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Hello and welcome to the E-Learning Highlights of SAP Country Version Brazil - Logistics and Financials.

Hello and welcome to the E-Learning Highlights of SAP Country Version Brazil - Logistics and Financials.

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After completing this lesson, you will be able to:  Discuss general topics about SAP in

After completing this lesson, you will be able to:

  • Discuss general topics about SAP in Brazil

  • Explain key Brazilian localization topics in SAP ERP

 First, we will give a brief overview of SAP in Brazil.  Next, we will
  • First, we will give a brief overview of SAP in Brazil.

  • Next, we will introduce some important localization topics with regard to logistics and financials processes. These topics include, for example, the nota fiscal, specific Brazilian processes in SAP ERP, taxes and tax calculation procedures, and financial and legal reporting.

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Let’s continue with SAP in Brazil . 4

Let’s continue with SAP in Brazil.

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 The Globalization Services team working on Brazilian topics comprises development and localization product management at
  • The Globalization Services team working on Brazilian topics comprises development and localization product management at several locations.

  • Roughly two-thirds of the developers working on Brazilian localization topics are located in SAP Labs in Sao Leopoldo, Brazil. The remaining developers are located mainly in Germany and India.

  • The development team is supported by 15 localization product managers located in São Paulo, Brazil, and Germany.

  • SAP continues to invest in Brazil. In fact the development team dedicated to Brazilian topics increased by 18% in 2011.

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Now, let’s come to Logistics, Financials, and HCM Highlights . 6

Now, let’s come to Logistics, Financials, and HCM Highlights.

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The following sections will give you an insight into specific Brazilian topics, including:  Nota fiscal

The following sections will give you an insight into specific Brazilian topics, including:

  • Nota fiscal

  • Brazilian processes in SAP ERP

  • Tax calculation

  • Financials and legal reporting

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 The local currency in Brazil is BRL (Brazilian real).  The fiscal year in Brazil
  • The local currency in Brazil is BRL (Brazilian real).

  • The fiscal year in Brazil is the same as the calendar year.

    • Tax reports have to be submitted to the respective federal, state, and municipal authorities. A number of local variations and layouts exist for each non-federal declaration.

  • Brazilian GAAP defines the general accounting practices and rules in Brazil. According to Brazilian GAAP, general ledger accounts in Brazil must use prefixed numbers. If a company uses a chart of accounts without prefixed numbers, they can extend it by adding the legal prefix so that it can be used in Brazil.

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 In Brazil, tax-paying companies must issue notas fiscais for almost all business processes. This includes
  • In Brazil, tax-paying companies must issue notas fiscais for almost all business processes. This includes processes involving business partners, companies belonging to the same group, and branches belonging to the same company.

  • In Brazil, each branch of one company (in Portuguese, called filial) is a juridical person. It is registered at one or more tax authorities and has tax registration numbers different from the ones of the company to which it belongs. Each branch sends and receives notas fiscais and must keep fiscal books and submit tax declarations.

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 The nota fiscal is the Brazilian invoice. It is required when moving goods from one
  • The nota fiscal is the Brazilian invoice. It is required when moving goods from one location to another, among different companies or branches of the same company. Additionally a nota fiscal is required also in transactions without goods movements, for example, when providing services or issuing credit memos. The nota fiscal contains much more information than the usual invoices required in most countries; it includes logistic, financial, and fiscal data.

  • The nota fiscal contains all tax information. It is the basis for submitting tax declarations.

  • On paper, the nota fiscal has specific printing requirements regarding the form and the sequential numbering.

  • In 2010, the electronic nota fiscal (NF-e) became mandatory for almost all companies.

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 This slide shows the electronic nota fiscal (NF-e) process.  The vendor receives a purchase
  • This slide shows the electronic nota fiscal (NF-e) process.

  • The vendor receives a purchase order, prepares the goods, and sends an electronic nota fiscal in XML format to the SEFAZ office in his or her region. The SEFAZ office performs some checks on the data and, if all data is correct, sends an authorization key and a receipt to the vendor.

  • Now the vendor can print the DANFE and ship it, with the goods, to the purchaser.

  • Once the purchaser receives the goods and the DANFE, the purchaser enters the data from the incoming nota fiscal in his or her system and sends this data to the SEFAZ. The SEFAZ cross-checks this data against the DANFE sent by the vendor.

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 A DANFE is a printed document issued together with the electronic nota fiscal . 
  • A DANFE is a printed document issued together with the electronic nota fiscal.

  • Even if a company issues electronic notas fiscais, a DANFE still needs to be printed.

  • The DANFE has to accompany all goods movements among companies or branches.

  • The DANFE, however, cannot take the place of the nota fiscal because the DANFE is not legally valid without the nota fiscal XML file

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 In the standard sales process, a nota fiscal is issued during the billing activities. 
  • In the standard sales process, a nota fiscal is issued during the billing activities.

  • In the standard purchasing process, a nota fiscal is issued at the time of goods receipt. It is also possible to have a nota fiscal at the time of invoice verification.

  • A nota fiscal is required also when transferring stock between two different branches of the same company.

  • In some cases, you must issue a nota fiscal without any reference to existing SAP ERP documents.

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 Brazilian legislation influences the business process by imposing a series of obligations with which companies
  • Brazilian legislation influences the business process by imposing a series of obligations with which companies must comply.

  • In fact, each business process is categorized by an official code called the CFOP code. This categorization has to be documented in the SAP ERP system and in the nota fiscal.

  • Some business processes in Brazil are very different from their international equivalents, such as the consignment process. For other processes, such as future delivery, there is no equivalent outside Brazil.

  • All Brazilian processes require nota fiscias.

  • Overall, Brazilian localization is very complex because it requires many customizing activities. Sometimes, modification of standard processes can have an impact on global templates.

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 In Brazil, there is no classical VAT; instead, there are several other taxes levied by
  • In Brazil, there is no classical VAT; instead, there are several other taxes levied by different tax authorities on federal, state, and municipal level.

  • Additionally, there are also a lot of contributions for social and other purposes and some withheld taxes, especially income taxes, which also have to paid to the government.

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 The IPI tax is a federal tax on industrialized products. The IPI amount is generally
  • The IPI tax is a federal tax on industrialized products. The IPI amount is generally not included in the tax base amount, but all other taxes are part of the IPI tax base amount.

  • This tax applies when selling products and it is due when the products leave the company.

  • The tax is usually levied as a percentage, but in some casessuch as beverages or tobaccoit is calculated as a fixed price per unit. In this case it is called IPI Pauta.

  • If the manufactured products are sold to final consumers, then the IPI amount is included in the IPI tax base amount.

  • Manufacturing companies can take a 50% IPI credit on purchase of materials to be used in production.

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 The ICMS is a state tax on goods movements and services. It is similar to
  • The ICMS is a state tax on goods movements and services. It is similar to a state VAT.

  • It is due when the goods leave the company.

  • The ICMS rate depends on the state of the seller and the state of the buyer. When buying goods from another state, the buyer has to apply the difference between the ICMS rate in the buyer’s own state and the ICMS rate in the other state to the local ICMS rate. This is similar to the EU acquisition tax.

  • When selling goods to a tax-free zone, the seller gets a 100% discount on the tax amount. When selling goods for consumption or assets, the ICMS is calculated on top of the IPI amount.

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 ICMS tax substitution applies when the customer is a non-tax-paying reseller. In this case, the
  • ICMS tax substitution applies when the customer is a non-tax-paying reseller. In this case, the vendor is in charge of calculating and paying the ICMS due from the customer.

  • The process works like this: The ICMS on the sale is calculated, and then the ICMS on the deemed resale price, including surcharge, is calculated. The difference between the two amounts is the ICMS with substitution.

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 ISS is a municipal service tax that applies to all services except the ones ruled
  • ISS is a municipal service tax that applies to all services except the ones ruled by state law, for example, telecommunication services.

  • ISS is usually collected by the service provider. In many cases, however, the service recipient must withhold the ISS. If the municipalities of both the service provider and the service recipient are in charge of collecting the ISS for a certain service, double taxation occurs.

  • The ISS rate depends on the type of service. Each municipality issues a list of services with applicable tax rates.

  • Services are either taxed by state law or by municipality law, but not both. ISS often has to be paid in combination with contributions like PIS and COFINS.

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 PIS, COFINS, and other taxes are collected by the government to fund social programs. 
  • PIS, COFINS, and other taxes are collected by the government to fund social programs.

  • It is possible to have a tax calculation per unit (Pauta) for such taxes. These contributions can be calculated as normal taxes; in some cases, the contributions can also be calculated as withholding taxes.

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 Withholding taxes are levied in Brazil in several scenarios and are the most complex in
  • Withholding taxes are levied in Brazil in several scenarios and are the most complex in the world. Withholding taxes can be due at the time of invoicing or at the time of payment, they depend on the type of business partner and on the nature of products sold or service provided.

  • Some taxes are always withheld, such as income tax (IR) and social security (INSS). In other cases, taxes are withheld only under certain circumstances, or they are collected by the vendor.

  • The calculation of withholding taxes can involve accumulation and thresholds.

  • Withholding taxes are reported in a federal tax report called DIRF. This contains information from the SAP logistics processes and human capital management (for Brazil).

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 As of 2010, large enterprises are required to present financial statements according to the IFRS
  • As of 2010, large enterprises are required to present financial statements according to the IFRS accounting principles. In parallel, they need to present financial statements according to the Brazilian GAAP. For small and medium enterprises, the transition to IFRS will take place in phases.

  • Brazil has no official chart of accounts, but has widely used common practices, especially with respect to treatment of tax postings

  • In Brazil, revenues are generally posted including taxes. The tax amount is then posted on the tax account and on an offsetting account, so as not to duplicate the taxes that are already included in the revenues.

  • Regarding revenue recognition, there is a discrepancy between the Brazilian GAAP, where revenues must be recognized at goods issue, and the IFRS principle, where revenues have to be recognized at proof of delivery.

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 Brazilian asset accounting is characterized by its own valuation and depreciation rules. All transactions involving
  • Brazilian asset accounting is characterized by its own valuation and depreciation rules. All transactions involving acquisition, sales, transfer, or leasing of assets require notas fiscais. This tax calculation is similar to the one for consumption goods.

  • Some taxes paid on asset acquisitionspecifically ICMS, PIS, and COFINScan be credited on a monthly basis over a period of four years. This means that the corresponding tax amounts have to be credited over 48 months, calculated from the day of the transaction.

  • All taxes paid on asset acquisition (ICMS, PIS, and COFINS) have to be reported in a special report called CIAP. SAP supports the CIAP report only in its simplest cases and cannot handle assets under construction or integration with the Investment Management application in SAP ERP.

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 Brazilian companies need to determine the real profit for income tax purposes. For this reason,
  • Brazilian companies need to determine the real profit for income tax purposes. For this reason, they need to apply actual costing.

  • Manufacturing companies are required to use the material ledger to roll up all differences between planned and actual costs to determine the value of work in process, inventory, and cost of goods sold. For this, use of the material ledger is mandatory in ERP.

  • Similarly, companies in the service industry must use wages and other HR information to valuate the actual cost of projects and services at period end.

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 In Brazil, checks and credit transfer are the most widely used payment instruments.  Credit
  • In Brazil, checks and credit transfer are the most widely used payment instruments.

  • Credit transfers are done through standard and real time fund transfers. Payment bills are also widely used.

  • Brazil has a modern clearing system with real-time credit transfer. However, the majority of payments done by private persons are still done by check. Payment cards are getting more common, while direct debit is less used.

  • Financing models are also common, where companies act as credit institutes for their customers.

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 Brazilian reporting comprises statutory and tax reports that have to be submitted to the municipal,
  • Brazilian reporting comprises statutory and tax reports that have to be submitted to the municipal, state, or federal authorities. Especially regarding tax reports, there are many local variations and layouts for each non-federal declaration, depending on the city or the state to which the report must be submitted.

  • There is a general trend to substitute paper based reports with electronic ones.

  • Moreover, there is a trend to harmonize local reports on a national level. However, experience shows that with each legal change, the complexity increases instead of decreases.

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 Some of the most common paper-based reports are listed here. These are accounting reports, like
  • Some of the most common paper-based reports are listed here. These are accounting reports, like the journal and the GL account statement.

  • Some federal tax reports, such as the declaration of withholding taxes, are not provided by SAP.

  • Local tax report forms at state and municipal level are called Modelos. These comprise, for example, a list of incoming and outgoing documents, an overview of production and inventory, summary reports for IPI and ICMS taxes, and so on.

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 Some years ago, the SPED initiative was started in Brazil by the central government. SPED
  • Some years ago, the SPED initiative was started in Brazil by the central government. SPED means Public System of Electronic Bookkeeping. Its goal is to harmonize the many reports required in Brazil and replace the old paper- based reports with electronic ones. As of now, the paper-based reports are still available.

  • The first SPED report to be developed was the SPED Contábil (or SPED ECD) report. The SPED ECD file contains accounting data that was, in the past, reported in several different forms. This includes balance sheet, income statement, journal, and account balances.

  • Another important SPED report is the EFD report, which contains data for tax purposes. It lists all notas fiscais for the reporting period, together with production, inventory, and goods movement information. It also contains some mechanisms to check the correctness of the reporting tax credit and liability.

  • The EFD PIS/COFINS report is used to submit information about the PIS and COFINS payments.

  • The FCONT report is used to report the differences in accounting between Brazilian GAAP and IFRS bookeeping.

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You should now be able to:  Discuss general topics about SAP in Brazil  Explain

You should now be able to:

  • Discuss general topics about SAP in Brazil

  • Explain key Brazilian localization topics for SAP ERP

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For more information on the topics discussed in this lesson, see the references listed here. 30

For more information on the topics discussed in this lesson, see the references listed here.

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Thank you for attending this E-Leaning session. 31

Thank you for attending this E-Leaning session.

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