Brazilian taxes

Finance and Operations calculates Brazilian taxes based on the tax type that you specify for the sales tax code. You can set up and calculate sales taxes on sales, purchases, transfers between fiscal establishments, delivery of items to a third party, or receipt of items from a third party.

You can set up taxation codes for Imposto sobre Circulação de Mercadorias e Serviços (ICMS), Imposto sobre Produtos Industrializados (IPI), Program de Integracao Social (PIS), and Contribuição para Financiamento da Seguridade Social (COFINS) taxes. The taxation codes are used for fiscal reporting and generating federal electronic fiscal documents (NF-e). You can also set up taxation codes for other tax types. When you set up a taxation code for a tax type, you assign a fiscal value to indicate the type of treatment that applies to taxes, such as taxable, not taxable or exempt, or taxable without credit. When a taxation code is not set up for a tax type, you can set up the fiscal value by selecting the Without tax credit and Exempt options on the Sales tax groups and Item sales tax groups pages. Sales taxes are calculated and saved on the Posted sales tax page. You can specify a default taxation code for the sales tax code in the Taxation code field on the Sales tax codes page. You can also specify the taxation code for a sales tax code when you attach the sales tax code to the following:

  • A sales tax group and the sales tax code is exempt.
  • An item sales tax group.

When you create and post tax transactions from sales orders, purchase orders, free text invoices, or project invoice proposals, the taxes are calculated based on either the fiscal value of taxation codes that are selected in the Fiscal value field on the Taxation code page, or the fiscal value that is determined based on the Without tax credit and Exempt options on the Sales tax groups and Item sales tax groups pages. The tax base and tax amount are displayed on the Posted sales tax and Temporary sales tax transactions pages, as follows:

  • For transactions with taxation codes that have a 1. with credit/debit fiscal value, or item sales tax groups for which the Without tax credit option is not selected, the amount that the sales tax is calculated for is equal to the taxable base amount. Sales tax is calculated according to the tax rate and is updated in the Actual sales tax amount field.
  • For transactions with taxation codes that have a 2. without credit/debit (exempt or not taxable) fiscal value, or sales tax groups or item sales tax groups for which the Exempt option is selected, the exempt base amount is equal to the transaction value, and no tax amount is calculated.
  • For transactions with taxation codes that have a 3. without credit/debit (other) fiscal value, or item sales tax groups for which the Without tax credit option is selected, the other base amount is equal to the transaction value. The sales tax amount is calculated according to the tax rate and is updated in the Other tax amount field.

Brazilian tax types

The following of tax types are available in the sales tax code configuration.

  • IPI – Imposto sobre Produtos Industrializados (IPI)
  • PIS – Program de Integracao Social (PIS)
  • ICMS – Imposto sobre Circulação de Mercadorias e Serviços (ICMS)
  • COFINS – Contribuição para Financiamento da Seguridade Social (COFINS)
  • ISS – Imposto sobre Serviços (ISS)
  • IRRF – Imposto de Renda Retido na Fonte (IRRF)
  • INSS – Imposto Nacional de Seguridade Social (INSS).
  • Import tax
  • Other taxes
  • Retained INSS
  • CSLL – Contribuição Social sobre Lucro Líquido (CSLL)
  • ICMS-ST – ICMS tributary substitution (ICMS-ST). In addition to this, the user can specify the one of the following calculation methods:
    • Own operation, IPI, and markup
    • Own operation only
  • ICMS-DIF – ICMS differential (ICMS-DIF) . This tax type is used to calculate the ICMS differential tax amount under the following scenarios:
    • Fiscal document is issued to the final consumer located in another state.
    • Fiscal document is receipted from a different state. Applicable for fixed assets and use and consumption items.

Examples

For a base transaction amount of BRL 1,000.00 and a tax rate of 18 percent, Microsoft Dynamics 365 for Finance and Operations calculates the taxes as follows for the different fiscal values.

Fiscal value Amount origin Actual sales tax amount Exempt base amount Other base amount Other tax amount
1. with credit/debit BRL 1,000.00 BRL 180.00
2. without credit/debit (exempt or not taxable) BRL 1,000.00
3. without credit/debit (other) BRL 1,000.00 BRL 180.00

For a base transaction amount of BRL 1,000.00, tax rate of 18 percent, and tax reduction percentage of 40 percent, taxes are calculated as follows for the different fiscal values.

Fiscal value Amount origin Actual sales tax amount Exempt base amount Other base amount Other tax amount
1. with credit/debit BRL 600.00 BRL 108.00 BRL 400.00
2. without credit/debit (exempt or not taxable) BRL 1,000.00
3. without credit/debit (other) BRL 400.00 BRL 600.00 BRL 108.00

For sales transactions with taxation codes that have a 1. with credit/debit fiscal value, or item sales tax groups for which the Without tax credit option is not selected, the actual sales tax amount is posted to the main accounts for which Sales tax and Sales tax expense are selected in the Posting type field on the Accounts for automatic transactions page. For purchase transactions with taxation codes that have a 1. with credit/debit fiscal value, or item sales tax groups for which the Without tax credit option is not selected, the actual sales tax amount is posted to the main accounts for which Sales tax is selected in the Posting type field on the Accounts for automatic transactions page.

Additional resources