TAXBRJ or TAXBRA – The SAP Brazilian Tax Calculation Schema
Frequently many companies in Brazil are implementing SAP or doing roll outs on their current ERP migrating to SAP or even adding new companies to their existing SAP and etc.
There are so many details to take care that are more related to the business, if the existing process will work properly on SAP or how to handle something that company that is being rolling out is doing that the existing company on SAP does completely different.
There are also all the legal requirements already in progress such as NFe, SPED, Incoming NFe, Social SPED, FCI, Federal, State and Municipal obligations, CTe and etc.
Even with all the planning, some customers don’t think about the core of all the Brazilian Tax Calculation, the Tax Schema (TAXBRJ x TAXBRA).
Some companies doesn’t see the importance on updating their Tax Schema Calculation and they think that they will save money and time if they just don’t update to the TAXBRA and keep using TAXBRJ. This is a terrible mistake and I will tell you why: In 2005 SAP started introducing the usage of the TAXBRA recommending that new customers on new implementations use the TAXBRA instead implementing TAXBRJ and also, recommended customers start considering upgrade their tax schema.
There are several reasons why SAP recommend your company use TAXBRA: It is more robust, easy to handle and meet taxes requirements, designed to meet the MP135, ISS and WHT cumulative, but more important than that, SAP giver priority releasing standard solution to the law changes and new legal requirements released by the government frequently. Besides that, SAP will discontinue the support to the TAXBRJ sooner or later.
Soon companies will realize that saving costs and time wasn’t worth, since they will have to spend lot time adapting TAXBRJ to the new legal requirements that are not standard released by SAP. And it will be worse when the support is discontinued. Companies will have to handle taxes issues without counting on SAP support.
One other terrible mistake that companies do is not choosing the right resources for upgrading or implement TAXBRA, this happens more often with foreign countries, where they have a centralized support team that still thinks that the Tax Calculation Schema in Brazil is maintained by FICO team. This is easy to understand since Brazil is the only country in Americas where the taxes are maintained by SD and MM.
Upgrading or even implementing TAXBRA could take from 1 to 4 months usually; it depends on the size of the company, resources focused to the project, existing processes, number of different tax codes, number of pricings, taxes exceptions and etc.
Even though implementing TAXBRA is 80% on SD/MM, a perfect team for this job should consider: MM, SD, FI, CO, ABAP, BASIS and a Project Manager.
Tasks related to the TAXBRA are:
CBT activation, Configure Tax Codes, Tax Groups, Dynamic Exceptions, Tax Rates, Condition Types, Account Keys, Condition Records, Access Sequences, Condition Codes, Tax Jurisdiction, Screen Controls, Conditions Mappings, Tax Posting Strings, internal codes, Price conditions, TAXBRA/RVABRA pricing adjustments, MP135, ISS, WHT, all this maintained by MM and SD consultant, and it is always good to check CFOP, Jurisdiction Codes, Tax Laws, Tax Situations, and etc.
A FICO consultant must setup the Withholding taxes on payment (since the WHT on Invoice is maintained by MM) and must configure the taxes account determination (OB40) and the conditions relevant for CO-PA, CO-PC and etc.
The secret of success is always experienced consultants working with experienced key users from fiscal department. Tests and users acceptance tests must be done carefully and include all the different processes and situation current in use.
FI/CO/ABAP/BASIS and PM can be part time for a project like this while MM and SD must be full time assigned to this job.
Security must be checked since there are new conditions and accesses on J1BTAX that must be considered.
For general information about the SAP strategy on TAXBRA condition-based tax calculation for Brazil and SAP recommendations, refer to the note 1538088
TAXBRA additional information:
• FTXP is no longer used. Maintain existing tax codes or creating new tax codes must be done via J1BTAX only
• Conditions are activated via FV11/FV12 with amount 100%
• Maintaining J1BTAX tax tables or tax codes conditions the system generates automatically condition records for these data
• The generation of condition records occurs during maintenance of tables J_1BTX*
• Main notes: 664855, 727475, 747607, 916003, 947670
- Using the method of Tax Calculating via condition based technique (CBT), every time a new tax group is created, it must be added in a certain access sequence, automatically by the system through the transaction J1BTAX. The same should occur whenever changes are performed in the tax groups, or even it is deleted
Leandro is absolutely correct ! !
The task list may seem overwhelming, but it's also true that not every element needs to be considered. When you look at J1BTAX there are cases where the default choices are all you need. Don't give up before you start, but don't think you can take a shortcut.
For example do you need exceptions or are the standard IPI, ICMS etc. good enough? It depends on the complexity of your business and where you are shipping to/buying from (which state within Brazil, or what countries outside).
This is why you need at least one good experienced SD/MM consultant who can guide you in your choices and work with the business to get best results. And on the Finance side you need someone who's worked with taxes. Actually I'd recommend someone with good FI/CO/MM experience here.
In the early 2000's we did TAXBRJ without outside help, but it was not the best. We gringos (non-Brazilians) had no intuitive understanding of what we were implementing. Even with SAP's excellent guides (see notes above), there were issues. Make sure you spend time with the user group fully understanding all the business cases! If there are language issues, prioritize solving them!
When the time came for TAXBRA I was really fortunate to meet Leandro at the Dallas airport returning from a previous implementation. We did 2 implementations of TAXBRA together. It's is a real eye opener to do this with someone who really understands it all the way through.
Don't short change your project - hire an expert - go to Brazil and immerse yourself in the process. And always, always make sure you have good communication and teamwork setup. Well, hey, that's true for every SAP project. Right?
Thanks a million for this wonderful article. This is extremely helpful to get an insight into Brazil taxation end-to-end process. The only thing which I felt was missing on the tax reporting & tax return preparation. Does SAP provide any standard tax report (like GJVA - VAT report) showing invoice transactions with input & output tax codes and also allow to do automatic tax payable posting netting off input & output tax.
Any pointer or guidance would be highly appreciated
Thanks & Regards,