Imposto s. Circulação de Mercadoria e Serviços (ICMS) 

Introduction

ICMS is a state tax applied when selling, transferring, etc. goods. The percentage rate and the value base of ICMS depends on several factors including:

Exemptions of ICMS for particular products are possible. Exemptions can either be permanent or only valid until a certain date. Exemptions can be valid only inside a state or for all states.

Different/reduced rates of ICMS for particular products. Reduced rates are only used within a state. Therefore, they do not depend on state of origin and state of destination.

For some products, ICMS is calculated on a reduced base (e.g. 80% of the goods value is taxed and 20% is not taxed). The reduction of the base can be valid either permanently or only for a certain time period. Reduced bases are only used within a state. Therefore, they do not depend on state of origin and state of destination.

Some companies are not obligated to pay ICMS tax (e.g. some government companies).

The base value for the calculation of ICMS depends on the usage of the goods. If a customer buys goods for production or reselling, ICMS is calculated on the goods value without IPI. If the goods are used in a different way (e.g. consumption), ICMS is calculated on the goods value plus IPI.

Additionally, the usage determines how the amounts are posted in purchasing. If a material is used for production or reselling, the tax amounts are posted to separate line items. If a material is used for consumption, the tax increases the value of the material and can not be recovered.

Rate Determination in MM

ICMS rates are derived from the following parameters and tables:

  1. FI tax code

    2. The FI tax code carries the information to determine whether ICMS is calculated.

  2. Vendor master

    3. R/3 uses the tax jurisdiction of the vendor to determine the ship-from tax region which is required to read the ICMS rate tables.

    Only for Conhecimentos, ICMS may be automatically calculated on a base reduced to 80%. The activation of the 80% base for 'Conhecimentos' is done in the vendor master maintenance screen: General - Control data.

  3. Receiving plant

    4. R/3 uses the tax jurisdiction of the receiving plant to determine the ship-to tax region which is required to read the ICMS rate tables.

  4. ICMS general rates

    5. General ICMS rates are defined date-dependent. Rates are maintained per ship-from and ship-to tax region combination.

    Please note that if ICMS rates are within the same tax region, then the values of ship-from and ship-to tax region are the same.

    To maintain ICMS general rates, choose the Customizing path for ICMS (general).

  5. ICMS exceptions

General rates can be overwritten by the ICMS exceptions. Exceptions can be defined per material for a certain time period.

Please note that if ICMS exceptions are within the same tax region, then the values of ship-from and ship-to tax region are the same.

To maintain ICMS exceptions rates, choose the Customizing path for ICMS (exceptions).

If no rate can be found in the tables ICMS general rates and ICMS exceptions, then the ICMS tax rate is taken from Default rates.

Rate Determination in SD

ICMS rates are derived from the following parameters and tables:

  1. SD tax codes

    2. The SD pricing procedure uses the indicator Calculate ICMS of the SD tax code to determine whether ICMS is calculated. SD tax codes are specified in the sales order on line level.

  2. Sending plant

    3. R/3 uses the tax jurisdiction of the sending plant to determine the ship-from tax region which is required to read the ICMS rate tables.

  3. Customer master

    4. R/3 uses the tax jurisdiction of the customer to determine the ship-to tax region which is required to read the ICMS rate tables.

    A customer can be exempted from ICMS. Use the indicator ICMS exempt for customers who are not obligated to pay ICMS.

  4. ICMS general rates

    5. General ICMS rates are defined date-dependent. Rates are maintained per ship-from and ship-to tax region combination.

    Please note that if ICMS rates are within the same tax region, then the values of ship-from and ship-to tax region are the same.

    To maintain ICMS general rates, choose the Customizing path for ICMS (general)

  5. ICMS exceptions

General rates can be overwritten by the ICMS exceptions. Exceptions can be defined per material for a certain time period.

Please note that if ICMS exceptions are within the same tax region, then the values of ship-from and ship-to tax region are the same.

To maintain ICMS exception rates, choose the Customizing path for ICMS (exceptions).

If no rate can be found in the tables ICMS general rates and ICMS exceptions, then the ICMS tax rate is taken from Default rates.

ICMS Tax Law

The ICMS tax law is used for generating automatic Nota Fiscal texts and for legal reporting. R/3 can automatically determine the ICMS tax law in MM and SD.

You can maintain ICMS tax laws by choosing the Customizing path for Tax Law ICMS.

Determination Rules in MM

The ICMS tax law is determined from the tax code enhancement (see Tax Code Enhancements). It can be overwritten by an entry in table ICMS (exceptions).

Determination Rules in SD

The access sequence for tax laws is:

  1. Sales item category only if tax code is entered
  2. Customer master
  3. Material (IPI general / IPI exceptions / ICMS exceptions)
  4. Sales item category again without checking tax code.

A manual entry in the sales order is also possible.