tax codes are specified in the sales order
on line level.
– Sending plant
R/3 uses the tax jurisdiction of the sending plant to determine the ship-from tax
region which is required to read the ICMS rate tables.
– Customer master
R/3 uses the tax jurisdiction of the customer to determine the ship-to tax region which
is required to read the ICMS rate tables. A customer can be exempted from ICMS by
using the indicator ‘ICMS exempt’.
General ICMS rates are defined date-dependent. Rates are maintained per ship-from
and ship-to tax region combination.
– ICMS exceptions

Process Integration
Tax Calculation – ICMS
 ICMS Tax Laws
– The ICMS tax law is used for generating automatic Nota Fiscal texts and
for legal reporting.
– SAP R/3 can automatically determine the ICMS tax law in MM and SD
– Determination Rules in MM:
 The ICMS tax law is determined from the tax code enhancement (see Tax Code
Enhancements). It can be overwritten by an entry in table ICMS (exceptions).
– Determination Rules in SD:
 The access sequence for tax laws is:
1. Sales item category only if tax code is entered
2. Customer master
3. Material (IPI general / IPI exceptions / ICMS exceptions)
4. Sales item category again without checking tax code
 A manual entry in the sales order is also possible.

Process Integration
Tax Calculation – ICMS Complementar
 ICMS Complementar
– 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 that is valid when
buying in the same state. Comp. ICMS has to be posted as a tax liability,
but it is not added to the product price.
– In addition to the normal calculation of the Complement of ICMS, the
following exceptions exist. A state can define that for a certain material
• the complement is not calculated and not paid
• a different calculation base (e.g. 80%) is used
– ICMS Complementar affects the FI posting only. The amount is not part
of the Nota Fiscal and is therefore not stored in the Nota Fiscal database.

Process Integration
Tax Calculation – ICMS Complementar
 Rate Determination
– The ICMS rates of the ship-from and ship-to tax regions are determined
identical to the determination as described under ICMS:
• Rate Determination MM, based on:
– FI tax code
– Vendor master
– Receiving plant
– ICMS exceptions
• Rate Determination SD, based on:
– SD tax codes
– Sending plant
– Customer master
– ICMS exceptions
– Exceptions can be defined in Customizing

Process Integration
Tax Calculation - ISS
 ISS Imposto Sobre Servicos
– ISS is a municipal tax on services.
– The tax rate is determined by the city of the supplier and the type of
service.
– Rate determination in SD
• 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.
– Rate determination in MM
• On the incoming side (MM), the ISS amount is not posted as an ISS credit but
is included in the service price.
• Therefore, no ISS calculation is necessary in MM.
• ISS is not stored in the Nota Fiscal database on the incoming side.
• On the incoming side, no ISS related reporting is necessary

• Withholding taxes
– Withholding Tax field in Vendor Master identify if WT should be
calculated or not
– Withholding Tax can be booked at two different moments:
• During invoice verification / FI invoice posting
or
• During Invoice payment / Down Payment
– Services are classified by fiscal codes (e.g. code 1708, 3205).
Process Integration
Tax Calculation – Withholding Taxes

LB_Brazil_localization_workshop.ppt

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