Solution ID: Doc ID: 625577.

1 Date Last Revised: 12/29/2004

200782233

Title: Brazilian Localization Setup

Abstract: This paper will cover all the steps needed to setup Brazilian Localization.

Table of Contents

Overview
Activate Localization
Tax Code Revision (P7617B)
ICMS Tax Revision (P7608B)
IPI Tax Revision (P76B18)
Transaction Nature (P7615B)
Next Number – Nota Fiscal (P7600B)
Next Number – Fiscal Books (P7602B)
Brazilian P.O. Additional Information (P4310BR)
Brazilian S.O. Additional Information (P4210BR)
Item Master – Brazil (P4101BR)
Item Branch/Plant – Brazil (P76412B)
Address Book Additional Info – Brazil (P01012BR)
Nota Fiscal Receipts (P4312BR)

Overview
This paper will cover all the steps needed to set up Brazilian Localization. The system
must be setup to process tax information including IPI (Imposto Sobre Produtos
Industrializados), ICMS (Imposto Sobre Circulação de Mercadoria e Serviços), and
ICMS Substitution (Imposto Sobre Circulação de Mercadoria e Serviços) taxes.
Automatic Accounting Instructions (AAIs) must be set for Sales and Purchasing for IPI,
ICMS and ICMS Substitution, and other Brazilian taxes.

Set up for Brazilian taxes includes the following tasks off menu G76B31:

• Setting up Tax Codes

• Setting up ICMS Tax Rates
• Setting IPI Tax Rates
• Transaction Nature
• Next Number - Nota Fiscal
• Next Number - Fiscal Books

Back to Top
Activate Localization
Activate Brazilian Localization by going to Users Profile (P0092) off menu GH9011, add
BR in the Localization Country Code field.

Back to Top

Tax Code Revision (P7617B)

Set up Tax Codes to define the taxes that apply to an item. The tax codes determine the
ICMS and IPI taxes that apply to the item. When a Purchase or Sales Order for the item,
the Tax Code defaults from the Item Branch Regional Information - Brazil (F76412)
table. If the item doesn’t exist in the Item Branch it will default form the Item Master
Regional Information - Brazil (F76411) table.

From menu G76B41B select Tax Code Revision (P7617B), click on Add and populate
the fields Tax Code and Description also define the Tax Incidence.
Back to Top

ICMS Tax Revision (P7608B)

ICMS (Imposto Sobre Circulação e Mercadoria) is a State Tax that the government
charges on purchasing and sales transactions in Brazil. The tax rate varies from state to
state, and some products may be taxed at different rates. The price of the product always
includes ICMS tax, but the amount of this tax also appears on the Nota Fiscal. Current
ICMS must be setup and maintained for all of the states where business is done. The
system will calculate the ICMS tax rates for purchasing and sales transactions based on
the rates you set up on the ICMS tax rate table. Specific ICMS Tax Rate can also be
defined by item or mark up level, which is a code that is used in conjunction with
Address Book Category Code 30 (AC30). The system will look first at the most specific
one, which is the mark up level, and then if it doesn’t find anything it will look for an
item number, if it doesn’t find it will use the generic state-to-state tax. The mark up level
cannot be left blank, if it not used, populate it with an '*'.

From menu G76B41B select ICMS Tax Revision (P7608B) and click on Add:
To define the rates, click on ICMS Tax Revisions (P7608B) on the row exit. Populate all
the necessary fields according to business needs. NOTE: Tax Rates must be expressed as
a percentage and not as the decimal equivalent. For example, 17% is typed as 17.
ICMS Reduction – A factor that the system uses to reduce the amount of the taxable base
of a product.

Substitution Mark-up – A theoretical mark-up factor, defined by the state, that is used to
calculate the maximum price a retail seller can charge customers for a certain product.

Substitution Reduction – A factor that reduces the ICMS substitution Tax Amount.

Back to Top

IPI Tax Revision (P76B18)

IPI (Imposto Sobre Produtos Industrializados) is a federal tax that the government
charges at various rates on manufactured products. The tax is payable at the point of
production or importation. To calculate the IPI tax that is paid to the customers and
suppliers, setup Tax Rates and Reductions. IPI Tax Rates can be setup either by Fiscal
Classifications or by a default tax that will apply to all customers and suppliers.

From menu G76B41B select IPI Tax Revision (P76B18), click on Add and populate the
necessary fields according to business needs.
Back to Top

Transaction Nature (P7615B)

The Transaction Nature code (Natureza da Operação) is a legal code established by the
Brazilian government. In Brazil, the government requires companies to assign each
business transaction a Transaction Nature code for tax purposes. Tax identification is the
primary purpose of the code. Originally, the Transaction Nature code was a three-
character code with a two-character suffix. After January 01, 2002 the legislation
changed and the Transaction Nature changed from 3 to 5 digits, however in Update 4, the
5 digits can only be viewed in the Fiscal Books and not at the time the sales or purchasing
Nota Fiscal is entered. The 5 digits must be specified by each client according to their
business needs, the Transaction Nature Cross Reference (P76B2001) table must be
manually setup. When running the Nota Fiscal Conversion (R76B200A), the Transaction
Nature will be converted from three to five digits according to the Transaction Nature
Cross Reference table defined by client. The calculation for the Transaction Nature is
hard coded and it’s done by the system as it follows:

1st digit:
* If it is NF inbound/purchase, it will be:

1 - Transaction inside the state

2 - Transaction interstate
3 - Foreign transaction

* If it is NF outbound/sales it will be:

5 - Transaction inside the state

6 - Transaction Inter state
7 - Foreign transaction

2nd digit:

NOTE: This digit is calculated by the system, not setup anywhere; it will depend on the
type of transaction that is being done.

1 - Sales or Purchase
2 - Transfer item
3 - Return
7 - Sales/Purchase with tax substitute
9 - Other...
(Note: This number will never allow the system to calculate ICMS and IPI
recoverability or ICMS substitution and reduction)

3rd digit:

NOTE: Address Book Category Code 6 will define if the item was manufactured by the
company or purchased from another company.

1 - Product manufactured by the company

2 - Product purchased that belongs to a branch plant
3 - Product purchased from another supplier/company

From menu G76B41B select Transaction Nature (P7615B), and click Add, populate the
necessary fields according to business needs.
The Transaction Suffix is a two-character field that works in conjunction with the
Transaction Nature code to identify the complimentary implications of a type of a
transaction. For example, the suffix might indicate that a certain type of transaction is an
inventory change, or a transaction is eligible for a certain type of tax. Transaction Nature
suffixes are set up using the Transaction Nature (P7615B) program.

Valid values are:

01 Bonus
02 Demo
03 Sample
Return
04
Merchandise
04 Back order
06 Donation

Examples of Transaction Nature codes with suffixes:

 Sales-in state,
511 02
Demo
Sales-import,
711 01
Bonus

Back to Top

Next Number – Nota Fiscal (P7600B)

This is where the next number that the system will automatically assign to each Nota
Fiscal is setup. A next number must be setup for all of the Document Types that will be
used and the same is set up based on the Fiscal Company.

Back to Top

Next Number – Fiscal Books (P7602B)

This is where the next number is setup that the system will automatically assign when
running the Fiscal Book programs. The Opening and Closing Statements for the report
type used can also be setup here. A number must be setup for all of the report types used
by a company.

The Print Date field (below) will be populated with the last date that the program was
run.
All the other programs in the menu are user defined and must be setup to fit the business
needs. Menu G76B31 will have all the information that was set up and used to default to
the Sales and Purchase Orders.

Back to Top

Brazilian P.O. Additional Information (P4310BR)

This program will display the regional information for the Purchase Order that was
calculated based on the item and customer set up the values used are from the set up from
the previous menu. Information cannot be added here, just review.

To view the information from menu G76B31, highlight the line and click Select.
Taking the row exit to PO Header will show the Transaction Nature and Suffix.
Taking the row exit to PO Detail Revisions will show all of the other information that
defaulted for that particular transaction from the Item Branch/Additional Information and
the Address Book/Additional Information.
Processing Options for Brazilian P.O. Additional Information (P4310BR)

Use these processing options to specify which value Brazilian P.O. Additional
Information (P4310BR) will apply to the transaction if nothing is entered. Enter a value
for the Transaction Nature and Transaction Suffix that will be used in all of the Purchase
Orders entered, if not entered manually.
Back to Top

Brazilian S.O. Additional Information (P4210BR)

This program works exactly like Brazilian P.O. Additional Information (P4310BR) but it
has all the information from the sales transactions (see above).

Back to Top

Item Master – Brazil (P4101BR)

This program will only display (not add) the tag file information for a particular item. In
Brazil it is mandatory that companies maintain additional information for each item.
When additional information is entered for an item, the system creates a record for the
item in the Item Master Regional Information – Brazil (F76411) table.

From menu G76B31, select Item Master – Brazil, choose an item to view the record.
To add the additional information, go to the Item Master (P4101) off menu G4111
inquire on the item then take the Regional Information row exit, the system automatically
displays the form where a new inventory item record is entered.
Back to Top

Item Branch/Plant – Brazil (P76412B)

Use this program to access the additional information for the item, like the Item Master,
the information can only be viewed not added. To make any changes, go to the Item
Branch (P4102) off menu G4111 and take the Regional Information row exit. In Brazil,
companies can choose to override the Item Master information entered for specific
Lot/Locations, when entering a Purchase or Sales Order the system will search for the
item information first in the Item Branch/Plant and if it doesn’t find it there it will search
in the Item Master. When Additional Branch/Plant Information is entered for an item, the
system creates a record for the item in the Item Branch Regional Information – Brazil
(F76412) table.

From menu G76B31, select Item Branch/Plant – Brazil, choose an item to view the
record.
To add the additional information, go to the Item Branch/Plant (P4102) off menu G4111,
choose a Branch/Plant, take the Location Revisions row exit, highlight the location
desired then take the Regional Information row exit.
Back to Top

Address Book Additional Info – Brazil (P01012BR)

In this program, only set up the processing options to determine if the system will allow
values to be duplicated when entering new Address Book information.

Regional Information can be added or changed for a client by going to menu G01, select
Address Book (P01012), choose a client and take the row exit to Regional Information.
Back to Top

Nota Fiscal Receipts (P4312BR)

Here is where the defaults to create an Inbound Nota Fiscal can be setup. What is set up
in the Processing Options will default to the Nota Fiscal.
Back to Top