Municipal Tax on Services (ISS)

Definition

See ISS(in Portuguese, Imposto sobre Serviços ).

ISS can be due to the municipal tax authority either where the service is provided or where the service provider is located, or under certain circumstances to both authorities.

A number of factors influence the calculation, levying, and reporting of ISS, including:

  • Tax-relevant location

    This can be one of three tax jurisdictions: where the service provider is located, where the service is provided, or where the service recipient is located.

  • Who the tax is levied by

    This is typically the service provider, but in certain cases it can also be withheld by the service recipient.

Integration

ISS Determination

The system derives the ISS rate from the following factors when you post a sales order in Sales and Distribution (SD) or a purchase order in Materials Management (MM):

Factor

MM

SD

1) Tax code

The FI tax code determines whether the system must calculate ISS.

The pricing procedure checks the SD tax code: If the Calculate ISS indicator is set, the system calculates ISS. You specify the SD tax code in the sales on line-item level.

2) Master record

Depending on which location(s) are tax-relevant for a transaction, the system checks the tax jurisdiction code in the address data for customers, vendors, and plants as follows:

a) Service provider

Vendor

Plant

b) Service recipient

Plant

Sold-to party(business partner role)

c) Location where service is provided

Delivery address

If not specified, then the system checks the plant.

Note that for ISS only (unlike ICMS and SubTrib), the system takes the jurisdiction code entered on the Delivery Address tab ( Address Details button) – and not the one entered on the Invoice tab.

Ship-to party(business partner role)

3) ISS rate

The system searches for the rate as defined in Customizing: Start of the navigation path Financial Accounting Next navigation step Financial Accounting Global Settings Next navigation step Tax on Sales/Purchases Next navigation step Calculation Next navigation step Settings for Tax Calculation in Brazil Next navigation step Tax Rates Next navigation step Maintain ISS Values End of the navigation path .

Whether ISS amounts are already included in the net price of a material depends on how you have customized your price conditions, under Start of the navigation path Financial Accounting Next navigation step Financial Accounting Global Settings Next navigation step Tax on Sales/Purchases Next navigation step Basic Settings Next navigation step Brazil Next navigation step Define Which Taxes Are Included in MM Price Conditions End of the navigation path or MM-SRV Price Conditions or SD Price Conditions .

Master Data Maintenance

If ISS needs to be calculated, you must enter the tax jurisdiction code in customer, vendor, and plant master records.

See also:

Withholding Tax