BR Test Cases - Taxes

1. Test Cases
Definitions

Tax Tariff code: Official code given by the legal authorities for a physical material/product. It is
commonly named ”NBM” or ”NCM” code in Brazil.

Tax type: In Brazil, the most important sales taxes on physical products are IPI and ICMS.
We will design
them as tax types. Please note that more than those 2 exist.

IPI: Federal Tax

ICMS: State Tax

Convênio 100: Name of a law that prescribes a calculation rule for ICMS. It applies to basic
goods.

1.1 Industrialization

Test case for industrialization

We will assume below that the customer purchasing the products will use them for
”industrialization”, i.e. for further manufacture. The calculation formulae are different for
”consumption” (i.e. sale to final customer) and will be covered by another test case.
Preparation:
Check that the setup of Brazilian taxes has been done (see CRM_BF_TAX_BR).
Create four products for industrialization (see below under Products).
Create Sales orders in CRM for each of the four products.
Follow up-process in R/3 Backend: Delivery, Billing, Nota Fiscal.
Check
Price with no discounts, no freight, no insurance:
- vary ship from / ship to / material class -> check rates.
Same with discounts:
- IPI must be calculated on base w/o discount; ICMS in base w discount
Same with freight and insurance:
- IPI must be calculated on base w/o freight; ICMS in base w freight
- Maintain ICMS for interstate freight -> check if it works
In the R/3 Backend, the Nota Fiscal must be issued with the correct base amounts, tax
amounts etc.
What happens with CFOP determination?
What happens with customers Tax numbers (CGC/CPF)?
1.1.1 ICMS Reduced base 70 %
Test cases with reduced tax calculation base

Given, we are selling products M1 … M4 to a customer for industrialization. M1 and M2

have Tax tariff code 100.100.10, whereas M3 and M4 have 100.200.10. M1 and M3 are
regular goods as to their ICMS tax categorization, whereas M2 and M4 are basic goods
and therefore subject to the Convênio 100 law.

Given the customer be a normal company, located in Sao Paulo (SP), the same state as
our delivering plant.

Given that all four materials have a reduced ICMS tax base of 70% which has been
specially granted by the Sao Paulo authorities for those materials.Given that all four
materials have a full IPI tax base of 100%.

BP 1111 Company

Taxes
Country Region Tax type Tax group
BR ICMS COMPANY
BR IPI FULL

IPI rate and IPI base:

Country Region Tax tariff Tax type Mat. |Cust Rate | Base
code group
BR 100.100.10 IPI Full | 10% | 100%
Company
BR 100.200.10 IPI Full | 5% | 100%
Company

The calculation rule for IPI is: Value(IPI) = base factor(IPI) * rate factor (IPI) * ( Net value +
value(ICMS) )

ICMS rate and base:

Country Region Product Tax type Mat. |Cust Rate | Base

from| to group
BR SP | SP M1 ICMS Regu | 18% | 70%
Company
BR SP | SP M2 ICMS C100 | 18% | 70%
Company
BR SP | SP M3 ICMS Regu | 18% | 70%
Company
BR SP | SP M4 ICMS C100 | 18% | 70%
Company

ICMS calculation rule:

Country Region Tax type Mat. Tax Calculation rule

group
BR ICMS Convenio100 Convênio 100 (basic goods)
BR ICMS Regular Regular

The calculation rule differs between Convenio 100 and regular ICMS tax calculation in the
following way:

Basic Goods (Convênio 100):

value(ICMS) = Net value * ( 1 - (1-base factor) * rate factor(ICMS)) / ( 1 - rate
factor (ICMS))
- Netvalue

Normal goods:
value(ICMS) = Net / ( 1 - rate factor(ICMS) * base factor(ICMS) ) - Netvalue.

The net value of all our products will be 82.000 Reais.

Ÿ Product 1

Product M1 Material

Taxes
Country Region Tax tariff code
BR 100.100.10
Country Region Tax type Tax group
BR ICMS REGULAR
GOODS
BR IPI FULL
 Calculation

Net = 82000
Regional Tax ICMS: 18%, with 30% base reduction
Federal Tax IPI: 10% without base reduction
Rate factor (ICMS) = 0,18 (18%)
Base factor (ICMS) = 0,7 (70% or 30% base reduction)

Rate factor (IPI) = 0,10 (10%)

Base factor (IPI) = 1,00 (no base reduction)

Hence:

Value(ICMS) = 82000 / ( 1- 0,7*0,18) - 82000 = 93821,51 - 82000 = 11821,51

Value (IPI) = 0,1* 93821,51 = 9382,15

Ÿ Product 2
Product M2 Material

Taxes
Country Region Tax tariff code
BR 100.100.10
Country Region Tax type Tax group
BR ICMS CONVENIO100
BR IPI FULL

Calculation

Like product 1, but product has tax group CONVEN100 for tax cat. ICMS.

Value(ICMS) = 82000 * (1 - 0,18*0,7 - 0,18 ) / (1 - 0,18) - 82000 = 94600 -82000 =

12600,00
Value(IPI) = 0,1* 94600 = 9460

Ÿ Product 3
Product M3 Material

Taxes
 Country Region Tax tariff code
BR 100.200.10
Country Region Tax type Tax group
BR ICMS REGULAR
GOODS
BR IPI FULL

Calculation

Like Product 1, but with different NBM code, hence different IPI rate

Net = 82000
Regional Tax ICMS: 18%, with 30% base reduction (ICMS within S.Paulo with a
material base reduction)
Federal Tax IPI: 5% without base reduction (derived from another NBM code)

Rate factor (ICMS) = 0,18 (18%)

Base factor (ICMS) = 0,7 (70% or 30% base reduction)

Rate factor (IPI) = 0,05 (5%)

Base factor (IPI) = 1,00 (no base reduction)

Hence:

Value(ICMS) = 82000 / ( 1- 0,7*0,18) - 82000 = 93821,51 - 82000 =

11821,51
Value (IPI) = 0,05* 93821,51 = 4691,08

Ÿ Product 4

Product M4 Material

Taxes
Country Region Tax tariff code
BR 100.200.10
Country Region Tax type Tax group
BR ICMS CONVENIO100
BR IPI FULL

Calculation

Like Product 2, but with different NBM code, hence different IPI rate, or
Like product 3, but product has tax group CONVEN100 for tax cat. ICMS.
 Value(ICMS) = 82000 * (1 - 0,18*0,7 - 0,18 ) / (1 - 0,18) - 82000 = 94600 -82000 =
12600,00
Value(IPI) = 0,05 * 94600 = 4730,00

·0 Freights
Use product M1:
Freight should be 5000

Product M1 Material

Taxes
Country Region Tax tariff code
BR 100.100.10
Country Region Tax type Tax group
BR ICMS REGULAR
GOODS
BR IPI FULL

Calculation

Net = 82000
Regional Tax ICMS: 18%, with 30% base reduction
Federal Tax IPI: 10% without base reduction
Rate factor (ICMS) = 0,18 (18%)
Base factor (ICMS) = 1 (no base reduction)

Rate factor (IPI) = 0,10 (10%)

Base factor (IPI) = 1,00 (no base reduction)
Freight = 5000

Hence:

Value(ICMS) = (82000 / ( 1-0,18) + 5000) *0,18 = 105000 * 0,18 = 18900

Value (IPI) = 0,1* 105000 = 10500
·1 Discounts
Please use product M1:
Discount should be 10 %

Product M1 Material

Taxes
Country Region Tax tariff code
BR 100.100.10
Country Region Tax type Tax group
BR ICMS REGULAR
GOODS
BR IPI FULL

Calculation

Net = 82000
Regional Tax ICMS: 18%, with 30% base reduction
Federal Tax IPI: 10% without base reduction
Rate factor (ICMS) = 0,18 (18%)
Base factor (ICMS) = 0,7 (70% or 30% base reduction)

Rate factor (IPI) = 0,10 (10%)

Base factor (IPI) = 1,00 (no base reduction)
Discount = 10%

Hence:

Value(ICMS) = (82000 / ( 1- 0,7*0,18))* (1-0,1) * (0,7*0,18) = 93821,51 * (1-0,1) *

(0,7 * 0,18) = 84439,36 * (0,7 * 0,18 ) = 10639,36
Value (IPI) = 0,1* 93821,51 = 9382,15

·2 Other ship-from / ship-to

·3 e.g. SP -> RJ
In RJ, another ICMS rate applies, e.g. 12 %

Value(ICMS) = 82000 / ( 1- 0,7*0,12) - 82000 = 89519,65 - 82000 = 7519,65

Value (IPI) = 0,1* 89519,65 = 8951,97
1.2 Consumption

Test case for consumption

We will assume below that the customer purchasing the products will use them for
”consumption” , i.e. sale to final customer. The calculation formulae are different for
”industrialization” i.e. for further manufacture, and will be covered by another test case.

Preparation (same as for industrialization test case):

Check that the setup of Brazilian taxes has been done (see CRM_BF_TAX_BR).
Create Sales orders in CRM for a consumption material.
Follow up-process in R/3 Backend: Delivery, Billing, Nota Fiscal.
Check
Price with no discounts, no freight, no insurance:
- vary ship from / ship to / material class -> check rates.
Same with discounts:
- IPI must be calculated on base w/o discount; ICMS in base w discount
Same with freight and insurance:
- IPI must be calculated on base w/o freight; ICMS in base w freight
- Maintain ICMS for interstate freight -> check if it works
In the R/3 Backend, the Nota Fiscal must be issued with the correct base amounts, tax
amounts etc.
What happens with CFOP determination?
What happens with customers Tax numbers (CGC/CPF)?

Which taxes should we get in our test case?

The net value of all our products will be 82.000 Reais.

1.2.1 ICMS Reduced base 70 %

Test case with reduced tax calculation base

Given, we are selling product M5 to a customer for consumption. M5 has Tax tariff code
100.100.10. M5 is a regular good as to its ICMS tax categorization.

Given the customer be a normal company, located in Sao Paulo (SP), the same state as
our delivering plant.

Given that all four materials have a reduced ICMS tax base of 70% which has been
specially granted by the Sao Paulo authorities for those materials.Given that all four
materials have a full IPI tax base of 100%.
BP 1111 Company

Taxes
Country Region Tax type Tax group
BR ICMS COMPANY
BR IPI FULL

IPI rate and IPI base:

Country Region Tax tariff Tax type Mat. |Cust Rate | Base
code group
BR 100.100.10 IPI Full | 10% | 100%
Company

The calculation rule for IPI is: Value(IPI) = base factor(IPI) * rate factor (IPI) * ( Net value +
value(ICMS) )

ICMS rate and base:

Country Region Product Tax type Mat. |Cust Rate | Base

from| to group
BR SP | SP M5 ICMS Regu | 18% | 70%
Company

ICMS calculation rule:

Country Region Tax type Mat. Tax Calculation rule

group
BR ICMS Regular Regular

ICMS calculation rule for consumption transactions, normal goods:

Value(ICMS) = Net value / ( 1 - ( rate factor(ICMS) * base factor(ICMS) * (1 + rate factor
(IPI))) - Net value .

The net value of all our products will be 82.000 Reais.

Ÿ Product 1

Product M5 Material

Taxes
Country Region Tax tariff code
BR 100.100.10
Country Region Tax type Tax group
BR ICMS REGULAR
GOODS
BR IPI FULL

Calculation

Net = 82000
Regional Tax ICMS: 18%, with 30% base reduction
Federal Tax IPI: 10% without base reduction
Rate factor (ICMS) = 0,18 (18%)
Base factor (ICMS) = 0,7 (70% or 30% base reduction)

Rate factor (IPI) = 0,10 (10%)

Base factor (IPI) = 1,00 (no base reduction)

Hence:

Value(ICMS) = 82000 / ( 1 - ( 0,18 * 0,7) * (1 + 0,1) ) - 82000 = 95193,87 -82000 =

13193,87.
Value (IPI) = 0,1* 95193,87 = 9519,39

·4 Freights
Please use product M5
Value(ICMS) = ( 82000 / ( 1 - ( 0,18 * 0,7) * (1 + 0,1) ) + 5000 ) * (1 + 0,1) * (0,7 *
0,18 ) = ( 95193,87 + 5000 ) * 1,1 * 0,126 = 13823,87.
Value (IPI) = 0,1* 95193,87 = 9519,39