The system determines the ISS tax rate by the city of the supplier (vendor) and the type of service. ISS amounts, required for nota fiscal reporting, are included in the price of services.

Construction companies represent an exception to the rule when calculating ISS: they use the ISS rate of the city where they render services, and not the city in which their company is based. The system does not currently cover this exception for construction companies.

ISS is charged only to the suppliers of services. This means that ISS is only calculated when you post a sales order in Sales and Distribution (SD), and not when you post a purchase order in Materials Management (MM).

In SD, when you enter a sales order, the system derives the ISS rate from the following information:

• ISS rate