5 Fast Facts about the Brazilian Nota fiscal legislation and best practices
Brazil is one of the many countries that have heavily invested in their national tax system. Nota Fiscal Eletrônica, or e, which is used to register each transaction. In order to implement SAP rollouts, this complex system needs to be clarified.
Before jumping into some interesting facts, let's have a look at this system works in the case of a transaction concerning physical goods.
- The company obtains a certificate from one of the Certification Authorities, which seeks to secure secure access between the company's system and the government's servers and registers to the SEFAZ.
- The XML document recording transaction is issued through the SAP system to the authorities.
- The authorities validate and allocate to NF-e to each of the XML documents.
- The new invoice is called the Digitally Authorised Nota Fiscal Eletrônica (DANF-e), and is attached to the shipment. Normally, a copy is sent to the buyer, too.
- The authorities check in real-time the NF-e matches the DANF-e.
- The buyer receives the goods and checks with SEFAZ the NF-e.
- The buyer sends a confirmation of goods to SEFAZ, which closes the transaction.
Now that it is clear how the Nota Fiscal works, here are 5 Fast facts to gain a better understand of this legal requirement.
Fast Fact 1: Not all Nota Fiscals are the same
Although there is only one official format for the electronic Nota Fiscal, there are still differences, based on the type of transaction occurring.
- NF-e for physical goods. It is the most used form of NF-e. The company issues an XML document that must be validated by SEFAZ and attached to the shipment. This process is administered at a national level.
- NF-e for services. It is a Provisioning Services Receipt and Neighborhood Revenue Service. Which will then transform the document into a NF-e. This process is administered at a city level.
- CT-e. CT-e documents are Transportation Invoices. Therefore, any transaction between the company and a third-party logistics partner would be required to be registered as CT-e.
Fast Fact 2: The Information Load Is Huge
In an attempt to address the issue, the taxation system was digitalised, and the information currently required for this system makes it almost impossible to fill it in by hand. In fact, there could be up to a maximum of 450 data pieces needed, which concerns the product type, the issuing company, the recipient, the delivery point, and so forth. Therefore, a digital integration with the NF electronic system is not only a mandatory requirement, but also as a compelling measure to cope with its extreme complexity.
Fast Fact 3: Having Real-Time Data Is a Priority
Manufacturing companies should acknowledge how the NF-e system is not only in their financial and accounting department, but also in their supply chain operations. In fact, the NF-e is generated by the authorities and placed on the shipment. The final validation cycle is completed when the buyer confirms the operation to the SEFAZ, and then the NF-e can not be changed by the seller anymore. Therefore, having real-time data is necessary in order to optimise the coordination in the supply chain.
Fast Fact 4: Electronic Invoicing Has Impact on Strategies
Due to the digital invoicing system, businesses recognise the benefits of such measure. Payable and possible automation of approval processes and easier compliance with taxation laws. However, other positive side effects might be overlooked. For instance, from a strategic point of view, this system helps SMEs to remove doubts about their suppliers' liquidity and since one of the main problems has become evident.
Fast Fact 5: NF-e Entails Risks for Companies
The whole NF-e legislation puts Brazilian work under pressure, and there are recurring problems that need to be addressed. As Brazilian businesses need to wait for the DANF-e to be issued and placed with the cargo; it affects their ability to ship. Therefore, companies encounter multiple risks, search as connectivity of cities, contingency risk management, and actualisation of the SAP system to comply with a developing legislation, multi-lingual support for SAP teams and SAP localisation. Concerning this last point, it was pointed out in the past how SAP centres of excellence undervalue localisation, and the most suggested strategy would be acquainted with SAP implementation.
Considering the nature of this legislative requirement, Bruno Lamac, SAP Solution Architect at Seidor Brazil, knows about those challenges: "Globalizing companies that wanted to harmonize their subsidiaries' systems in Brazil, had to pay a lot of time and not enough money This is not a one-time customization, but an ongoing process to make sure that the localization process is implemented efficiently ".
Doing Business in Brazil
Do you want to know how Global Hydropower Statkraft successfully completed their roll out to Brazil Peru and Chile? Read about STATKRAFT's roll-out to their Latin American subsidiaries.
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