Read this if you want to implement an ERP solution compliant with the Brazilian Taxation System

1. Eduardo Negri de Farias
20th March 2013

2. This material was prepared as an orientation to
those who intend to implement a foreigner ERP
system in Brazil.
Any mentioned legal requirement refers to
updates up to December 2012.
Brazilian Taxation System Page No. 2

3. Before doing any action in the direction of implementing an foreigner
ERP solution in Brazil you must understand how is its taxation system
and specially how it works (or change frequently).
The taxation system is detail oriented and it is a real pain to
understand it and keep up with the updates.
Banking interfacing is also mentioned here, although it is not a real
problem to use the Brazilian Bank Interface protocol.
My piece of advice: hire local experts or interface your solution with a
Brazilian Taxation Software like Mastersaf, Synchro just to say two of
them.
Brazilian Taxation System Page No. 3

4.  Guided by the CTN Book (Código Tributário Nacional or
“National Taxation Code”)
Taxes are charged on
◦ Sales (T.O.S)
◦ Invoicing (T.O.I)
◦ Profit (T.O.P)
 Electronic Bookkeeping is under regulation of a set of legal
requirements called SPED
Source – If you have any Portuguese knowledge you can check
the full law in the URL indicated on the bottom of each
applicable slide
Brazilian Taxation System Page No. 4

5.  CTN - “Brazilian Taxation Guide”
• Governmental decree of October 1966 which
establishes tributes on
– International Trade – tributes on importation (II) and on
exportation (IE)
– Assets and Income – tributes on assets (ITR,IPVA,IPTU,
ITR, ITCD and ITBI) and on income (IR / IRPJ, CSLL )
– Production and Goods movement – tributes on production
(IPI, ISSQN, IOF) and on goods movement (ICMS)
– Tributes must be controlled as an account system (initial balance + tributes
from sourcing – tributes from invoicing)
– Negative balance  Tribute must be paid
– Positive balance  No tribute is paid; balance is used
in the next tribute calculation period
Source: http://www.planalto.gov.br/ccivil_03/leis/L5172.htm
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6.  Main taxes charged on raw material purchases:
– II – charged on material cost
– PIS – charged on material cost
– COFINS – charged on material cost
– ICMS – charged on material cost (for imports it is calculated on
material cost + II + importation expenses). It mainly varies
based on a combination of good type and buyer region.
– IPI – charged on material cost. It mainly varies
based on good classification.
Sources:
http://www.receita.fazenda.gov.br/legislacao/leis/2004/lei10865.htm
http://www.planalto.gov.br/ccivil_03/leis/L5172.htm
http://info.fazenda.sp.gov.br/NXT/gateway.dll?f=templates&fn=default.htm&vid=sefaz_tributaria:vtribut (RICMS/2000)
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7.  Main taxes charged on Invoices (goods and/or
services) :
– ICMS – embedded on product and service price. It mainly varies
based on a combination of good type and buyer region.
– IPI – charged on product price. It mainly varies based
on a combination of good type and buyer region.
– PIS – charged on product and service price
– COFINS – charged on product and service price
– ISS – embedded on service price (it applies only to
service with no goods supplied)
Sources:
http://www.receita.fazenda.gov.br/legislacao/leis/2004/lei10865.htm
http://www.planalto.gov.br/ccivil_03/leis/L5172.htm
http://info.fazenda.sp.gov.br/NXT/gateway.dll?f=templates&fn=default.htm&vid=sefaz_tributaria:vtrib
ut (RICMS/2000)
http://www.planalto.gov.br/ccivil_03/leis/LCP/Lcp116.htm
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8.  Main taxes on Profit according to the Brazilian
Taxation System
– CSLL – charged on net profit
– IRPJ – charged on net profit
Sources:
http://www.planalto.gov.br/ccivil_03/leis/L9430.htm
http://www.receita.fazenda.gov.br/legislacao/leis/2004/lei10865.htm
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9.  SPED - “Digital Bookkeeping Public System”
• Governmental decree of July 2007 which
obligates companies to send information to all
three Taxation and Finance Public Departments
electronically
– ECD – Digital Accountancy Bookkeeping (Livros Diário e
Razão)
– FCONT – Additional information about LALUR
bookkeeping in order to attend IFRS requirements
– EFD – Digital Fiscal Bookkeeping (ICMS and IPI)
– EFD Contribuições - Digital Fiscal Bookkeeping (PIS and
COFINS)
– NF-e – State Electronic Invoice
– NFS-e – County Electronic Invoice
Source: www1.receita.fazenda.gov.br
Page # 9

10.  NF-e - “Electronic Invoice for goods and services”
• NFS-e – “Electronic Invoice for services only”
• The main requirement is that all invoice operation
must be first registered in the Financial and
Taxation Department (State or County)
– The invoice is requested to the Financial and Taxation Department
– The Financial and Taxation Department creates an invoice and
return its authorization code to the requester
– The requester must store this information on its environment
– The requester prints this information on a predefined layout which
must be sent with the goods or services (DANFE)
Source:
www1.receita.fazenda.gov.br
www.prefeitura.sp.gov.br/cidade/secretarias/financas/legislacao/index.php?p=3168
www.fazenda.sp.gov.br/nfe/legislacao/legislacao_em_vigor.asp
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11.  DACON - “Report of Social Contributions”
• Governmental decree of January 2004 which
obligates companies to send information
about PIS and COFINS tributes to Federal
Taxation and Finance Department
electronically
– PIS and COFINS are charged on commercial
transactions
– PIS is charged on company total payroll
Source: http://www.receita.fazenda.gov.br/pessoajuridica/dacon/default.htm
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12.  SINTEGRA - “Integrated Information System about
interstate good movement”
• State Confederation decree of 1995 which
obligates companies to send information
about all sale and purchase transactions to
State Taxation and Finance Department
electronically
Source: http://www.sintegra.gov.br/
Page # 12

13.  eLALUR - “Calculation Report of taxes and
contributions charged on net profit ”
• Governmental decree of December 2009
which obligates companies to send
information about IRPJ and CSLL tributes
electronically to Federal Taxation and
Finance Department
This obligation starts on the Fiscal Year of 2013
Sources:
http://www1.receita.fazenda.gov.br/outros-projetos/e-lalur.htm
http://www1.receita.fazenda.gov.br/noticias/2012/marco/noticia-02032012.htm
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14.  The Brazilian Banking System adopts a protocol called
CNAB to exchange data between banks and
companies. It covers among others:
– Electronic Receiving Document – data
interchange between companies and banks in
order to companies receive money from its sales
– Electronic Payment - data interchange between companies
and banks in order to companies pay theirs bills
– Bank account ledger (list of all account operations)
– Tax Payment
• Every Receiving Document must have an ID called
IPTE code which its calculation follows a
predetermined rule (there is also a barcode ID that
must be calculated)
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15. ERP solutions cover a lot of functionalities and I
just listed those who interact with taxation and
bookkeeping (at least the most important ones).
On each module is tagged with the respective
taxation item described before.
Brazilian Taxation System Page No. 15

16. Customer Relationship Management
Project Management
Financial &
Sales Sales Production Discrete
Sourcing Invoicing Accountancy
Quotation Order Planning Mfg Mgt
CTN CTN CTN CTN CTN CTN CTN
T.O.S T.O.I T.O.P
SPED SPED SPED
NF-e DACON
NFS-e
SINTEGRA
eLALUR
Bank
Interface
Taxation Law Tax Calculation bookkeeping
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