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Customizing Guide: New Taxes 2004 (ISS, PIS, COFINS, MP-135 Withholding Taxes) – For Classic (Non-Condition-Based) Tax Calculation – Version 1.2 9 June 2005

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Page 1: Customizing Iss Pis Cofins Mp135

Customizing Guide:

New Taxes 2004 (ISS, PIS, COFINS,

MP-135 Withholding Taxes)

– For Classic (Non-Condition-Based) Tax

Calculation –

Version 1.2

9 June 2005

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Content 1 Purpose of This Guide ................................................................................................3 2 Create Condition Types ..............................................................................................3

2.1 Condition Types For Application TX............................................................................3 2.2 Condition Types For Application V..............................................................................4

3 Price Conditions Including Taxes................................................................................5 3.1 Price Conditions SD ....................................................................................................6 3.2 Price Conditions MM ...................................................................................................6 3.3 Define Which Taxes Are Included in MM/SD Price Conditions .................................6

4 Create Entries in J_1BAJ ............................................................................................7 5 Create Processing Keys for FI (T007B) ......................................................................8 6 Create G/L Accounts...................................................Erro! Indicador não definido. 7 Assign Tax Accounts to Account Keys........................................................................9 8 Define Account Keys for SD (T687) ............................................................................9 9 Update Calculation Procedures ................................................................................10

9.1 Update Calculation Procedure FI ..............................................................................10 9.2 Update Pricing Procedure SD ...................................................................................11

10 Customizing of Extended WHT.................................................................................13 10.1 WHT Types at Payment ..........................................................................................13 10.2 WHT Types at Invoice.............................................................................................13 10.3 WHT Codes.............................................................................................................14 10.4 Define Processing Key For Modified Tax Amount ..................................................14 10.5 Assign WHT Types to Company Codes..................................................................14 10.6 Define Accounts for Withholding Tax to Be Paid Over ...........................................14 10.7 Define Official Collection Codes..............................................................................15 10.8 Assign Condition Types to Withholding Tax Types.................................................15 10.9 Maintain Tax Relevant Classification ......................................................................15 10.10 Maintain Withholding Tax SD Conditions ...........................................................15

11 FI Tax Codes.............................................................................................................15 11.1 Taxes in Tax Codes Used in MM ............................................................................15 11.2 Usage Indicator for Tax Codes ...............................................................................16

12 SD Tax Codes (View J_1BTXSDCV)........................................................................17 13 Maintain Settings for External Tax Calculation .........................................................17

13.1 Structure for Tax Jurisdiction Code (View V_TTXD)...............................................17 13.2 Activate External Tax Calculation ...........................................................................17 13.3 Define Logical Destination ......................................................................................17

14 Define Tax Jurisdiction Codes ..................................................................................17 15 Assign Jurisdiction Codes to Ranges of Postal Codes.............................................17 16 Master Data Changes ...............................................................................................17

16.1 Vendors (Transaction XK02)...................................................................................17 16.2 Customers (Transaction XD02)...............................................................................18 16.3 Other Address Changes: Organizational Structure.................................................18

17 ISS Customizing........................................................................................................18 17.1 Tax Laws .................................................................................................................18 17.2 Official Service Types..............................................................................................18 17.3 Generic Service Types............................................................................................18 17.4 Assign Official Service Types..................................................................................18

18 Tax Rates ..................................................................................................................18 18.1 COFINS...................................................................................................................18 18.2 PIS...........................................................................................................................18 18.3 ISS...........................................................................................................................18 18.4 Withholding Taxes...................................................................................................19

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1 Version History

Document Version Description of Change

1.0 Documented in the customizing Note 747607.

1.1 Downgrade of ISS functionality to the releases 4.0B, 4.5B, and 4.6B

Description adapted for these releases

1.2 Version History introduced

Correction of chapter 12.1.6 Modification of chapter 4.3

2 Purpose of This Guide The purpose of this guide is to describe how to technically set up the system for the new tax functions (ISS, PIS, COFINS, and MP-135 withholding taxes). The prerequisite is that all coding and DDIC changes are already implemented. This means, either the support package that contains the changes is installed, or the changes are implemented manually, following the instructions of the respective Note. For further details, see overview Note 727475 or overview Note 752440 and the Notes mentioned there.

After implementation of the support package or the Note, there are still manual steps necessary to work with the new taxes. These manual steps are described in this guide. It may be that the changes described in some of the steps are already done in your system (e.g. entries in table J_1BAJ). In such case, just skip the section.

3 Create Condition Types New condition types have to be created for the new taxes. The following classes of condition types are affected:

• Tax code conditions (activation of taxes)

• Conditions with WHT codes (specific for SD)

3.1 Condition Types For Application TX Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchases -> Basic Settings -> Check Calculation Procedure -> Define Condition Types and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries.

3.1.1 Tax Code Conditions Cond. Class: D (Taxes) Calculat. Type: A (Percentage) Cond. Category: 1 (Jur. Level 1) Access Seq.: MWST Manual Entries: D (Not possible to process manually) Item Condition: X Delete fr. DB: B (without popup)

Cond. Type Description

ICN3 COFINS Normal Tax ICOA COFINS Normal PO/GR ICON COFINS Normal Tax ICOO COFINS Offset Tax Included

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Cond. Type Description

ICOS COFINS Normal PO/GR ICOU COFINS COFINS Normal IV NVV ICOV COFINS Offset ICOS/ICOU ICOW COFINS WHT ICOZ COFINS WHT Offset ICSW CSLL WHT ICSZ CSLL WHT Offset ICW3 COFINS Withholding TaxSD ICZ3 COFINS WHT SD Offset IGEW General WHT IGEZ General WHT Offset IGW3 General WHT SD IGZ3 General WHT SD Offset IIRW IR WHT IIRZ IR WHT Offset IPS3 PIS Normal Tax IPSA PIS Normal PO/GR IPSN PIS Normal Tax IPSO PIS Offset Tax Included IPSS PIS Normal PO/GR IPSU PIS Normal IV NVV IPSV PIS Offset IPSS / IPSU IPSW PIS WHT IPSZ PIS WHT Offset IPW3 PIS WHT SD IPZ3 PIS WHT SD Offset IRW3 IR Withholding TaxSD IRZ3 IR WHT SD Offset ISA3 ISS at Provider SD ISB3 ISS WHT at Provider SD ISE3 ISS at Service Loc SD ISF3 ISS WHT at Service Loc SD ISSA ISS at Provider ISSB ISS WHT at Provider ISSE ISS at Service Loc ISSF ISS WHT at Service Loc ISSG ISS Offset ISW3 CSLL Withholding Tax SD ISZ3 CSLL WHT SD Offset

3.2 Condition Types For Application V Transaction SPRO: SAP Reference IMG -> Sales and Distribution -> Basic Functions -> Pricing -> Pricing Control -> Define condition types -> Maintain Condition Types and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries.

3.2.1 Tax Code Conditions Cond. Class: D (Taxes) Calculat. Type: A (Percentage) Cond. Category: 1 (Jur. Level 1) Access Seq.: MWST Manual Entries: D (Not possible to process manually) Item Condition: X Delete fr. DB: B (without popup)

Tax Type Description

ICN3 COFINS from SD

ICW3 COFINS Withholding TaxSD

IGW3 General WHT SD

IPS3 PIS Normal Tax

IPW3 PIS WHT SD

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IRW3 IR Withholding TaxSD

ISA3 ISS at Provider SD

ISB3 ISS WHT at Provider SD

ISE3 ISS at Service Loc SD

ISF3 ISS WHT at Service Loc SD

ISW3 CSLL Withholding Tax SD

Cond. Class: D (Taxes) Calculat. Type: A (Percentage) Cond. Category: 1 (Jur. Level 1) Access Seq.: IBRR Manual Entries: D (Not possible to process manually) Item Condition: X Delete fr. DB: B (without popup) Ref. Con. Type: ICMO Ref. Applicat.: V

Tax Type Description

ICZ3 COFINS WHT SD Offset IGZ3 General WHT SD Offset IPZ3 PIS WHT SD Offset IRZ3 IR WHT SD Offset ISZ3 CSLL WHT SD Offset

Cond. Class: A (Discount or surcharge) Calculat. Type: A (Percentage) Cond. Category: Access Seq.: IBRR Manual Entries: D (Not possible to process manually) Item Condition: X Delete fr. DB: B (without popup) Ref. Con. Type: ICMO Ref. Applicat.: V

Tax Type Description

ICO2 COFINS Offset SD IPS2 PIS Offset SD

3.2.2 WHT Code Conditions Cond. Class: W (Wage Withholding Tax) Calculat. Type: A (Percentage) Cond. Category: D (Tax) Access Seq.: J1AG (Arg.: Tax Relev. Clas) Manual Entries: D (Not possible to process manually) Item Condition: X Delete fr. DB: B (without popup)

Tax Type Description

IKW4 ISS provider WHT cde ILW4 ISS service WHT cde ICW4 COFINS WHT code IPW4 PIS WHT code ISW4 CSLL WHT code IRW4 IR WHT code IGW4 General WHT code

4 Price Conditions Including Taxes The new solution for tax calculation supports prices which are not the real net prices, but may contain PIS, COFINS, ISS due at the municipio of the service provider, ISS due at the municipio of the service execution, or any combination of these.

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In order to allow the system to consider correctly which taxes are already included in a price and which not, corresponding price conditions should be maintained. It is possible to either continue using existing price conditions or introduce new ones. Of course, if new price conditions are introduced, all price conditions must be updated.

The following is a suggestion based on 4 new price conditions.

4.1 Price Conditions SD Copy pricing procedure PR0000 to RVXBR2 before creating the conditions:

Transaction SPRO: SAP Reference IMG -> Sales and Distribution -> Basic Functions -> Pricing -> Pricing Control -> Define And Assign Pricing Procedure -> Maintain Pricing Procedure select the entry PR0000 and press the push button Copy as … Finally, save all new entries.

Then create the condition types:

Transaction SPRO: SAP Reference IMG -> Sales and Distribution -> Basic Functions -> Pricing -> Pricing Control -> Define condition types -> Maintain Condition Types and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries. Cond. Class: B (Prices) Calculat. Type: C (Quantity) Cond. Category: H (Basic Price) Access Seq.: PR00 Manual Entries: C (Manual entry has priority) Amount/percent: X Item Condition: X Delete: X Pricing Proc: RVXBR2 Delete fr. DB: (do not delete) Scale basis: C Check Value: A descending (“Check scale” in release 4.5B and 4.0B) Quantity Conversion: X TextDetPrc: 01 Price Text OD: 0001

Cond. Type Description

ZPB0 Price w/o Taxes ZPB1 Price+ISS ZPB2 Price+PIS+COF ZPB3 Price+ISS+PIS+COF

4.2 Price Conditions MM If necessary, create new price conditions and adapt the MM pricing procedure for Purchase Orders (e.g. RM0000) or create new ones by copying and modifying.

4.3 Define Which Taxes Are Included in MM/SD Price Conditions Maintain for each SD (Application V) or MM (Application M) pricing procedure the taxes that are included in each price condition type. As an example, the MM procedure RM0000 is maintained for the pricing conditions PB00 and PBXX the SD procedure RVXBRA is maintained for the pricing conditions ZPB1 … ZPB3.

Transaction SM30: maintain the views J_1BKON1MMVV and J_1BKON1SDVV or alternatively the view J_1BKON1V

Price Condition Tax Group

PB00 COFI COFINS PB00 ISSP ISS at location of service provider PB00 ISSS ISS at location where service is provided

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PB00 PIS PIS PBXX COFI COFINS PBXX ISSP ISS at location of service provider PBXX ISSS ISS at location where service is provided PBXX PIS PIS

Price Condition Tax Group

ZPB1 ISSP ISS at location of service provider ZPB1 ISSS ISS at location where service is provided ZPB2 COFI COFINS ZPB2 PIS PIS ZPB3 COFI COFINS ZPB3 ISSP ISS at location of service provider ZPB3 ISSS ISS at location where service is provided ZPB3 PIS PIS

Comment: If the pricing procedure contains more than one condition of condition class price, the last of these conditions is considered.

5 Create Entries in J_1BAJ Transaction SM30: maintain the view J_1BAJ

Tax Type Tax Group Description WHT Offset

ICN3 COFI COFINS Normal Tax

ICOA COFI COFINS Normal PO/GR

ICOF COFI COFINS Deductible

ICON COFI COFINS Normal Tax

ICOO COFI COFINS Offset Tax Included X

ICOS COFI COFINS Normal PO/GR

ICOU COFI COFINS COFINS Normal IV NVV

ICOV COFI COFINSOffset ICOS/ICOU X

ICOW WHCO COFINS WHT X

ICOZ COFINS WHT Offset

ICSW WHCS CSLL WHT X

ICSZ CSLL WHT Offset

ICW3 WHCO COFINS Withholding TaxSD X

IGEW WHT General WHT X

IGEZ General WHT Offset

IGW3 WHT General WHT SD X

IIRW WHIR IR WHT X

IIRZ IR WHT Offset

IPIS PIS PIS Deductible

IPS3 PIS PIS Normal Tax

IPSA PIS PIS Normal PO/GR

IPSN PIS PIS Normal Tax

IPSO PIS PIS Offset Tax Included X

IPSS PIS PIS Normal PO/GR

IPSU PIS PIS Normal IV NVV

IPSV PIS PIS Offset IPSS / IPSU X

IPSW WHPI PIS WHT X

IPSZ PIS WHT Offset

IPW3 WHPI PIS WHT SD X

IRW3 WHIR IR Withholding TaxSD X

ISA3 ISSP ISS at Provider SD

ISB3 ISSP ISS WHT at Provider SD X

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ISE3 ISSS ISS at Service Loc SD

ISF3 ISSS ISS WHT at Service Loc SD X

ISSA ISSP ISS at Provider

ISSB ISSP ISS WHT at Provider X

ISSE ISSS ISS at Service Loc

ISSF ISSS ISS WHT at Service Loc X

ISSG ISSP ISS Offset X

ISW3 WHCS CSLL Withholding Tax SD X

6 Create Processing Keys for FI (T007B) New processing keys (account keys) have to be created to post taxes to separate accounts and to identify withholding tax amounts in the normal tax calculation.

Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchases -> Basic Settings -> Check and Change Settings for Tax Processing and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries. Tax Type: 2 (input tax) Not deductible: X Posting indicator: 3 (Distribute to relevant expense/revenue items)

Processing Key Description

ISW ISS WHT WTC COFINS WHT WTG General WHT WTI IR WHT WTP PIS WHT WTS CSLL WHT

Tax type: 2 (input tax) Non deductible: space Posting indicator: 2 (separate line item)

Processing Key Description

CO3 COFINS Clearing PI3 PIS Clearing

Tax type: 1 (output tax) Non deductible: space Posting indicator: 2 (separate line item)

Processing Key Description

COF COFINS PIS PIS WK3 ISS WHT WC3 Cofins WHT WC4 Cofins WHT offset WG3 General WHT WG4 General WHT offset WI3 IR WHT WI4 IR WHT offset WP3 PIS WHT WP4 PIS WHT offset WS3 CSLL WHT WS4 CSLL WHT offset

7 Create G/L Accounts If you need to post the new taxes to separate accounts, create new G/L accounts. The following is just a suggestion.

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Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Postings -> Define Accounts for Withholding Tax -> Define Accounts for Withholding Tax to be Paid Over specify the relevant Chart of accounts and press push button New entries. Finally, save all new entries. 177011: COFINS Withholding Tax Posting at Payment 177013: PIS Withholding Tax Posting at Payment 177020: CSLL Withholding Tax Posting at Payment 177021: IR Withholding Tax Posting at Payment 177022: General Withholding Tax (PIS/COFINS/CSLL/IR) 177030: PIS Normal Tax 177031: COFINS Normal Tax 154031: PIS Tax deductible 154008: COFINS Tax deductible 177040: ISS Withholding Tax

8 Assign Tax Accounts to Account Keys Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchasing -> Posting -> Define Tax Accounts select an entry, specify the relevant Chart of accounts and maintain the G/L account. Finally, save all new entries. Posting Keys: 40 – 50

9

Define Account Keys for SD (T687) Transaction SM30: maintain the view V_T687, Application V

Account Key Description

COF COFINS PIS PIS WK3 ISS WHT WC3 Cofins WHT WC4 Cofins WHT offset WG3 General WHT WG4 General WHT offset WI3 IR WHT WI4 IR WHT offset WP3 PIS WHT WP4 PIS WHT offset WS3 CSLL WHT WS4 CSLL WHT offset

Account Key Account

CO3 154008 COF 177031 PI3 154031 PIS 177030 WK3 177040 WC3 177011 WC4 177011 WG3 177022 WG4 177022 WI3 177021 WI4 177021 WP3 177013 WP4 177013 WS3 177020 WS4 177020

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10 Update Calculation Procedures

10.1 Update Calculation Procedure FI The FI calculation procedure below is based on SAP sample delivery TAXBRJ. The new entries are shown in red. Adapt the calculation procedure that you use in a corresponding way or create a copy of the old one and adapt the new one in order to have a backup.

Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Tax on Sales/Purchasing -> Basic Settings -> Check Calculation Procedure -> Define Procedure -> select a procedure for maintenance. Finally, save your changes.

New requirements and/or formulas can be created in transaction VOFM.

Step Cntr CTyp Description From To Reqt SubTo Stat AltCTy AltCBV ActKy

100 BASB Base Amount 150 Ext. calculation X 320 200 Level 200 X 210 IPI1 IPI Industr. In 100 521 301 VS1 215 IPIF IPI Industr. In 100 521 301 VS1 230 ICM1 ICMS Industr. In 100 523 303 VS2 231 ICMV ICMS DIFAL Con/Asset 100 523 303 ICD 232 ICMT ICMS Difal Investmen 100 523 303 ICD 233 ICMP ICMS Difal inv. off. 232 ICC 235 ICZG ICMS tax free 100 525 305 NVV 240 ICS1 Sub.Tributaria In 100 524 304 VS3 250 ICMF ICMS S.T. fr. offset 100 525 305 IC1 255 IFR1 ICMS on freight In 100 527 307 VS3 256 IFS1 ICMS ST freight In 100 528 308 VS3 260 IP1C IPI Ind.Clearing 100 521 301 IPC 265 IP1O IPI Ind.Clear.Off. 210 IPC 270 IC1C ICMS Ind.Clearing 100 523 303 ICC 275 IC1O ICMS Ind.Clear.Off. 230 ICC 300 Level 300 X 310 IPI2 IPI Consumption In 100 522 302 NVV 330 ICM2 ICMS Consumption In 100 523 303 NVV 331 ICMD ICMS Consumption In 100 523 303 NAV 340 ICS2 S.T. Consumption In 100 524 304 NVV 350 ICOP ICMS complement 100 525 305 ICP 355 ICOT STO-ICMS complement 100 525 305 ICP 360 ICOX ICMS complement 100 350 ICX 365 ISS2 ISS from MM In 100 526 306 NVV 366 ISSO ISS from MM In Offs 365 VS1 370 ICO1 ICMS compl Transfer 100 160 525 305 ICP 371 ICO2 ICMS compl. Tra. Off 370 160 ICX 372 ICO3 ICMS compl. NVV 100 525 305 ICP 373 ICO4 ICMS compl. NVV off 372 ICX 500 Level 500 X 510 IPI3 IPI from SD Out 100 521 301 MW1 520 ICM3 ICMS from SD Out 100 523 303 MW2 521 ICMM ICMS DIFAL Out 100 523 303 MW2 522 ICML ICMS DIFAL ofset out 521 ICC 530 ICS3 Sub.Tributaria Out 100 524 304 MW3 540 ISS3 ISS from SD Out 100 526 306 MW4 541 ICSO SOCIAL Offset TxIncl 540 MW4 550 ICZF ICMS Rev (Z.F.)-STO 100 525 305 ICZ 560 IFR3 ICMS on freight Out 100 527 307 MW3 570 IFS3 ICMS ST freight Out 100 528 308 MW3 600 ICM4 STO-ICMS SD (ICM3) 100 523 303 MW2 700 Other taxes X 710 INSS INSS Incoming 100 VST 720 INSX INSS offset (100-) 710 INX

750 PIS, COFINS, ISS X

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755 ISSA ISS at Provider 100 521 301 NVV 760 ISSB ISS WHT at Provider 100 522 302 ISW 765 ISSE ISS at Serv.Loc. 100 523 303 NVV 770 ISSF ISS WHT at Serv.Loc. 100 524 304 ISW 771 ISA3 ISS at Provider SD 100 521 301 MW4 772 ISB3 ISS WHT at Prov. SD 100 522 302 WK3 773 ISE3 ISS at Serv.Loc. SD 100 523 303 MW4 774 ISF3 ISS WHT Srv.Loc. SD 100 524 304 WK3 775 ISSG ISS Offsets 100 525 305 NVV 780 ICON COFINS NVV 100 821 801 NVV 785 ICOO COFINS NVVOff TxIncl 100 822 802 NVV 790 IPSN PIS NVV 100 823 803 NVV 795 IPSO PIS NVV Off. TxIncl 100 824 804 NVV 797 ICN3 COFINS from SD 100 821 801 COF 798 IPS3 PIS from SD 100 823 803 PIS 800 WITHHOLDING TAXES ON

GROSS X

805 ICOW COFINS WHT 100 825 805 WTC 810 ICOZ COFINS WHT Offset 805 NVV 815 IPSW PIS WHT 100 826 806 WTP 820 IPSZ PIS WHT Offset 815 NVV 825 ICSW CSLL WHT 100 827 807 WTS 830 ICSZ CSLL WHT Offset 825 NVV 835 IIRW IR WHT 100 828 808 WTI 840 IIRZ IR WHT Offset 835 NVV 845 IGEW General WHT 100 829 809 WTG 850 IGEZ General WHT Offset 845 NVV 851 Withholding Tax from SD X 852 ICW3 COFINS WHT SD 100 825 805 WC3 853 ICZ3 COFINS WHT Offset SD 852 WC4 855 IPW3 PIS WHT SD 100 826 806 WP3 856 IPZ3 PIS WHT Offset SD 855 WP4 858 ISW3 CSLL WHT SD 100 827 807 WS3 859 ISZ3 CSLL WHT Offset SD 858 WS4 860 IRW3 IR WHT SD 100 828 808 WI3 861 IRZ3 IR WHT Offset SD 860 WI4 864 IGW3 General WHT SD 100 829 809 WG3 865 IGZ3 Genera WHT Offset SD 864 WG4 900 COFINS reduce stock X 901 ICOV Cofins Offset 100 D 822 802 CO3 905 ICOS COFINS deduct. PO/GR 100 160 831 801 CO3 906 ICOU Cofins IV Non Deduct 100 161 831 801 NVV 907 ICOA Cofins ded. not inc. 100 841 801 CO3 910 PIS Reduce stock X 911 IPSV Offset IPSS / IPSU 100 E 824 804 PI3 915 IPSS PIS deduct. PO/GR 100 160 833 803 PI3 916 IPSU PIS non deductib. IV 100 161 833 803 NVV 918 IPSA PIS ded. not inc. 100 843 803 PI3

10.2 Update Pricing Procedure SD The below SD pricing procedure is based on SAP sample delivery RVXBRA. Examples for other procedures (like RVXBRE etc.) are not given, since the changes are the same. The new or changed entries are shown in red. Adapt the calculation procedures that you use in a corresponding way or create copies of the old ones and adapt the new ones in order to have a backup.

Transaction SPRO: SAP Reference IMG -> Sales and Distribution -> Basic Functions -> Pricing -> Pricing Control -> Define and assign pricing procedures -> Maintain pricing procedure -> select a procedure for maintenance. Finally, save your changes.

New requirements and/or formulas can be created in transaction VOFM.

Step Cntr CTyp Description From To Man. Reqt SubTo Stat AltCTy AltCBV ActKy Print

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10 Price 2 X 10 1 ZPB0 Price w/o Taxes X 10 2 ZPB1 Price+ISS X 10 3 ZPB2 Price+PIS+COF X 10 4 ZPB3 Price+ISS+PIS+COF X 45 X 50 RB00 Discount (Value) 2 X 290 K X 300 ICMI Price+Tax (for NF) 2 323 ERL X 320 K004 Material 2 ERS 321 K007 Customer Discount 2 ERS 322 K005 Customer/Material 2 ERS 329 320 328 400 KF00 Freight ERS 595 590 600 IBRX Brazil tax calc. 595 596 X 320 610 IPI3 IPI from SD X 521 301 MW1 620 ICM3 ICMS from SD X 523 303 MW2 630 ICS3 Sub.Trib. from SD X 524 304 MW3 650 ICZF ADMS Disc. Zona Fr. X 525 305 MWS 660 IFR3 ICMS on freight SD X 527 307 MW3 670 IFS3 ICMS ST freight SD X 528 308 MW3 675 ISS3 ISS from SD X 526 306 MW4 680 ISA3 ISS at Provider SD X 521 301 MW4 681 ISB3 ISS WHT at Prov. SD X 522 302 WK3 682 ISE3 ISS at Serv.Loc. sd X 523 303 MW4 683 ISF3 ISS WHT Srv.Loc.

SD X 524 304 WK3

684 ICSO ISS offset 675 683 BRI 685 ICN3 COFINS from SD X 821 801 COF 686 ICO2 COFINS Offset SD 685 BRI 687 IPS3 PIS from SD X 823 803 PIS 688 IPS2 PIS Offset SD 687 BRI 700 Total Tax Value 610 690 X 720 ICMO ICMS offset 620 BRI 740 DIFF Rounding Off 13 16 4 ERS 750 4 X 799 R100 100% discount 750 55 28 ERS 800 SKTO Cash Discount 9 X 11 810 VPRS Cost 4 B X 960 Withholding taxes X 961 ICW3 COFINS WHT SD X 825 805 WC3 963 ICZ3 COFINS WHT SD

offset 961 X WC4

965 IPW3 PIS WHT SD X 826 806 WP3 967 IPZ3 PIS WHT SD Offset 965 X WP4 970 ISW3 CSLL WHT SD X 827 807 WS3 972 ISZ3 CSLL WHT SD offset 970 X WS4 975 IRW3 IR WHT SD X 828 808 WI3 977 IRZ3 IR WHT SD offset 975 X WI4 979 IGW3 General WHT SD X 829 809 WG3 980 IGZ3 Genera WHT SD

offset 979 X WG4

985 Withholding taxes: Tax codes

X

986 ICW4 COFINS WHT code 963 983 X 987 IPW4 PIS WHT code 965 983 X 988 ISW4 CSLL WHT code 972 983 X 989 IRW4 IR WHT code 975 983 X 990 IGW4 General WHT code 979 983 X

991 IKW4 ISS provider WHT cde

681 983 X

992 ILW4 ISS service WHT cde 683 983 X

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The SD pricing procedure below is the new price supplement procedure RVXBR2 which is introduced for the optional new price conditions. It can be configured in the following way:

St C CTyp Description Fro To M M S P S Req A.C A.B. Act.K

10 1 ZPB0 Price w/o Taxes 10 2 ZPB1 Price+ISS 10 3 ZPB2 Price+PIS+COF 10 4 ZPB3 Price+ISS+PIS+COF 40 1 RA00 % Discount from Net 40 2 RB00 Discount (Value) 40 3 RC00 Quantity Discount 40 4 RD00 Weight Discount

11 Customizing of Extended WHT Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Calculation -> Withholding Tax Types -> Define Withholding Tax Types for Payment Posting -> specify a country key (BR for Brazil) and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries.

11.1 WHT Types at Payment Base amount = Modified Tax Amount Rounding rule = W/tax comm round Cash Discount = C/disc pre W/tx Post w/tax amount = X No accumulation W/tax base manual = X Manual w/tax amount = X No cert numbering = X Base amount = W/tax code level Withholding tax amount = W/tax code level No central invoice Minimum Check at item level

W/Tax Type Description

CP COFINS at Payment GP General WHT (PIS/COF/CSLL/IR) at Payment PP PIS at Payment RP IR at Payment SP CSLL at Payment

11.2 WHT Types at Invoice Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Calculation -> Withholding Tax Types -> Define Withholding Tax Types for Invoice Posting -> specify a country key (BR for Brazil) and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries. Base amount = Modified Tax Amount Rounding rule = W/tax comm round Post w/tax amount = X No accumulation W/tax base manual = X Manual w/tax amount = X No cert numbering = X Base amount = W/tax code level Withholding tax amount = W/tax code level

W/Tax Type Description

IW ISS WHT

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11.3 WHT Codes Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Calculation -> Withholding Tax Codes -> Define Withholding Tax Codes -> specify a country key (BR for Brazil) and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries. Percentage subject to tax: 100,00% With/tax rate: 100,00% Posting indicator: 1

W/Tax Type W/Tax Code Description

CP CP COFINS 100% WHT Amount GP GP General 100% WHT Amount IW IW ISS 100% WHT Amount PP PP PIS 100% WHT Amount RP RP IR 100% WHT Amount SP SP CSLL 100% WHT Amount

11.4 Define Processing Key For Modified Tax Amount Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Calculation -> Withholding Tax Base Amount -> Define Processing Key for Modified Tax Amount -> specify a country key (BR for Brazil) and press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries.

WHT Type Processing Key

IW ISW IW WK3 CP WTC CP WC3 PP WTP PP WP3 SP WTS SP WS3 RP WTI RP WI3 GP WTG GP WG3

11.5 Assign WHT Types to Company Codes In IMG, assign all relevant WHT types to all Brazilian company codes that are subject to them.

Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax -> Company Code -> Assign Withholding Types to Company Code -> press push button New entries or select an existing entry and press the push button Copy as … Finally, save all new entries.

• To activate for MM, flag With/tax agent in vendor data and assign validity.

• To activate for SD, flag Subject to w/tax in customer data.

11.6 Define Accounts for Withholding Tax to Be Paid Over Assign G/L accounts for WHT to WHT types.

Transaction FSP1

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11.7 Define Official Collection Codes The official WHT codes cannot be used to specify collection codes. Instead, define them in view V_T059Z_WITHCD2.

Transaction SM30: Maintain view V_T059Z_WITHCD2

11.8 Assign Condition Types to Withholding Tax Types Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax ->Calculation -> Withholding Tax Types -> Assign Condition Types to Withholding Tax Types -> specify a country key and carry out the assignment. Finally, save all new entries.

WHT Type Condition Type

IW IKW4 CP ICW4 PP IPW4 SP ISW4 RP IRW4 GP IGW4

11.9 Maintain Tax Relevant Classification Argentina Customizing: view V_1ATXREL, according to Note 178824

Tax rel. Text

IW ISS WHT Invoice CP Cofins Payment GP General WHT payment PP PIS WHT Payment RP IR WHT Payment SP CSLL WHT payment

11.10 Maintain Withholding Tax SD Conditions Transaction VK11.

Country BR. Maintain for all conditions a rate of 100%, assign validity.

Condition Tax Rel. Class. W/tax code

IKW4 IW IW ICW4 CP CP IPW4 PP PP ISW4 SP SP IRW4 RP RP IGW4 GP GP

12 FI Tax Codes Activate additional taxes for existing tax codes or create new tax codes.

Transaction FTXP

12.1 Taxes in Tax Codes Used in MM

12.1.1 To activate COFINS non-deductible:

Rate (%) Cond. Type Description Tax Group Acct. Key

100 ICON COFINS NVV Normal Tax COFI NVV

100 ICOO COFINS NVV Offset Tax Included COFI NVV

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12.1.2 To activate PIS non-deductible:

Rate (%) Cond. Type Description Tax Group Acct. Key

100 IPSN PIS NVV Normal Tax PIS NVV

100 IPSO PIS NVV Offset Tax Included PIS NVV

12.1.3 To activate COFINS deductible:

Rate (%) Cond. Type Description Tax Group Acct. Key

100– ICOV COFINSOffset ICOS/ICOU COFI CO3

100– ICOS COFINS Normal PO/GR COFI CO3

100– ICOU COFINS Normal IV NVV COFI NVV

100 ICOA COFINS Normal PO/GR COFI CO3

12.1.4 To activate PIS deductible:

Rate (%) Cond. Type Description Tax Group Acct. Key

100– IPSV PIS Offset IPSS / IPSU PIS PI3

100– IPSS PIS Normal PO/GR COFI PI3

100– IPSU PIS Normal IV NVV COFI NVV

100 IPSA PIS Normal PO/GR COFI PI3

12.1.5 To activate withholding taxes:

Rate (%) Cond. Type Description Tax Group Acct. Key

100 ICOW COFINS WHT WHCO WTC

100– ICOZ COFINS WHT Offset NVV

100 IPSW PIS WHT WHPI WTP

100– IPSZ PIS WHT Offset NVV

100 ICSW CSLL WHT WHCS WTS

100– ICSZ CSLL WHT Offset NVV

100 IIRW IR WHT WHIR WTI

100– IIRZ IR WHT Offset NVV

100 IGEW General WHT WHT WTG

100– IGEZ General WHT Offset NVV

12.1.6 To activate ISS New 2004:

Rate (%) Cond. Type Description Tax Group Acct. Key

100 ISSA ISS at Provider ISSP NVV

100 ISSB ISS WHT at Provider ISSP ISW

100 ISSE ISS at Service Loc. ISSS NVV

100 ISSF ISS WHT at Service Loc. ISSS ISW

100 ISSG ISS Offsets ISSP NVV

12.2 Usage Indicator for Tax Codes Tax codes used for the taxation of services must have the service flag set. Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Taxes on Sales/Purchases -> Calculation -> Settings for Tax Calculation in

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Brazil -> Additional Standard Tax Codes -> select the check box in column Service were required. Save all new entries.

13 SD Tax Codes (View J_1BTXSDCV) Activate additional taxes for SD tax codes by flagging the relevant taxes on the existing SD tax codes or on newly created ones.

14 Maintain Settings for External Tax Calculation

14.1 Structure for Tax Jurisdiction Code (View V_TTXD) New entry for TAXBRJ. Level1 = 3, level2 = 4.

14.2 Activate External Tax Calculation For calculation procedure TAXBRJ, specify ext. system C.

Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings ->Tax on Sales/Purchasing -> Basic Settings -> External Tax Calculation -> Activate External Tax Calculation. Finally, save all new entries.

14.3 Define Logical Destination For ext. system C, specify:

Transaction SPRO: SAP Reference IMG -> Financial Accounting -> Financial Accounting Global Settings -> Withholding Tax -> Extended Withholding Tax ->Calculation -> Withholding Tax Types -> Define Logical Destination ->

C JUR J_1BTAXJUR_DETERMINE_NEW

C TAX J_1BCALCULATE_TAXES

15 Define Tax Jurisdiction Codes For new ISS calculation, two-level jurisdiction codes should be maintained.

The proposal is to use the first three digits for the state (e.g. ‘SP ‘ for Sao Paulo) and the last four digits to define the municipio. A suggestion is to use the digits 4 through 7 of the IBGE code for this. As an example, ‘SP 5030’ would be the municipio of SAO PAULO, ‘SP 4850’ the municipio of SANTOS, etc.)

Transaction SM30: Maintain view J_1BTXJURV

16 Assign Jurisdiction Codes to Ranges of Postal Codes For proper tax jurisdiction code validation and value help, assign valid ranges of postal codes to the newly created tax jurisdiction codes.

Transaction SM30: Maintain view J_1BTREG_CITYV

17 Master Data Changes There are changes to master data necessary in order to correctly effectuate the new tax calculation.

17.1 Vendors (Transaction XK02)

Assign all WHT types and codes that are applicable.

Update address with new tax jurisdiction code for correct ISS calculation.

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17.2 Customers (Transaction XD02)

Assign all WHT types and codes that are applicable.

Update address with new tax jurisdiction code for correct ISS calculation.

17.3 Other Address Changes: Organizational Structure In order to allow correct calculation of ISS, all relevant adresses must be updated with the new Jurisdiction codes. This is necessary for:

• Company Codes

• Plants

• Business Places (Filial)

• General addresses of central address management that are used as delivery addresses

18 ISS Customizing Details about the ISS Customizing logic can be found in the ISS documentation. Here, only an overview of the necessary Customizing steps is given.

18.1 Tax Laws View: J_1BATL3V. Maintain definitions for ISS tax laws.

18.2 Official Service Types Define official service types for purchasing (view J_1BSERVTYPES1V) and sales (view J_1BSERVTYPES2V) processes.

18.3 Generic Service Types Define generic service types in view J_1BGENSERVTV.

18.4 Assign Official Service Types Assign official service types as needed:

• to generic service types (view J_1BSERVASSIGN1V)

• to material numbers (view J_1BSERVASSIGN2V)

19 Tax Rates

19.1 COFINS Maintain entries in transaction J1BTAX (R/3 4.7 or higher) or view J_1BTXCOFV. Use the tax groups of dynamic exceptions you created.

19.2 PIS Maintain entries in transaction J1BTAX (R/3 4.7 or higher) or view J_1BTXPISV. Use the tax groups of dynamic exceptions you created.

19.3 ISS Maintain entries in transaction J1BTAX (R/3 4.7 or higher) or view J_1BTXISSV. Use the tax groups of dynamic exceptions you created.

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19.4 Withholding Taxes Maintain entries in transaction J1BTAX (R/3 4.7 or higher) or view J_1BTXWITHV. Use the tax groups of dynamic exceptions you created.

You define either a general WHT collection code and a combined rate or the four individual withholding taxes separately.