Tax Region

Definition

Code that identifies a Brazilian region for purposes of tax calculation.

Use

The system calculates ICMS and SubTrib based on materials' ship-from and ship-to tax regions. For Brazilian company codes, the ship-from and ship-to locations are stored in the tax jurisdiction code , which can be found in address data.

Note that to calculate ISS, the system requires additional information at the municipal level (see Tax Jurisdiction Code ).

Activities

Customizing

You can maintain tax regions in Customizing for Start of the navigation path Financial Accounting (FI), by choosing 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 Brazilian Tax Regions End of the navigation path . Here you establish the assignment of tax regions to regions. Each region can have one or more tax regions assigned to it. For example, the region Amazonas has assigned to it the tax regions Amazonas and Zona Franca Manuas . In most cases, however, there is one tax region for every region, and they both have the same code.

The system handles foreign customers and vendors a bit differently. Additional tax regions have been defined (where the region is left blank), for example, XX for trade with the United States . You can then assign a tax region to the foreign countries you need by choosing the same path above, but the activity Define Tax Regions for Foreign Customers/Vendors .

For the system to automatically determine the tax region during tax calculation, ensure that the following settings are made in Customizing for FI, under Start of the navigation path Financial Accounting Global Settings Next navigation step Tax on Sales/Purchases Next navigation step Basic Settings Next navigation step External Tax Calculation End of the navigation path

  • Define Logical Destination

    Ex = B; Event = JUR; Function Module = J_1BTAXJUR_DETERMINE_NEW; RFC Destination = leave blank

  • Activate External Tax Calculation

    Reference = enter your calculation procedure (TAXBRA or TAXBRJ); External System = B; leave all other fields blank

Master Data

When you enter address data in master records, the system automatically determines the tax jurisdiction code based on the region (geographical) that you enter. If a single tax region corresponds to the region, the system assigns this tax region to the master record in the Jurisdict. Code field. If more than one tax region is assigned to the region, you must choose the appropriate tax region for the plant, customer, vendor, or company code.

Day-to-Day Activities

When you then post a purchase order in Materials Management (MM) or a sales order in Sales and Distribution (SD), the system uses the tax jurisdiction code from the respective master record. Or if you enter address data directly in the sales or purchase order, the system determines the tax jurisdiction code in the same way as described above, by checking which one is assigned to the geographical region you enter.