Brazil Accounting Tax Processes v1 PDF

BRAZIL ACCOUNTING & TAX PROCESSES
Intragroup Brazil tax issue related

workshop
Contents
INTRODUCTION ............................................................................................................................. 2
I ACCOUNTING............................................................................................................................ 3
1.
Concept ............................................................................................................................. 3
2.
Applications ....................................................................................................................... 3
3.
Obligations ........................................................................................................................ 3
4.
Accounting Division ........................................................................................................... 3

4.1
Assets...................................................................................................................... 3
4.2
Liabilities ................................................................................................................. 5
4.3 Equity ............................................................................................................................ 6
5.
6.
4.3
Revenues ................................................................................................................ 6
4.4
Expenses .................................................................................................................... 6
4.5
Brazil tax structure .................................................................................................... 7
4.6
Nota fiscal Concept ................................................................................................... 8
4.7
Process examples into accounting concepts ........................................................... 12
-Concept for CFOP, Legal Books and tax rule related to Accounting .............................. 25
5.1
CFOP Codes ............................................................................................................. 25
5.2
Outgoing CFOPs ....................................................................................................... 26
5.3
Incoming CFOPs ....................................................................................................... 27
5.4
ICMS tax-rate determination rule ........................................................................... 29
5.5
Legal book for taxes ................................................................................................ 32
5.6
Incoming Processes ................................................................................................. 35
5.7
Outgoing Process................................................................................................... 103
5.8
Moving average price concept .............................................................................. 158
5.9
Main required legal reports .................................................................................. 161
Final considerations: ..................................................................................................... 162
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INTRODUCTION
The main purpose of this material is about to explain Brazil Accountancy & Taxes
principles, techniques and its behavior in Brazil legal reports.
In this material will see the right way to post all possible processes inside accounting
area and their registers on the Brazil legal books.
All registers will be explained from a process concept point of view, FI posting scheme
and legal books posting in the following areas:
Sales and Distribution

Materials Management
Production Planning
Other charges Legal Books
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I ACCOUNTING
1. Concept
Accounting is the science that studies the Equity by the economical and finance point
of view, taking into account all the quantitative aspects and all variances inside it.
2. Applications
Accounting is applied in all entities, being a person, a non - profitable entity, or a
company and either a Federal, State or Municipal Public Company.
3. Obligations
"Postings are mandatory by virtue of laws, and through them there is the possibility of
controlling all operations of a company as far as the mandatory tax payments required
to maintain the existence of the State and the yearning of the Society."
4. Accounting Division
Accounting is divided into 5 parts for better understanding:
Assets
Liabilities
Equity
Revenues
Expenses
4.1 Assets
Assets represent all goods and rights of one entity or company, monetarily expressed.
Therefore, assets and the accounts have always a debit nature (DB).
Goods are that, which cause satisfactions to the human being necessities and can be
economically evaluated.
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From the accounting point of view, you can define goods as everything that a company
has, whether for use, consumption or trade.
Goods of use example:
-
Machinery, equipment, vehicles, installations, etc.
Goods of use are that called as Fixed Assets.

Goods of consumption - example:
-
Stationary, cleaning material.
Those are considered consumption material

Exchanging Goods - example:
-
Inventories for sale and resale.
Those are considered exchanging goods by the characteristics that we exchange

merchandise per money.
Rights are all values that a company will receive from third parties.
Example:
A company sells goods into a long payment terms and then it is not receiving money
upon sales, but constitutes a right of receiving this in near future.
This transaction that allows the company receiving money
Receivable.
is called Accounts
Based on this, we know that one asset represents all the rights and goods expressed
monetarily, increasing values by a FI debit posting (DB).
-
Asset of one company is increased with a debit (DB) and decreased with a
credit (CR)
Increasing posting or debits (DB) appears in the left side of accounting.
Decreasing posting or credits (CR) appears in the right side of accounting.
Below are given some Assets elements:

-
Bank accounts
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Cash
Accounts Receivable
Prepaid/Recoverable taxes
Finished Goods
Furniture
Vehicles
Building
Land
Machinery & Equipment
4.2 Liabilities
Liabilities represent all company obligations, i.e., amounts due to third parties.
Example:
A company buys into short payment terms and due to that obligation payment is the
future. This means a payable invoice corresponding to Accounts Payable.
Based on that, we know that one liability represents all the obligations being paid
expressed monetarily, increasing values by a credit posting (CR).
-
Liabilities of one company is increased with a credit (CR) and decreased with a
debit (DB).
Increasing posting or credits (CR) appears in the right side of accounting.
Decreasing posting or debits (DB) appears in the left side of accounting.
Below are given some Liabilities elements:

-
Accounts Payable
Rental/Leasing Payable
Taxes Payables
Salaries Payable
Loans Payable
Interest Payable
Social Contribution Payable
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4.3 Equity
Equity represents the owners investments in a company, profits and losses from prior
years and dividends payable to partners.
Equity is the difference between Assets and Liabilities in a certain time.
Example:
Assets..10,000.00
Liabilities5,300.00
Equity..4,700.00
4.3 Revenues
Revenues are understood as all incoming elements to assets, money or rights

receivable generated by goods sold, services performed, rentals or receivable
discounts
Revenue represents always Equity increasing.
Example:
-
General Sales
Services Sales
Rentals Receivable
Interest Receivable
Exchange Gain
Items given above are posting to assets in a monetary form for one company.
-
Revenues are always credit posting (CR)
Posting will be at the right accounting side.

4.4 Expenses
It is understood by expense, the consumption of goods or services that directly or

indirectly produce revenues, i.e., it is the sacrifice which an entity does to be able to
generate revenues. Decreasing in assets or increasing liabilities, expenditure is
undertaken with the purpose of obtaining revenue whose value exceeds that spending
which leads a reduction in equity.
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Example:
-
Utilities
Rental
Cafeteria
Sales discounts
Bank charges
Taxes expenses
Interest payable
Stationery \
4.5 Brazil tax structure
When talking about direct and indirect taxes to be considered on Notas Fiscais related to
business process, currently Brazil works into three different authority levels for taxation:
Federal, State and Municipal
Federal
To the Federal level we have the following tax types considered as the main ones:
Direct
PIS Withholding tax
COFINS Withholding tax
CSLL withholding tax
IRRF Withholding tax
INSS Withholding tax
Indirect
PIS regular tax Social Integration Program
COFINS regular tax Social Finance Contribution
IPI regular tax Tax on Industrialized products
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State
ICMS Tax on goods movement
ICMS ST (Surcharge)
Municipal
ISS tax on service
ISS Withholding tax on service
4.6 Nota fiscal Concept
While countries authorities all over of the word require an invoice document in order charge
customer and also declare VAT tax to be collected to the order to cash process, Brazil works
into a different approach. Invoice is replaced into a Nota Fiscal document.
Goods Nota Fiscal
Whatever goods company moves to outside of the company, Nota Fiscal document is required.
Nota Fiscal is something similar to invoice, but the difference in between is about an official
form and layout given by government where every single company which is defined as ICMS
taxpayer must post and print this document out.
On this Nota Fiscal document you have all data related to sender tax payer, customer, goods,
unit and total price, tax base and tax amounts, payment terms, forwarding agent and so on.
As main and important legal requirement, when company posts a good issue immediately that
Nota fiscal document must also be posted.
Brazil Company could never moves goods to outside without posting outgoing Nota Fiscal.
Brazil authorities requires that you as soon as goods issue is posted, COGs and inventory
account must also immediately posted and as Nota Fiscal is immediately required, revenue,
customer and tax to pay must be posted as well.
This means that COGs and revenue must be recognized at the same time.
It is not allowed to send goods to customer through a simple bill of lading document without
goods issue and just post it and invoice when customer confirms goods receipt.
Nota Fiscal is required to every single process which moves goods. It does not matter if process
refers to order to cash, consignment, subcontracting process, free of charge, donation,
samples etc. This is due to tax must be calculated and paid.
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This happens to goods receipt. When goods receipt is posted, immediately that invoice receipt
must also be posted.
In general rule:
Post goods issue and outgoing invoice/Nota Fiscal must be posted into the same posting date.
Post goods receipt and incoming Invoice/Nota Fiscal receipt must be posted into the same
posting date.
See below a Nota Fiscal document as example.
DANFE Documen Auxiliar de Nota Fiscal Eletronica(Auxiliar Eletroctronic Nota Fiscal

Document)
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Currently in Brazil Notas Fiscais related to goods, when it is posted, before shipping goods an
electronic approval by the government is required.
Then as soon as billing document is created, an XML file with all invoice data must be sent to
the government and after government approval that Nota Fiscal Document can be printed out.
An approval is recognized by a Protocol Number given by the authority in which must be
printed on that outgoing Nota Fiscal.
Service Nota fiscal
Regarding to Service Nota Fiscal, layout depends on where city service provider is located in.
Due to more than 5000 cities all over Brazil, we may have also about 5000 service Nota Fiscal
layouts.
As there is no goods involvement that NF can be posted any time. Municipal government
requires an electronic one and approval as well.
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4.7 Process examples into accounting concepts
After all above explanations given as accounting area is, we can see some examples getting
involved those provided concepts.
a) Raw material purchasing for a finished good production and consequent sale:
Total invoice
Raw material amount
IPI 10% tax rate
IPI tax base amount
ICMS 18% tax rate
ICMS tax base amount
PIS 0,65% tax rate
PIS tax base amount
COFINS 3,0% tax rate
COFINS tax base amount
$ 1,100.00
$ 1,000.00
$ 100.00
$ 1,000.00
$ 180.00
$ 1,000.00
$
6,50
$ 1,100.00
$
30.00
$ 1,100.00
In 99, 9% of purchases for industrialization (raw material) the tax base amount for ICMS/IPI
taxes will be the raw material value. In this case, if the buyer is a taxpayer for both taxes, keep
in mind that credits of those taxes must be taken in incoming fiscal book.
See below how accounting and fiscal books are posted:
-
Accounting posting scheme
Six accounts are involved in this document being five of them asset and one liability.
DB Raw material inventories (Asset-exchange goods)
DB ICMS Recoverable
(Asset-rights)
DB IPI Recoverable
(Asset-rights)
DB PIS Recoverable
(Asset-rights)
DB COFINS Recoverable
(Asset-rights)
CR Accounts Payable (Liability- Payable Obligations)
$ 783.50
$ 180.00
$ 100.00
$......6,50
$.....30,00
$ 1,100.00
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Raw Material
inventories
(1)
783.50
(DB)
Accounts Payable
(1)
1,100.00
(CR)
ICMS Recoverable
IPI Recoverable
(1) 180.00
(1) 100.00
(DB)
(DB)
PIS Recoverable
COFINS Recoverable
(1) 6.50
(1) 30.00
(DB)
(DB)
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Note that following accounts are used:
Raw Material Inventories (Asset account for exchanging goods)

ICMS Recoverable
- (Asset account for rights)
IPI Recoverable
PIS Recoverable- (Asset account for rights)
COFINS Recoverable
Accounts Payable
- (Liability account for obligations)
Incoming legal books registration shows posting as follows:
Accounting amount
ICMS tax amount-credit
IPI tax base amount
IPI tax amount-credit
$ 1,100.00
$ 1,000.00
$ 180.00
$ 1,000.00
$ 100.00
No PIS and COFINS taxes information are required in this incoming legal book.
If purchases are not taxed by IPI, PIS and COFINS taxes, accounting follows the same
line and those nontaxable taxes postings are excluded.
Incoming legal books registration shows charges as follows:
Accounting amount
ICMS tax amount-credit
IPI tax other or excluded base
$ 1,000.00
$ 1,000.00
$ 180.00
$ 1,000.00.
If purchases are not taxed by ICMS, PIS and COFINS taxes, accounting follows the same
line and those nontaxable taxes postings are excluded.
Incoming legal books registration shows posting as follows:
Accounting amount
ICMS tax other or excluded base
IPI tax base amount
IPI tax amount-credit
$ 1,100.00
$ 1,100.00
$ 1,000.00
$ 100.00
If purchases are not taxed by ICMS, IPI, PIS and COFINS taxes, accounting follows the
same line and those nontaxable taxes postings are excluded.
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Incoming legal books registration shows postings as follows:

Accounting amount
ICMS tax other or excluded base
IPI tax other or excluded base
$ 1,000.00
$ 1,000.00
$ 1,000.00
Accounting posting now is the easy one.

Two accounts will be used in this case one for assets and another for liabilities.
(DB) Raw materials inventories (Assets exchanging goods) $ 1,000.00
(CR) - Accounts Payable (Liabilities obligations payable)
$ 1,000.00
Raw Material inventories
(1)
1,000.00
(DB)
Accounts Payable
(1)
1,000.00
(CR)
As a general rule, every purchases for industrialization (raw material) that will be sold
as a new product, purchase of other indirect materials for production (indirect
material) or resale products, the calculation for accounting purposes becomes very
simple.
Excluding all amounts of existing taxes on Invoice (Nota Fiscal), the remaining amount
to be charged to inventories accounting, will be the total of Nota Fiscal less taxes.
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b) Consumption material purchased to be utilized by company. Remember

that from year 2000 on, those purchases, in same cases allow the buyer
takes the ICMS credits registered on its incoming legal books.
Total invoice
Raw material amount
IPI 10% tax rate
IPI tax base amount
ICMS 18% tax rate
PIS 0,65% tax rate
PIS tax base amount
Stationary/Cleaning/Other
$ 1,100.00
$ 1,000.00
$ 100.00
$ 1,000.00
$ 180.00
$ 1,000.00
$
6,50
$ 1,100.00
$
30.00
$ 1,100.00
ICMS Recoverable
Accounts Payable
(1) 198.00
(1) 820.00
(DB)
(1) 1,100.00
(CR)
(DB)
Although PIS and COFINS taxes are included in the Nota Fiscal, they are not allowed to
be recovered once material refers to consumption purpose.
c) Services Purchases
This kind of purchase should be related to a production order (Finished Goods) or
direct expense.
One detail on this item, there is no obligation to register Service Nota Fiscal on
Incoming legal books.
Service Nota Fiscal includes sometimes, both taxes being ISS -Services tax- and IRRF
withholding.
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Example:
NF Service amount
ISS tax rate 5%
ISS tax base amount
IRRF WHT tax rate 1,5%
IRRF WHT base amount
$ 1,000.00
$
50.00
$ 1,000.00
$ .15.00
$ 1,000.00
In this situation two liabilities accounts and one asset account will be utilized. If the
material refers to production of finished goods, an asset account will be necessary or if
you are purchasing for consumption an expense account must be utilized.
Examples:
1 Production:
DB Production order/Inventories (Asset exchanging goods)
$ 1,000.00
CR Vendor accounts payable (Liabilities obligations payable) $ 985.00
CR IRRF withholding payable (Liabilities obligations payable) $
15.00
Production Order
(2)
1,000.00
(DB)
Accounts Payable
(1) 985.00
(CR)
IRRF WHT Payable
(2) 15.00
(CR)
Take into consideration that ISS on incoming invoice is not registered in

incoming legal books due to that is a municipal tax and this tax is not into the
non- cumulative concept, i.e., debit outgoing and credit incoming(See
explanation on tax rule structure and calculation topic)
The payment to vendor is net of IRRF (WHT), as such tax will be paid to the
federal government through a document called DARF.
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If the above purchase will be consumed, postings are the same above but
replacing account Production order into General expenses.
Below is given some examples showing sales/distribution(O2C) behavior.

d) Sales for resale or industrialization with IPI/ICMS.
Amount on outgoing Nota Fiscal
Goods amount
IPI 10% tax rate
IPI tax base amount
ICMS 18% tax rate
PIS 0,65% tax rate
PIS tax base amount
$ 1,100.00
$ 1,000.00
$ 100.00
$ 1,000.00
$ 180.00
$ 1,000.00
$
6.50
$ 1,100.00
$
30.00
$ 1,100.00
In most of the purchases, almost 99, 9%, are done for resale or industrialization so the
IPI/ICMS tax base amount will be the goods value. In this case if the seller or vendor is
a taxpayer for both taxes, register of debit on Outgoing legal books and credit on
Incoming legal books are mandatory.
See below how accounting posting behaves:
-
Accounting posting scheme:
This FI posting contains eleven accounts, being two for assets, four for liabilities, four
for expenses and one for revenue.
DB Customer (Assets Accounts Receivable)
CR Gross sales revenue (Revenue)
DB ICMS tax sales deduction (Expenses)
CR ICMS tax to pay (Liabilities)
CR - IPI tax to pay (Liabilities)
DB PIS tax sales deduction (Expenses)
CR - PIS tax to pay (Liabilities)
DB COFINS tax sales deduction (Expenses)
CR - COFINS tax to pay (Liabilities)
DB COGs (Expenses) - exemplification only
CR Inventories (Assets)
$ 1,100.00
$ 1,000.00
$ 180.00
$ 180.00
$ 100.00
$
6.50
$
6.50
$
30.00
$
30.00
$
450.00
$
450.00
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Customer
Gross Sales Revenue
(1)
1,100.00
(D)
(1)
1,000.00
(C)
ICMS Tax to Payable
ICMS Tax Sales

Deduction
(1)
180.00
(D)
IPI Payable
(1)
180.00
(C)
PIS Tax Sales Deduction
(1)
100.00
(C)
PIS Tax to Pay
(1)
6.50
(D)
(1)
6.50
(C)
COFINS Tax to pay

(1)
30.00
(C)
COGs(Cost of Goods
Sold))
(2)
450.00
(D)
COFINS Tax Sales

Deduction
(1)
30.00
(D)
Inventories
(2)
450.00
(c)
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In outgoing legal books those registers are as follows:

Accounting amount
ICMS Tax base amount
ICMS Debit
IPI Tax base amount
IPI Debit
$ 1,100.00
$ 1,000.00
$ 180.00
$ 1,000.00
$ 100.00
Although PIS and COFINS taxes are calculated and posted in FI accounting they are not
obligated to be posted in outgoing legal as well. For those sales where IPI, PIS and
COFINS taxes are not taxable, accounting follows the same rule and those nontaxable
taxes are excluded.
In the outgoing legal books, Posting are:
Accounting amount
ICMS Debit
IPI excluded/other base
$ 1,100.00
$ 1,000.00
$ 180.00
$ 1,000.00
For those sales where ICMS, PIS and COFINS taxes are not taxable, (IPI only),
accounting follow the same rule, and those nontaxable taxes are excluded.
In the outgoing legal books, postings are:
Accounting amount
ICMS excluded or other base
IPI tax base amount
IPI Debit
$ 1,100.00
$ 1,100.00
$ 1,000.00
$ 100.00
Sales for end user, accounting posting follow the same rule. Only change is about ICMS
tax base amount where its tax base is that material value plus IPI amount as given
below.
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e) Sales to end user destination with ICMS/IPI.

Amount of outgoing Nota Fiscal
Goods amount
IPI 10% tax rate
IPI tax base amount
ICMS 18% tax rate
PIS 0,65% tax rate
PIS tax base amount
COFINS 3% tax rate
$ 1,100.00
$ 1,000.00
$ 100.00
$ 1,000.00
$ 198.00
$ 1,100.00
$
6.50
$ 1,100.00
$
30.00
$ 1,100.00
See below accounting posting scheme:

CR Gross sales revenue (Revenue)
DB ICMS tax sales deduction (Expenses)
CR ICMS tax to pay (Liabilities)
CR - IPI tax to pay (Liabilities)
DB PIS tax sales deduction (Expenses)
CR - PIS tax to pay (Liabilities)
DB COFINS tax sales deduction (Expenses)
CR - COFINS tax to pay (Liabilities)
DB COGs (Expenses) - exemplification only
CR Inventories (Assets)
Customer
(1)
1,100.00
(D)
$ 1,100.00
$ 1,000.00
$ 198.00
$ 198.00
$ 100.00
$
6.50
$
6,50
$
30.00
$
30.00
$
450.00
$
450.00
Gross Sales Revenue

(1)
1,000.00
(C)
ICMS Tax Sales

Deduction
(1)
198.00
(D)
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ICMS Tax to Pay
IPI Tax to Pay
(1)
198.00
(C)
PIS Tax sales Deduction
(1)
100.00
(C)
COFINS Tax Sales

Deduction
PIS to Pay
(1)
6.50
(D)
(1)
6.50
(C)
COFINS Tax to Pay

(1)
30.00
(C)
(1)
30.00
(D)
Cost of Goods Sales
Inventories
(2)
450.00
(D)
(2)
450.00
(c)
In outgoing legal books those postings are as follows:

Accounting amount
ICMS Debit
IPI tax base amount
IPI Debit
$ 1,100.00
$ 1,100.00
$ 198.00
$ 1,000.00
$ 100.00
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f) Sales of services with incidence of ISS and IRRF WHT.

Amount of outgoing Nota Fiscal
Services amount
ISS 5% tax rate
ISS tax base amount
IRRF WHT 1.5% tax rate
IRRF WHT tax base amount
PIS 0, 65% tax rate
PIS tax base amount
COFINS 3% tax rate
$ 1,000.00
$ 1,000.00
$ 50.00
$ 1,000.00
$
1.50
$ 1,000.00
$
6.50
$ 1,000.00
$
30.00
$ 1,000.00
Below see how accounting posting is:

-
Accounting posting scheme
This posting contains eleven accounts, being three for assets, three for liabilities, four
for expenses and one for revenue.
CR Gross services sales revenue (Income)
DB ISS tax sales deduction (Expenses)
CR ISS tax to pay (Liabilities)
DB IRRF WHT Recoverable (Assets)
DB PIS tax sales deductions (Expenses)
CR PIS tax to pay (Liabilities)
DB COFINS tax sales deductions (Expenses)
CR - COFINS tax to pay Payable (Liabilities)
DB Cost of service (Expenses) - exemplification only
CR Payroll accrual (labor for appropriation)
Customer
(1)
998.50
(D)
Gross Service Sales

Revenue
(1)
1,000.00
(C)
$ 998.50
$ 1,000.00
$
50.00
$
50.00
$
1.50
$
6.50
$
6.50
$
30.00
$
30.00
$
150.00
$
150.00
ISS Tax Sales
Deduction
(1)
50.00
(D)
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ISS tax to Pay

(1)
50.00
(C)
COFINS Tax Sales

Deduction
(1)
30.00
(D)
Cost of Service
(2)
150.00
(D)
PIS Tax Sales

Deduction
PIS to Pay
(1)
6.50
(D)
(1)
6.50
(C)
COFINS to Pay
(1)
30.00
(C)
Recoverable IRRF
WHT
(1)
1.50
(D)
Labor for
Apropriation
(2)
150.00
(c)
IRRF WHT must be always posted and withhold at the invoice posting while PIS,
COFIS and CSLL withhold at the payment posting.
Example:
-
ICMS tax sales deduction <-> ICMS tax to pay

ISS tax sales deduction <-> ISS tax to pay.
PIS tax sales deduction <-> PIS tax to pay.
COFINS tax sales deduction <-> COFINS tax to pay).
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5. -Concept for CFOP, Legal Books and tax rule related to

Accounting
Accounting seems to be a complicated business technic , when we have the first
contact, since this practice drives user to a confusion at the moment of debiting or
crediting , assets , liabilities, revenue and expenses accounts.
One of the best ways to understand this process, after analyzing accounting concepts,
what is the nature of involved accounts in that transaction or process.
After that you can do the right accounting classification and have the postings applied.
Another very important point is about de CFOP. These codes will be utilized always
associated to a Nota Fiscal either outgoing or incoming.
5.1 CFOP Codes
(*) Codigo Fiscal de Operaes = Codes for fiscal operational process.

These codes have a great importance in both books account or fiscal, since they
determine if the transaction is a purchase of a raw material, consumption material or
service, etc. Starting with these codes, it will be easy identifying how to proceed
accounting classification and posting to accounts.
CFOP table is controlled by SINIEF Federal Fiscal and Economics Information System,
which regulates the States legislations in one common rule referring to ICMS tax.
Therefore this procedure is applied for all Brazilian States in the same way, so there is
no difference among them, stating that all transactions foreseen for ICMS taxes are
defined in this table and must be applied in any place in Brazil.
SINIEF Table is composed by:
-
Incoming
Outgoing
For better understanding, we will start with outgoing and then incoming transactions.
We need to keep in mind that identifying, incoming transaction naturally we will be
able to define accounting classification and posterior accounting posting.
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5.2 Outgoing CFOPs
Outgoing invoices are classified as per following codes:

-
5.000 Goods or services sales inside the State;

6.000 Goods or services sales to other States;
7.000 Goods or services sales - Exports.
5.000 Goods or services sales inside the State.

This code must be applied when sales transaction takes place in the same State of
customer and sender.
Still for this code, according to CFOP table, three more digits must be added, which
identifies the correct outgoing transaction.
Example:
Sale of one good produced by the sender to a customer in the same State the right
code to be applied is:
5.000 + 101 = 5.101 Sales of production from company inside the State.
A resale of goods by sender to a customer in the same State the right code to be
applied is:
5.000+ 102 = 5.102 Resale of goods acquired from third parties inside the State.
6.000 - Goods or services sales to other States.
This codification has the same rules used for 5.000 codes and the only difference is
that the sender and the customer are in different States, so taxation has other rule.
7.000 - Goods or services sales - Exports.
This codification has the same rules used as above codes (5.000/6.000) and the
differences are sender country, destination country and taxation.
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Taxation breakdown:
-
Inside State transactions (5000) rates are 17% or 18% according State
legislation.
Transactions among different States, legislation ruled taxation as follows:
Transactions among States South/Southeast (SP, MG, RJ, PR, SC, RS)-rate
applied is 12%.
Transactions among State North/Northeast, including Espirito Santo state
rate applied is 7%.
Transactions with other countries destination - taxation will be suspended or

exempted.
5.3 Incoming CFOPs
Incoming and outgoing transactions are also related to each other because for nature
determination on incoming we need to know the outgoing nature, informed on Nota
Fiscal and goods application at the buyer company. With this information on hands we
are able to define which accounting classification and registers.
Incoming is controlled by codes as follows:
-
1.000 Incoming or services acquisitions inside State;

2.000 Incoming or services acquisitions outside State;
3.000 - Incoming or services acquisitions Imports;
Lets take a look on the following:

A purchase of a good (merchandise) produced by the Nota Fiscal sender to one
taxpayer inside the same State (5.101).
Besides the nature on the Nota Fiscal, be sure what is the usage of purchased
product.
If this product has its destination to produce another one, you are purchasing a raw
material.
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The incoming nature would be:

1000 codes
1000 + 101 = 1.101 Raw material purchase inside State;
Please verify rules or tax credits in Fiscal Books.
If purchase destination is for consumption:
1000 + 556 = 1.556 = Purchase of consumption material inside State.
Fixed Assets purchases:
1000 + 551 = Fixed Assets purchases inside State.
Resale purchases:
1000 + 102 = 1.102 = Resale purchases inside State.
2000 code
Same codes are applied for codification purchases as above 1000 and differences
are that, the Nota Fiscal sender is in another State and taxation.
3000 code
Same codes are applied for codification purchases, as above, indicating that are
imports.
Purchases taxation will be explained as below:
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5.4 ICMS tax-rate determination rule
ICMS tax rates determination is defined also through that same SINIEF agreement
signed up by all States.
Tax rates rule were given as follow:
-
Transactions inside the same State (1000), 17 or 18% are applied according
State legislation.
Taxation transactions among other States, according to legislation are as follows:

-
Transactions among South/Southeast region States (SP, MG, RJ, PR, SC, RS)
12% rate is applied.
Transactions from North/Northeast/Middle West, including Espirito Santo
state to South/Southeast regions 12% rate are applied.
Transactions from South/Southeast regions to North/Northeast/Middle West
7% rate are applied.
Incoming transactions from other countries, the internal rate of the State
where the merchandise is cleared.
In order to have a better understanding, see pictures given below:
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First of all you have Brazil map where in there we have 27 States
By grouping those States into regions, government was able to harmonize ICMS
taxation based on region with same characteristics and also its own development.
Then, 5 regions were defined.
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Taking into account States grouped into regions, government defined ICMS tax rates
for operation into the same and among States (Ship from Ship to) as given:
With the table shown below, you have then ICMS general tax rates rule getting
involved all States.
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5.5 Legal book for taxes

Regarding to incoming and outgoing Notas Fiscais (Invoices), there are four main
required books.
Incoming legal books Model 1 or 1/A Refers to all incoming Notas Fiscais
Outgoing legal books Model 2 or 2A Refers to all outgoing Notas Fiscais
Statutory legal books Model 8 Refers to IPI tax reconciliation (Credit and debit
postings). Settling and amounts on it must be the same on incoming and outgoing legal
books (Models 1-1/A and 2-2/A).
Statutory legal books Model 9 Refers to ICMS tax reconciliation (Credit and debit
postings). Settling and amounts on it must be the same on incoming and outgoing legal
books (Models 1-1/A and 2-2/A).
CFOP rules and consequent posting in incoming and Outgoing legal books, are valid for
States only, i.e., for transactions involving ICMS tax.
Talking about IPI, although that tax refers to Federal authority, its posting appears on
that fiscal books being relevant to the Federal auditors which utilize also that book in
order to control IPI tax.
IPI taxation (Tax on industrialized products), takes into account essentialness of goods,
and rates goes from reduced rate 0% (zero) to 300 %( three hundred percent).
TIPI (IPI Table) must be followed for goods classification and its respective rate.
Before we finish this concept, part of this work, it is very important remembering that
all taxes related to postings in fiscal incoming or outgoing legal books must reflect and
be the same posted in general ledger in accordance to the rules given:
The way to express posting on fiscal books is different in accounting. Although it
seems to be confusion, if we go in a more accurate analysis, we can understand it
easily what difference they have.
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When, talking about a transaction of an incoming good on incoming fiscal book, each
transaction which has the characteristic of tax appropriation posting is:
-
On fiscal books = Credit posting;

On accounting = Debit Recoverable taxes (Assets).
When talking about a transaction of an outgoing good on outgoing fiscal book, each
transaction which has de characteristic of tax appropriation posting is:
-
On fiscal books = Debit posting;

On accounting = Credit Tax to pay (Liabilities).
Therefore, the amount of account Recoverable taxes in accounting must be the same
of the column of the incoming legal books named Tax credit.
The amount of the account named Tax to pay must be the same of the column of the
outgoing legal books named Tax debit.
The difference between those two accounts must be exactly the amount payable to
government agency or keep this amount to be recovered next month, in case credit in
incoming legal books is greater than outgoing one.
Summarizing:
-
All credits in incoming legal books , are debits in accounting;

All debits in outgoing legal books are credits in accounting.
Inventory legal books:

All stock movements posted through incoming or outgoing processes must be posted
in a legal books name Model 3.
All stock balance Inventory legal books Model 7.
*All mentioned legal books are required in piece of paper into a monthly basis.
Besides those mentioned legal books there are also 3 main magnetic files referring to
transaction performed a long the month and year as given:
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SPED Fiscal Containing all incoming and outgoing Notas Fiscais Information
Required on monthly basis
SPED G/L accounting posting Containing all accounting posting
Required on yearly basis
SPED PIS/COFINS All posting related to PIS and COFINS taxes.
Required on monthly basis
After the above concepts given we can go through all possible incoming and outgoing
process and how their behaviors are in accounting and fiscal area.
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5.6 Incoming Processes

1.00 Raw materials purchasing;
2.00 - Consumption Materials purchasing;
3.00 Industrialization purchasing with ICMS tax base reduction
4.00 Raw material purchasing with ICMS surcharge;
5.00 - Industrialization purchasing with 50% of IPI Credit;
6.00 Services purchasing
7.00 Service purchase from natural person with WHT.
8.00 Vendors return;
9.00 Stock transfer order (Between plants);
10.00 Freight Nota Fiscal-Transportation (CTRC);
11.00 Returnable packaging Nota fiscal sales with acquired products;
12.00 Future delivery purchasing;
13.00 sub-contracting or Industrialization remittance;
14.00 Consignment process;
15.00 Third party process
16.00 Complementary Nota Fiscal;
17.00 Importation purchasing;
18.0 Inventories
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1.0- Raw materials purchasing

Definition:
Raw material is a good purchased to be industrialized resulting in a new product to be
sold, i.e., one or various raw materials will be transformed in a new product.
Example
To produce a finished good called A youll need two other materials considered B
and C which is called raw materials.
As a general rule, a company which has this kind of transaction is considered an
ICMS/IPI taxpayer, i.e., it has the right of credits of those taxes on raw materials
purchases and debit also of those taxes at the sales moment. (Non-cumulative).
Nota Fiscal of a raw material purchase with ICMS/IPI CFOP 5.101 (inside State).
-
Nota fiscal total amount

ICMS/IPI tax base amount
ICMS 18% tax rate
IPI 10% tax rate
PIS 0,65% tax rate
PIS tax base amount
= $ 2,200.00
= $ 2,000.00
= $ 360.00
= $ 200.00
=$
13.00
= $ 2,200.00
=$
60.00
= $ 2,200.00
1.1 Fiscal Books

Besides Nota Fiscal data, register on Incoming legal books will be treated as below:
CFOP Code= 1.101 Raw material purchase inside State
Accounting amount =
ICMS tax base amount=
ICMS credit
IPI tax base amount =
IPI Credit =
$ 2,200.00
$ 2,000.00
$ 360.00
$ 2,000.00
$ 200.00
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1.2 Accounting
DB Raw Material inventories account
DB Recoverable ICMS
DB Recoverable IPI
DB Recoverable PIS
DB Recoverable COFINS
CR Accounts Payable
$ 1,567.00
$ 360.00
$ 200.00
$......13.00
$......60.00
$ 2,200.00
1.3 Posting scheme
Inventories
(1)
1,567.00
(D)
Recoverable ICMS
(1)
360.00
(D)
Accounts Payable
(2) 2,200.00
C
Recoverable PIS
(1) 13.00
(D)
Recoverable IPI
(1)
200.00
(D)
Recoverable
COFINS
(1) 60.00
(D)
When purchasing raw materials and IPI, PIS and COFINS are not due, accounting
process follows as above excluding those mentioned tax types.
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Incoming legal book will be as follows:

Accounting amount =
ICMS tax base amount=
ICMS credit =
IPI excluded or other base
$ 2,000.00
$ 2,000.00
$ 360.00
$ 2,000.00
When purchasing raw materials and ICMS, PIS and COFINS are not due, accounting
process follows as above excluding those mentioned tax types.
Accounting amount =
ICMS other or excluded base =
IPI tax base amount =
IPI Credit =
$ 2,200.00
$ 2,000.00
$ 2,000.00
$ 200.00
When purchasing raw materials and ICMS/IPI is not due, accounting process follows as
above excluding ICMS/IPI posting only.
Accounting amount =
ICMS other or excluded base=
IPI excluded or other base =
$ 1,000.00
$ 1,000.00
$ 1,000.00
Posting in this case is the very simple. Taxes are excluded, remaining Nota fiscal total
amount to be posted to Inventory account versus Accounts Payable.
Remarks:
If that purchase is from another state (6.101) or other country (7.101), just change the
first digit of CFOP from 1(1.101) to 2(2.101) or 3(3.101) checking the ICMS rate and
follow the same posting practice.
If the CFOP Code is 5.102, 6.102 or 7.102 (Resale) procedure will be the same as above,
but taking into account taxes on Nota Fiscal.
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2.00 Consumption Material Purchasing

Definition:
Consumption materials are all that purchases to be utilized inside the company (not for
sale).
Example:
-
Stationary, cleaning material, services, etc.
It is necessary in this case verify if there is some existing rule for tax credit, as from the
year 2000 on, new rules were put in place for ICMS credits for some of those material.
Purchase Nota Fiscal of consumption material, with ICMS/IPI CFOP Codes 5.102 (inside
State).
ICMS amount of 18%
IPI amount of 10%
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 100.00
2.1 Fiscal Books

Besides of Nota Fiscal data, posting on incoming legal books must follows as:
CFOP Code
= 1.556 Consumption material purchase.
Accounting amount
Calculation basis - ICMS
ICMS amount at 18%
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 1,100.00
2.2 Accounting
DB Consumption material/Cleaning/ Stationary etc.
DB Recoverable ICMS
CR Accounts Payable
= $ 902.00
= $ 198.00
= $ 1,100.00
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Pgina 39
2.3 Posting scheme
Consump.Material
Recoverable ICMS
Accounts Payable
(1)
198.00
(D)
(1) 902.00
(D)
(1)
1,100.00
For those consumption materials, cleaning and stationary purchases where no IPI is
charged, accounting procedures follows the same as said above, once just Incoming
legal books will change.
Incoming legal books postings will be as below:
CFOP Code
Accounting amount
ICMS amount at 18%
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 1,100.00
In purchases of consumption materials without ICMS but with IPI postings we exclude
ICMS posting, i.e., we post the total amount of Nota Fiscal in consumption material
account versus Accounts Payable.
Incoming legal books postings will be as below:
CFOP Code
Accounting amount
= $ 1,100.00
= $ 1,100.00
= $ 1,100.00
Same rule is applied when purchasing without ICMS/IPI and accounting and fiscal
books are as above.
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Pgina 40
Remarks:
If purchase is from another State (6.101/6.102) or from another country (7.101/7.102)
you just change the first digit of the CFOP, from 1(1.556) to 2(2.556) or 3(3.556) and
verify the ICMS rate and proceed with the same rule for posting.
If CFOP 5.102, 6.102 or 7.102 (Resale material) procedures are same as prior above,
taking into account taxes included on Nota Fiscal.
If the purchase of consumption material placed from other State, it has to be taken in
the differential rate. If a purchase is 12% tax rate interstate, internal rate should be
taken by the state where goods will be consumed and apply the differential.
Example:
If a Nota Fiscal with 12% is shipped to Sao Paulo, it must be calculated 6% as
difference, because the internal rate for this state is 18%.
Accounting for this value will be:
DB Consumption Material Expense
CR - ICMS to pay
3.0 Industrialization purchasing with ICMS tax base reduction
Definition:
This kind of operation happens when the vendor or product commercialized has any
benefit of ICMS tax base amount reduction given by State authorities. This reduction
should be in any percentage.
In these cases is necessary take in account taxes included in Nota Fiscal and the correct
appropriation of them.
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Example of Nota Fiscal of raw material purchasing with ICMS/IPI taxes where ICMS tax
has its base amount reduced into 60%.. No PIS and COFINS as well CFOP 5101
Raw material amount
ICMS tax base amount reduced
ICMS at 18%
IPI tax base amount
IPI amount at 10%
= $ 1,100.00
= $ 1,000.00
= $ 400.00
= $ 72.00
= $ 1,000.00
= $ 100.00
3.1 Fiscal books

Besides Nota fiscal data, posting on incoming legal books must be as follows:
CFOP Code= 1.101 Raw material purchase - inside State
Accounting amount
= $ 1,100.00
= $ 400.00
ICMS credit
= $ 72.00
= $ 600.00
IPI tax base amount
= $ 1,000.00
IPI credit
= $ 100.00
3.2 Accounting:
DB Raw material inventories account
DB Recoverable ICMS
DB Recoverable IPI
CR Accounts Payable
= $ 928.00
= $ 72.00
= $ 100.00
= $ 1,100.00
3.3 Posting scheme

Material Inventories
(1) 928.00
(D)
Recoverable ICMS
(1)72.00
(D)
Recoverable IPI
(1)
100.00
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Accounts Payable
(1) 1,100.00
C
If purchase like this case, there is no IPI tax, accounting procedures follows the same,
excluding that IPI posting only.
In incoming legal books, these accounting entries behave as follows
CFOP Code= 1.101 - Raw materials in the State
Accounting amount
$ 1,000.00
$....400.00
ICMS Credit =
$
72.00
ICMS excluded or other base =
$ 600.00
IPI excluded or other base =
$ 1,000.00
For purchases of raw materials in which there is no ICMS but only IPI, the accounting
follows the same way, excluding only the ICMS entries.
In incoming legal book, these entries behave as follows:
CFOP Code= 1.101 Raw materials purchase inside State
Accounting amount
IPI tax base amount
IPI amount
= $ 1,100.00
= $ 1,100.00
= $ 1,000.00
= $ 100.00
For purchases of raw materials where there is no ICMS / IPI, the accounting follows the
same way, excluding only IPI / ICMS entries.
In incoming legal book, these entries behave as follows:
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Pgina 43
CFOP Code= 1.101 Raw materials purchase inside State

Accounting amount
= $ 1,000.00
= $ 1,000.00
= $ 1,000.00
The posting for this case becomes the simplest of all, where Nota Fiscal total amount is
posted in inventory against vendor account
Remarks:
If this purchase is placed to a vendor in another State (6101) or other Country (7101),
simply change the first number CFOP 1 (1101) to 2 (2101) or 3 (3101), check the tax
rate, and proceed with the same techniques of postings.
If CFOP is 5102, 6102 or 7102 (Resale products), the procedure becomes the same as
the previous example, observing only the taxes listed in the Nota Fiscal.
4.0 - Raw material purchasing with ICMS surcharge (ICMS Substituio Tributria)
Definition:
It is a normal purchase of goods where the use of it may be both for industrialization
(raw material) and for own use (consumption).
What is a tax surcharge?
It is another taxation rule defined by authority in order to control some tax payer in
certain region in which government has some difficult to assist if taxes are correctly
paid.
As a general rule, who absorbs any existing tax in a Nota Fiscal or product is the "end
user".
Therefore, some establishments, although registered as taxpayers in the State
Department of Finance, do not collect ICMS or even pay for estimation scheme,
booklet or monthly (not cumulative).
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A classic example of this operation are the cafes, bars, restaurants and gas stations
that have tax collections ruled by surcharge and when selling some products such as
beer, soft drinks, fuel, etc., Nota Fiscal is issued to the consumer and this one is not a
regular Nota Fiscal but to sales to consumer serie "D". On this Nota Fiscal there is no
existence of taxes.
Thus, the government created a rule for ICMS surcharge by delegating the
responsibility to the sender to calculate, include in Nota Fiscal and finally pay to
government on behalf of customer.
There are also cases where the government collects tax for transactions between
states and by type of goods. This is the case of pharmaceutical products, pneumatic,
cement, beans, and so on.
For companies that purchase products for their manufacturing process (raw material)
with this characteristic, they are not allowed to the credit of the ICMS surcharge,
unless if the finished product manufactured is subjected to that ICMS surcharge when
it is sold.
Purchase Nota Fiscal of raw materials containing
ICMS surcharge.- No PIS and COFINS taxes CFOP 5.401
ICMS surcharge
ICMS amount at 18%
IPI amount at 10%
ICMS
IPI
and
= $ 2,200.00
= $ 2,200.00
= $ 100.00
= $ 360.00
= $ 200.00
4.1 Fiscal Books

In addition of Nota Fiscal data, entries on Incoming legal books should be as follows:
CFOP Code= 1.401 Raw material purchase inside the State
Accounting amount
= $ 2,200.00
= $ 2,200.00
ICMS credit
= $ 360.00
IPI tax base amount
= $ 2,200.00
IPI credit
= $ 200.00
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4.2- Accounting
DB - Raw materials inventory
DB Recoverable ICMS
DB Recoverable IPI
CR - Accounts Payable
$ 1,640.00
$ 360.00
$ 200.00
$ 2,200.00
4.3-Posting scheme
Material Inventories
(1) 1,640.00
(D)
Recoverable ICMS
(1)360.00
(D)
Recoverable IPI
(1)
200.00
(D)
Accounts Payable
(1) 2,200.00
C
For purchases of raw materials with Tax Surcharge in which there is no incidence of IPI,
accounting follows the same way, excluding only IPI entries.
In Incoming legal book entries, these entries are as follows:
CFOP Code= 1401 - Raw material purchase inside State
Accounting amount
ICMS Credit
= $ 2,000.00
= $ 2,000.00
= $ 360.00
= $ 2,000.00
For purchases of raw materials with Tax Surcharge in which no ICMS incidence but only
IPI, the accounting follows the same way, excluding only ICMS entries.
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In Incoming legal book entries, these entries are as follows:

Accounting amount
IPI tax base amount
IPI Credit
= $ 2,200.00
= $ 2,200.00
= $ 2,000.00
= $ 200.00
For purchases of raw materials with Tax Surcharge in which no incidence of ICMS / IPI,
the accounting follows the same way, excluding only the entries of IPI / ICMS.
In incoming legal book entries, these entries are as follows:
Accounting amount
= $ 1,000.00
= $ 1,000.00
= $ 1,000.00
Remarks:
If this purchase is placed to a vendor from another State (6401) or other Country
(7401), simply change the first digit CFOP 1 (1401) to 2 (2401) or 3 (3401), check the
tax rate, and proceed with the same techniques of postings.
.
If CFOP Code is 5.403, 6.403 or 7.403 (Resale / Tax Surcharge), procedure becomes the
same as the previous example, observing only the taxes listed in the Nota Fiscal
4.3 Purchases with ICMS Tax Surcharge (ST) -.with credit
In this case there are differences of entries in the legal books and accounting.
In addition to the Nota Fiscal data, entries in fiscal books should behave as follows:
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CFOP Code: 1401 Raw material purchase inside State (Tax Surcharge)
Accounting amount
ICMS Credit
IPI tax base amount
IPI credit
ICMS surcharge base amount (ST)
ICMS Surcharge credit (ST)
= $ 2,200.00
= $ 2,000.00
= $ 360.00
= $ 2,200.00
= $ 200.00
= $...2.200,00
= $ 100.00
4.4 Accounting
DB - Raw materials inventory account
DB - Recoverable ICMS
DB Recoverable ICMS Surcharge
DB - Recoverable IPI
$ 1,540.00
$ 360.00
$ 100.00
$ 200.00
$ 2,200.00
4.5 Posting scheme

R.Material Inventories
Recoverable ICMS
(1)
200.00
(D)
(1) 1,540.00
(D)
(1)360.00
(D)
Recoverable ICMS
Surchage
(1)
Accounts Payable
100.00
(D)
Recoverable IPI
(1)
2,200.00
C
If in a certain purchase there is no ICMS regular tax, there is no also ICMS surcharge,
once one depends on each other to be calculated.
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For raw materials purchases entitled to Surcharge credit where there is no incidence of
IPI but ICMS only, the accounting follows the same way, excluding IPI entries only.
In addition to the Nota Fiscal data, entries in incoming legal books should behave as
follows:
CFOP Code= 1401 - Raw material purchase inside State (Surcharge)
Accounting amount
= $ 2,200.00
= $ 2,200.00
ICMS Credit
= $ 360.00
= $ 2,200.00
ICMS surcharge (ST) base amount
= $ .2,200.00
ICMS Surcharge (ST) credit
= $ 100.00
For raw materials purchases related to Surcharge Tax credit where there is no
incidence of ICMS / IPI, accounting follows the same way, excluding only IPI/ICMS
entries.
In incoming legal books, these entries behave as follows:
CFOP Code= 1.401 - Raw material purchase inside State (Surcharge)
Accounting amount
= $ 2,200.00
= $ 2,200.00
= $ 2,200.00
Remarks
Accounting posting for this case becomes simple. It excludes entries of ICMS /ICMS
surcharge and IPI. As mentioned, in case no ICMS regular tax, nothing to do with ICMS
surcharge.
(7401), simply change the first digit CFOP 1 (1401) to 2 (2401) or 3 (3.41), check tax
rate, and proceed with the same techniques of postings.
If CFOP code is 5.403, 6.403 or 7.403 (Resale), the procedure becomes the same as the
previous example, observing only the taxes listed in Nota Fiscal
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4.6 Consumption material purchase with ICMS Surcharge:

For purchases of material for use and consumption in which the invoice has the ICMS
Surcharge
it
will
be
credited
only
the
regular
ICMS.
Nota Fiscal of raw materials containing ICMS / IPI and ICMS Surcharge
Nota Fiscal value
ICMS Surcharge
ICMS surcharge tax base amount
ICMS amount 18%
IPI tax base amount
IPI amount 10%
= 2,200.00
= 2,200.00
= 100.00
= 2,200.00
= 360.00
= 2,000.00
= 200.00
4.7 Fiscal Books

In addition to the Nota Fiscal data, entries in incoming legal book entries should
behave as follows:
CFOP Code= 1407- Consumption material purchases (Surcharge)
Accounting amount
ICMS credit
= $ 2,200.00
= $ 2,200.00
= $ 396.00
= $ 2,200.00
4.8 Accounting
DB Stationary and cleaning material.
DB Recoverable ICMS
$ 1,804.00
$ 396.00
$ 2,200.00
4.9 Posting scheme

Stationary/Clean.Expense
(1) 1,804.00
(D)
Recoverable ICMS
(1)396.00
(D)
Accounts Payable
(1) 2,200.00
C
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Pgina 50
Remarks:
(7401), simply change the first digit CFOP 1 (1407) to 2 (2407) or 3 (3407), check the
tax rate, and proceed with the same techniques of postings.
If nature is 5403, 6403 or 7403 (Resale), the procedure becomes the same as the
previous example, observing only taxes in Nota Fiscal.
If the purchase of consumption material placed from other State, it has to be taken in
the differential rate. If a purchase is 12% tax rate interstate, internal rate should be
taken by the state where goods will be consumed and apply the differential.
Example:
If a Nota Fiscal with 12% is shipped to Sao Paulo, it must be calculated 6% as
difference, because the internal rate for this state is 18%.
Accounting for this value will be:
DB Consumption Material Expense
CR - ICMS to pay
5.0 Raw material purchase with 50% IPI credit
Definition:
This situation occurs when a taxpayer ICMS / IPI acquires raw materials from a supplier
considered Micro Company or non IPI taxpayer. This business model is not
sponsoring
the
IPI,
but
only
the
ICMS.
Thus, when the purchase of raw material for finished goods production takes place, if
that finish goods is obligated to pay IPI when selling, Brazil law allows IPI tax credit of
50% on vendor invoice amount considering the following criteria:
a-) what is the classification of this material in TIPI (IPI table).
b-) what rate is determined in this table for this material.
c-) Applying percentage of 50% on Nota Fiscal total amount.
Rafael Vanderlei
Pgina 51
Nota Fiscal purchase of raw materials containing only ICMS applying 50% on the total
of Nota Fiscal generating the IPI credit. No PIS and COFINS tax. CFOP 5102
- Nota Fiscal total amount
= 1,000.00
- ICMS tax base amount
= 1,000.00
- ICMS tax amount 18%
= 180.00
.
Applying 50% on Nota Fiscal total amount, assuming 10% IPI tax rate for credit.
$ 1,000.00 x 50% = $ 500.00 x 10% = $ 50.00
5.1 Fiscal Books
In addition to Nota Fiscal data, entries in Incoming legal book should behave as follows
CFOP Code= 1101 Raw material purchase inside State
Accounting amount
ICMS credit
IPI tax base amount
IPI credit
= $ 1,000.00
= $ 1,000.00
= $ 180.00
= $ 500.00
= $ 50.00
= $.....500.00
5.2 Accounting
DB Recoverable ICMS
DB Recoverable IPI
$ 770.00
$ 180.00
$ 50.00
$ 1,000.00
Rafael Vanderlei
Pgina 52
5.3 Posting scheme

R.Material Inventories
(1) 770.00
(D)
Recoverable ICMS
(1)180.00
(D)
Recoverable IPI
(1) 50.00
(D)
Accounts Payable
(1) 1,000.00
C
Remarks:
If this purchase is sourced from other State (6101) or from another country (7101),
simply change the first digit CFOP 1 (1101) to 2 (2101) or 3 (3101), check the tax rate,
and proceed with the same techniques of postings.
If nature is 5102, 6102 or 7102 (Resale), the procedure becomes the same as the
previous example, observing only the taxes listed in the Nota Fiscal
6.0 Services purchasing
.
Definition:
The purchase of services is not regulated by the ICMS authority but then by Municipal
one.
The tax assigned to this operation is called ISS (tax on service). It is determined
according to the Organic Law of each municipality that exists in Brazil.
The ISS (Tax on service) is a non-cumulative tax, i.e., tax credit through incoming
purchase by debiting through outgoing as given to ICMS / IPI/PIS and COFINS taxes.
Rafael Vanderlei
Pgina 53
For those who buy services of any kind, will entry the full amount of that document to
an expense account or account of the production process versus accounts payable.
Remind that in many cases besides ISS tax, there is also that taxation about
withholding tax.
Nota Fiscal of services containing 5% tax and 1.5% withholding tax.
Service Nota Fiscal
ISS tax base amount
ISS tax amount 5%
WHT base amount
WHT amount 1.5%
= $ 1,000.00
= $ 1,000.00
= $ 50.00
= $ 1,000.00
= $ 15.00
6.1 - Accounting
DB Production order / expenses
CR Accounts Payable
CR Withholding tax to pay
$ 1,000.00
$ 985.00
$ 15.00
6.2 Posting scheme

Production
order/Expenses
(1) 1000.00
(D)
Accounts Payable
(1) 985.00
C
WHT to pay
(1) 15.00
(D)
For services purchase, there is no obligation to do entries in the incoming legal books,
since this operation is done at municipality area as mentioned before.
Currently in Brazil there two moments where it withheld and posted.
At invoice posting and;
At payment posting
Rafael Vanderlei
Pgina 54
7.0 Service purchase from natural person with WHT

Definition:
The purchase of service from a natural person, is one in which the service provider is
not defined as a taxpayer in the city where he is located.
So this one has no obligation to issue invoice with ISS or WHT. However, the buyer of
the service at the time of invoice or payment posting must withhold all relevant WHT
types, including ISS value.
Value of RPA (Receipt Payment Self-employed)

Value of services
ISS Withholding tax
IRRF 1.5%
= 500.00
= 25.00
= 7.50
7.1 Accounting
DB Production order / Expense
CR - Bank accounting / Cash
CR ISS WHT to pay
CR IRRF WHT ro pay
$ 500.00
$ 467.50
$ 25.00
$ 7.50
7.2 Posting scheme

Production
order/Expenses
(1) 500.00
(D)
Bank acc/Cash
(1) 467,50
C
ISS WHT to pay

(1) 25.00
C
IRRF WHT to pay

(1) 7.50
C
Remember that for this type of operation, only accounting posting is required. No
incoming legal book is required.
Rafael Vanderlei
Pgina 55
8.0 Purchases return to Suppliers:

Concept:
Returns to suppliers occurs whenever a purchase, either raw material or consumption
material, did not meet the desires of the buyer. This occurs by various situations:
Incorrect Price
Incorrect material specification
Material not in accordance with purchase order.
Trade conditions in dispute etc.
Returns may occur in two situations:
With same supplier invoice, or
With the buyer invoice.
With same supplier invoice
Returning with the same vendor invoice for legal purposes, when buyer receipts goods,
if any disagreement about situations given above is faced, buyer must make a
statement on the back of vendor Nota Fiscal by informing that real disagreement
reason.
With buyer
It is important to remember that if the receiver stamps date of entry on the invoice, it
is mandatory post goods receipt and just later on post its own nota fiscal returning
goods to the vendor.
When that returns refers to a raw material, it should be observed the taxes in the
suppliers Nota Fiscal at the time of entry and the same values must be reversed in
accounting and legal books, i.e. the values of ICMS and IPI taxes should appear in the
respective outgoing legal books columns
On outgoing posting, only ICMS tax must be printed on the appropriated field. IPI
amount must be informed on the NF additional information, although IPI tax posting in
account is also reversed.
Rafael Vanderlei
Pgina 56
When return refers to a consumption material, the value of the IPI must be also
informed on the NF additional information. In this case, there is no IPI amount to
reverse in accounting and legal books side, once there was no IPI tax to recover during
post goods receipt.
It should also contain in the body of the returning Nota Fiscal, the number of original
incoming Nota Fiscal of that material.
Returning Nota Fiscal of raw material containing ICMS / IPI
- Nota Fiscal value
- ICMS tax base amount / IPI
- ICMS tax amount 18%
- IPI tax amount 10%
= 2,200.00
= 2,000.00
= 360.00
= 200.00
8.1 Fiscal Books (Outgoing)

In addition to the Nota Fiscal data, entries in the outgoing legal books, should behave
as follows:
CFOP Code: 5.201 - Returning of purchased raw material.
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 2,200.00
= $ 2,000.00
= $ 360.00
= $ 2,000.00
= $ 200.00
8,2 Accounting:
DB - Accounts Payable
CR Recoverable ICMS / payable
CR Recoverable IPI / payable
CR Inventories account
$ 2,200.00
$ 360.00
$ 200.00
$ 1,640.00
Rafael Vanderlei
Pgina 57
8.3 Posting scheme

Inventories
( 1)
1,640.0
0
(C)
Recoverable/Payable ICMS
Recoverable/Payable IPI
(1) 360.00
(C)
(1) 200.00
(C)
Accounts Payable
1)
2,200.00
(D)
.
In case of returns, in which there were no entries of IPI, we use the same technique,
excluding only the IPI posting
If PIS and COFINS taxes were taken when posting invoice receipt, then they have also
to be reversed.
If a return refers to a resale purchase, the CFOP Code is 5.202.
If from that previous vendor NF PIS and COFINS were also recovered they have to
reverse.
Remarks:
If this return is for the purchase of raw materials from another State (2101) or other
Country (3101), simply change the first digit CFOP 1 (5201) to 2 (6201) or 3 (7201),
check ICMS rate, and proceed with the same techniques of postings.
If CFOP code is 1102, 2102 or 3102 (Purchase of materials for resale), the procedure
becomes the same as the previous example, observing only the taxes listed in the Nota
Fiscal
Rafael Vanderlei
Pgina 58
In return to a supplier of material for use and consumption, processes in the same
way, observing only the IPI posting, as it should appear Nota Fiscal additional data as
an observation, since at the time of entry the credit value was not taken
Purchase return of consumption material containing ICMS / IPI
ICMS amount 18%
IPI Value to be informed on Nota Fiscal body
=$ 2,200.00
=$ 2,200.00
=$
396.00
=$ 200.00

In addition to the Nota Fiscal data, entries in the outgoing legal books should behave
as follows:
CFOP Code 5.556 Consumption material return
Accounting amount
ICMS debit
= $ 2,200.00
= $ 2,200.00
= $ 396.00
= $ 2,200.00
8.5 - Accounting
CR Expense Account
CR - ICMS Recoverable/Payable
DB - Accounts Payable
$ 1,840.00
$ 360.00
$ 2,200.00
8.6 Posting scheme

Expenses
( 1)
1,840.00
(C)
Recoverable/Payable ICMS
(1)360.00
(C)
Accounts Payable
(1)
2,200.00
(D)
Rafael Vanderlei
Pgina 59
Remarks:
If returns of consumption material is placed to a vendor from other State (2.101) or
other Country (3101), simply change the CFOPs according to the operation of returning
consumption material - 1 (5.556 to 2 (5.556) or 3 (7.556), check the tax rate, and
proceed with the same accounting posting rule.
If CFOP Code is 1.102, 2.102 or 3.102 (Resale products), the procedure becomes the
same as the previous example, observing only the taxes listed on the entry.
9.0- Stock transfer order (Between plants);
Concept:
Transfer of goods is always between two plants belonging to the same company code.
When we talk about this type of operation, we must always associate it with an Nota
Fiscal so that goods can be moved. If there is movement of goods, a Nota Fiscal is a
mandatory document due taxes rules.
The legislation requires that the value of this transaction is at least that last inventory
moving average price.
There are several different types of transfers: - Transfer for manufacturing,
consumption and for reselling.
In the case of stock transfer for industrialization, it can be subjected to the tax payment on
Nota Fiscal,
In some cases legislation excludes the tax payment.
Receipt of materials stock transfer containing ICMS / IPI

CFOP Code 5.151 (inside same State).
ICMS / IPI tax base amount
ICMS tax amount 18%
IPI tax amount 10%
=$ 16,500.00
= $15,000.00
=$ 2,700.00
=$ 1,500.00
Rafael Vanderlei
Pgina 60
9,1 Fiscal Books

In addition to the Nota Fiscal data, incoming legal book entries should behave as
follows:
CFOP Code: 1.151 - Transfer. for industrialization.
Accounting amount
ICMS credit
IPI tax base amount
IPI credit
= $ 16,500.00
= $ 15,000.00
= $ 2,700.00
= $ 15,000.00
= $ 1,500.00
9.2 Accounting
DB Recoverable ICMS
DB Recoverable IPI
CR Stock Transfer clearing account
.= $12,300.00
=$ 2,700.00
=$ 1,500.00
=$ 16,500.00
When the goods left sending plant, the following postings took place in accounting:
CR Inventories
CR ICMS payable
CR - IPI payable
DB Stock transfer clearing account
=$ 12,300.00
=$ 2,700.00
=$ 1,500.00
=$ 16,500.00
Note that stock transfer clearing account is cleared when goods receipt is posted in
that receiving plant.
We will now see the accounting entries as follows:
9.3 Posting scheme
Inventories
(1)
12,300.00
(D)
Recoverable ICMS
(2)
2,700.00
(D)
Recoverable IPI
(1)
1,500.00
(D)
Rafael Vanderlei
Pgina 61
STO clearing account

(1)
16,500.00
C
If the transfer comes from other State, (6.151), just change CFOP of 1.151 to 2.151.
If the transfer is for resale, the CFOP Code of Nota Fiscal should be 5.152, 6.152 or
7.152 and CFOP Code for incoming should be 1.152, 2.152 or 3.152
If stock transfer order is a consumption material, the CFOP Code of Nota Fiscal should
be 5.156, 6.156 or 7.156 and 1.156 and incoming CFOP Code, 2.156 or 3.156.
For all these situations, should be observed whenever the question related to taxes.
10.0 Freight Nota Fiscal-Transportation (CTRC)
Definition:
CTRC is a document used only by carriers, which its purpose is to collect any
transportation service provided to a person or company.
This kind of service was not previously recognized by State authorities as the collection
of the ICM, as the name itself says, ICM was "Tax on goods movement.
On 1989, government changed this into ICMS, "Tax on goods movement & service".
This service at the end refers to a transportation service provided by any forwarding
agent and ICMS tax is collected by the State where the service is performed
Because of the difficulty of controlling these carriers, the state of Sao Paulo authorities
charged the responsibility of payment of ICMS to the service buyer now named "ICMS
tax surcharge (ST)"
Therefore, the responsibility for the collection of this tax will always be by the service
buyer, i.e., that one who purchases the service.
Rafael Vanderlei
Pgina 62
There are two types freight service:

- Purchase of transport services without ICMS Tax Surcharge and
- Purchase of transport services with ICMS Tax Surcharge.
For both cases carrier must post a CTRC document (Nota Fiscal type for carriers)
related to the provided transportation service.
The purchase of transport services without ICMS Tax Surcharge is that one in which the
carrier has already calculated and paid ICMS to the government and service buyer
should consider that amount for accounting and incoming legal books.
The purchase transportation service with ICMS Tax Surcharge is that one where the
buyer has to calculate and post ICMS tax amount in accounting and in incoming legal
books. Immediately to that posting, a reversal one must be done in accounting and
legal books model 9-ICMS statutory ICMS clearing.
The legislation also allows that when purchasing these services, instead of posting each
CTRC document the service buyer can issue single incoming Nota Fiscal, considering all
CTRC documents given a month and make a single entry.
Transportation services may be related to purchases of raw materials, consumption
material and finished product.
If CTRC is related to purchase of raw materials or finished goods, the service buyer
must post the freight amount in the inventory account charging that material originally
purchased or sold as part of product cost.
In general, the ICMS tax rate for freight service is:
12% for internal operations
12% for interstate operation from South to Southeast
12% for interstate operation from Southeast South
12%for Interstate operation from South or Southeast to North or Northeast
7% for Interstate operation from North or Northeast to South Southeast.
7% for interstate operation from North to Northeast.
7% for interstate operation from Northeast to North.
Rafael Vanderlei
Pgina 63
Example:
Purchase of transport service without ICMS Tax Surcharge with the CFOP code 5.352.
CTRC amount
ICMS tax amount 12%
.=$ 1000.00
.=$ 1,000.00
.=$ 120.00
10.1 Fiscal Books

Besides the data of CTRC, incoming legal book entries should behave as follows:
CFOP Code: 1.352 - Transport service purchase
Accounting amount
ICMS Credit
= $ 1,000.00
= $ 1,000.00
= $ 120.00
= $ 1,000.00
10.2 - Accounting
DB Expenses/Raw Materials / Finished
DB Recoverable ICMS
.=$ 880.00
=$ 120.00
=$ 1,000.00
10.3 Posting scheme
Inventories
(1)
880.00
(D)
Recoverable ICMS
(2)
120.00
(D)
Accounts Payable
(1)
1,000.00
C
If the purchase of this service is related to consumption material, it should be noted

the CFOP Code (1.357). Accounting remains the same just changing raw
materials/finished goods accounts for freight expenses
Rafael Vanderlei
Pgina 64
Regarding the services purchase with Tax Surcharge, the process is as follows:
Services purchases with Tax Surcharge CFOP Code 5.352.
CTRC value
=$ 1,000.00
In the body of the CTRC must be shown a text saying that the ICMS will be collected as
Tax Surcharge as per art. xx xx decree and so on.
To do so, you should simply multiply the value of transportation services by the due
ICMS tax rate. In this case 12% rate.
$ 1,000.00 x 12% = $ 120.00
10.4 Fiscal Books
Besides of the CTRC data, incoming legal book entries should behave as follows:
CFOP Code: = 1352 Accounting amount
ICMS debit
Purchase of transport service

= $ 1,000.00
= $ 1,000.00
= $ 120.00
= $ 1,000.00
10.5 - Accounting
DB Inventory Raw Materials / Finished accounts
DB Recoverable ICMS
CR Accounts Payable
$ 1,000.00
$ 120.00
$ 1,000.00
10.6 Posting scheme

Inventories
(1)
1,000.00
(D)
Recoverable ICMS
(2)
120.00
(D)
Accounts Payable
(1)
1,120.00
C
Rafael Vanderlei
Pgina 65
11.0 - Returnable Packaging

Definition:
It is a product type to accommodate another product during transportation.
There is also the case for the packing in consignment, where the sender is the owner of
products being manufactured by third parties.
These packages are part of the sender assets, which are under the same physical and
financial control.
Shipment of packaging occurs along with the sale of a product, i.e., it is packaging the
material to be sold.
An example for easy understanding, are pallets that follow with the goods and
thereafter should return to the vendor
To do so, this operation has two CFOP Codes for a single Nota Fiscal: The CFOP Code of
sale (5.101, 6.101, 5.102, 6.102, etc...) and the CFOP Code for the shipping package
(5.949, 6.949 and so on ...)
.
The value of packaging in the Nota Fiscal exists only as a symbolic value for transport
not entitled for taxation, since these quantities will be returning later.
When the outgoing of a Nota Fiscal for sale with packaging, in addition to the sales
entries, an issue being addressed on SD processes, packages will be posted as follows.
Nota Fiscal of sales (SD) where in the value of sale is 1,100.00 and the package is equal to $
2,000.00
Nota Fiscal value

ICMS / IPI tax base amount
ICMS tax amount 18%
IPI tax amount 10%
=$ 3100.00
=$ 1000.00
=$ 180.00
= 100.00
Rafael Vanderlei
Pgina 66
11.1 Fiscal books

In addition to the Nota Fiscal data in outgoing fiscal book entries should behave as
follows:
CFOP Code= 5.101 Manufactured goods sales
Nota Fiscal value
Value of goods
IPI 10% rate
IPI tax base amount
ICMS 18% rate
PIS tax base amount
PIS 0.65% rate
COFINS 3%
= $ 1,100.00
= $ 1,000.00
= $ 100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 1,000.00
=$
7.15
= $ 1,000.00
= $ 33.00
CFOP Code= 5.949 - Packing Remittance

Accounting amount
= $ 2,000.00
= $ 2,000.00
= $ 2,000.00
In the body of the Nota Fiscal must be mentioned that packaging is only for goods
transportation and shall return later.
11.2 Accounting
DB Customer
CR - Sales revenue
DB ICMS tax sales deduction
CR ICMS tax Payable
CR IPI tax payable
DB - PIS tax sales deduction
CR - PIS tax payable
DB COFINS tax sales deduction
CR - COFINS tax payable
DB COGs (Expense)-value example.
CR Inventories
DB Packaging in third part inventory
CR Packaging Inventories. (Pallets, cardboard, etc)
$
$
$
$
$
$
$
$
$
$
$
$
$
1,100.00
1,000.00
180.00
180.00
100.00
6.50
6.50
30.00
30.00
450.00
450.00
2,000.00
2,000.00
Rafael Vanderlei
Pgina 67
11.3 Posting scheme

Customer
ICMS Tax Sales

Deduction
Sales Revenue
(1)
1,100.00
(D)
(1)
1,000.00
(C)
ICMS Tax Payable
IPI tax Payable
(1)
180.00
(C)
(1)
100.00
(C)
PIS Tax Payable
(1)
6.50
(D)
(1)
6.50
(C)
COFINS Tax Payable

(1)
30.00
(C)
(1)
180.00
(D)
COGs
(2)
450.00
(D)
COFINS Tax Sales

Deduction
(1)
30.00
(D)
Inventories
(2)
450.00
(c)
Rafael Vanderlei
Pgina 68
Packaging in 3rd party

inventory
Packaging Inventories
(3)
2,000.00
(D)
(3)
2,000.00
(D)
When the return of goods, entries will be as follows:

11.4 Fiscal Book
In addition to the Nota Fiscal data in outgoing fiscal book entries should behave as
follows:
CFOP Code= 1.949 - Packaging return
Accounting amount
= $ 2,000.00
= $ 2,000.00
= $ 2,000.00
In the body of the Nota Fiscal must be mentioned that packaging was sent in according
to sales Nota Fiscal (sent previously) which served only for conditioning goods which
now returns to sender.
11.5 Accounting
CR - Packaging Material in 3rd parties inventory
DB Inventories (Pallets, cardboard, etc.)
= $ 2,000.00
= $ 2,000.00
Rafael Vanderlei
Pgina 69
11.6 Posting scheme
(4)
2,200.00
(D)
Packaging in 3rd
parties inventory
(4)
2,200.00
(C)
12.0 - Purchase for Future Delivery

Concept:
This operation occurs when the buyer makes a purchase from a particular production
line at a supplier during a period of time.
It can also occur when due to physical space issue the buyer guides the vendor to do
partial deliveries on daily, weekly or monthly basis.
Initially there is the issuance of a simple billing Nota Fiscal charging IPI tax only.
Referring to ICMS tax, it should be calculated and pay only in the physical movement of
goods as required by the regulation.
Still on the ICMS tax, tax base amount and its tax amount, may change if there is
economic instability in the country.
Each state must create a currency for indexing these values. In case of Sao Paulo, State
the created currency was that one named UFESP (Fiscal Unit of the State of Sao Paulo).
Rules are as follows:
The value of goods of the first Nota Fiscal (Simple Billing) will be divided by that UFESP
exchange rate given on that Nota Fiscal posting date. This NF refers to accounts
receivable and legal books only. No goods movement is done.
Rafael Vanderlei
Pgina 70
On the effective date for shipping the goods (day, month or year), the value for UFESP
(previous calculation result) will be multiplied by UFESP of the day of issuance of Nota
Fiscal. This calculation is applicable only to find the calculation basis and value for
ICMS.
COGS and inventory postings are also take into consideration.
Example:
First Nota Fiscal CFOP 5116 - Sales for future delivery (single billing),
Nota fiscal total amount of $ 2,000.00 without ICMS / IPI.
UFESP value given for the day of issuance of the simple billing =
1.17
$ 2,000.00 / 1.17 = 1709.401709 UFESP

Second Nota Fiscal - 5922 Shipment with delivery date two months later after billing.
We must remember that this product entitled to be taxed by IPI , this will be provided
at billing invoice (Nota Fiscal) , but mandatory in the Nota Fiscal for deliverance .
As an example, will use 10% IPI tax rate.
First of all lets find the ICMS tax base amount.
UFESP value for that shipment day = 1.21
Results of prior calculation- UFESP = 1709.401709 * 1.21 = $ 2,068.38
Therefore, the value of Nota Fiscal is as follows:
Nota Fiscal value
Value of goods
ICMS tax amount 18%
IPI tax base amount
IPI tax amount 10%
= $ 2,200.00
= $ 2,000.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
Rafael Vanderlei
Pgina 71
On Nota Fiscal body must be informed for each simple Nota fiscal this process refers
In case UFESP exchange rate does not change when posting that second Nota Fiscal,
amount must remain the same.
12.1 Purchases for future deliverance:
We will use the previous example to observe the tax and accounting entries.
First Nota Fiscal CFOP code 5116 - Sales for future delivery No PIS and COFINS
taxes(single billing),
Nota Fiscal total amout of $ 2,000.00 without ICMS / IPI.
CFOP Code= 1.116 Raw material purchase for future delivery
Nota Fiscal value
= $ 2,000.00
12.2 Fiscal Book

In addition to data from the Nota Fiscal Incoming legal book entries, should behave as
follows:
Accounting amount
= $ 2,000.00
= $ 2,000.00
= $ 2,000.00
12.3 Accounting
DB Future delivery clearing account
CR Accounts Payable
= $ 2,000.00
= $ 2,000.00
12.4 Posting scheme

Future delivery clearing
account
(1)
2,000.00
(D)
Account payable
(1)
2,000.00
(C)
Rafael Vanderlei
Pgina 72
12.5 Purchase remittance for future delivery:

Nota Fiscal value of the remittance for future delivery with CFOP 5.922:
Nota Fiscal value
Value of goods
ICMS tax amount 18%
IPI tax base amount
IPI tax amount 10%
= $ 2,200.00
= $ 2,000.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
12.6 Fiscal Books

In addition to data from the Nota Fiscal incoming legal book entries, should behave as
follows:
CFOP Code= 1.922 Incoming purchase of future delivery
Accounting amount
ICMS credit
IPI tax base amount
IPI credited
= $ 2,200.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
12.7 Accounting:
DB Inventories
DB Recoverable ICMS
CR Future delivery clearing account
CR Accounts payable
= $ 1,627.69
= $ 372.31
= $ 200.00
= $ 2,000.00
= $ 200.00
12.8 Posting scheme
Inventories
(1)
1,627.29
(D)
Recoverable ICMS
(1)
372,31
(D)
Recoverable IPI
(1)
200.00
(D)
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Pgina 73
Accounts Payable
(1)
200.00
(C)
Future Delivery
Clearing Account
*(1)
(1)
2,000.00 *2,000.00
(D)
(C)
(*) - Entries existing in previous document.

Note that future delivery clearing account was also reset at the end of the process.
If at the time of this process the currency index does not changed , the calculating
basis will be the same as the value of the goods in simple billing Nota Fiscal.
If this process is not taxable for IPI, it will be excluded for purposes of accounting and
fiscal books.
Remarks:
If this purchase is placed to a vendor from another State (6.116) or other Country
(7.116), simply change the first digit CFOP 1 (1.116) to 2 (2.116) or 3 (3.116),
For shipping step the same criteria is used, i.e., whether 6.922 or 7922, changes to
2.922 or 3.922.
If CFOP Code is 5.116, 6.116 or 7.116 (Goods resale for future delivery), the procedure
becomes the same as the preceding example, only take into account taxes on Nota
Fiscal.
13.0 - Subcontracting or remittance for Industrialization
Concept
Reason of this process occurs when the production capacity of a particular business is
lower than the demanded quantity of products, i.e., the sales orders of one or more
products ordered by customers, is higher than production capacity.
Rafael Vanderlei
Pgina 74
So the vendor sends raw material CFOP equal to 5.901, 6.901 or 7.901 to another
company which in turn will charge only the raw material more labor applied to this
industrialization. On the amount of that raw material will be charged ICMS, while IPI is
applied only when this applied material is produced by the vendor itself.
For that applied labor ICMS and IPI are not applied.
When that symbolic raw material returns , it may be contained in a single Nota Fiscal
along with that buyer raw material sent before and other materials applied by the
vendor, but it should be noted two CFOPs 5.902, 6.902 or 7.902 and with 5.124, 6.124
or 7.124.
In the remittance of this material, to the same state, ICMS/IPI is suspended / deferred,
whereas when remittance is to another state, IPI is mandatory.
When the shipment without taxes, it is mandatory that in body Nota Fiscal a legal text
law should be mentioned as ruled by law.
When you remit goods and charge any tax you are entitled to recover these taxes at
the returning
If in the remittance there were no taxes, they should be calculated and paid if the
mentioned materials did not return within 180 days.
13.1 Remittance for Industrialization
Remittance for industrialization without ICMS / IPI
CFOP code 5.901
Nota Fiscal total amount $ 5,000.00.
In addition to the Nota Fiscal data in outgoing legal books, entries should behave as
follows:
CFOP Code5.901 - Remittance for industrialization
Accounting amount
= $ 5,000.00
= $ 5,000.00
= $ 5,000.00
Rafael Vanderlei
Pgina 75
13.3 Accounting
DB - Material on third parties inventory
CR - Raw materials inventory
$ 5,000.00
$ 5,000.00
13.4 Posting scheme
Material on third parties

inventory
(1)
5,000.00
(D)
Inventory
(1)
5,000.00
(C)
13.5 - Return of Industrialization

Nota Fiscal of return of industrialization, containing raw materials (symbolic return)
sent earlier in the value of $ 5,000.00 added by raw materials and labor applied by the
vendor.
CFOP 5.902 (symbolic return of materials sent for industrialization) and 5.124
(Industrialization on request).
Nota Fiscal value
Applied raw material
Applied labor
ICMS value 18%
IPI tax base amount
IPI value 10%
= $ 6,600.00
= $ 1,000.00
= $ 500.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
Rafael Vanderlei
Pgina 76
13.6 Fiscal books

In addition to the Nota Fiscal data in outgoing legal books, entries should behave as
follows:
CFOP Code= 1.124 Industrialization handled by third parties
Accounting amount
ICMS Credit
IPI tax base amount
IPI credit
= $ 1,600.00
= $ 1,000.00
= $ 180.00
= $ 500.00
= $ 1,000.00
= $ 100.00
CFOP Code= 1.902 Symbolic return of remittance for industrialization

Accounting amount
= $ 5,000.00
= $ 5,000.00
= $ 5,000.00
In addition to the legal texts, the number of remittance Nota Fiscal as reference is
mandatory.
13.7 - Accounting
DB - Inventory of raw materials
CR - Material held by third parties
DB Production order clearing account
CR - Inventory of raw materials
DB - Production order clearing account
DB - Recoverable IP
DB Recoverable ICMS
CR Accounts Payable
$ 5,000.00
$ 5,000.00
$ 5000.00
$ 5,000.00
$ 1320.00
$ 100.00
$ 180.00
$ 1,600.00
After these entries, it is necessary to report this production order into inventory of
finished product as follows:
DB Finished goods inventory
CR - Production order clearing account
$ 6,320.00
$ 6320.00
Note that, again that clearing account was zeroed.
Rafael Vanderlei
Pgina 77
13.8 Posting scheme

Material on 3rd parties
inventory
(*)(1)
5,500.00
(D)
(2)
5,500.00
(C)
Recovarable ICMS
(4)
180.00
(D)
Raw Material Inventory

(2)
5,500.00
(D)
(*)(1)
5,500.00
(C)
(3)
5,500.00
(D)
(3)
5,500.00
(C)
(4)
1,320.00
(D)
Recoverable IPI
(4)
100.00
(D)
Production oOrder
clearing account
Accounts Payable
()
1,600.00
(C)
Finished Goods
Inventory
(5)
6,320.00
(D)
(*) - Entries exist in previous document.

In most cases, in Nota Fiscal of material and labor applied, only the ICMS is charged as
the raw material applied is not produced by the manufacturer.
In cases where the return, material and labor applied, are collected in separate, the
process becomes the same, but the symbolic return Nota Fiscal should be posted first.
If the return and industrialization are partial, the accounting is made the same way,
observing however, only partial quantities.
Rafael Vanderlei
Pgina 78
14.0 - Consignment Sale

Concept:
This operation occurs when a particular company will not pay immediately the goods
purchased for resale or industrialization, due to high financial disbursement,
considering that the sale or production of these products could be time-consuming or
even high inventories turnover.
If the company makes a contract with the seller to sell goods under consignment,
which means that regardless of the amount issued as a consignment, the issuer may
issue Nota Fiscal collecting it under buyer authorization.
If the seller issues a consignment Nota Fiscal of 100 pieces of a product, no sale
occurred at this time, but a commitment by the recipient when the effective sale of
these products or consumption occurs, the seller may issue a called sales Nota Fiscal
and collect it
If there is no any sale of the goods, the buyer may return these products without any
onus to pay.
.
Remember that when this process occurs, the taxes values must be paid in the first
shipment on consignment Nota Fiscal (5.917, 6.917 or 7.917).
For this process, there will be two Notas Fiscais, being the first with the consignment
remittance (5.917, 6.917 or 7.917) with the appropriate tax (ICMS / IPI) and the
second, as product sales prior sent on consignment (5.111,6.111 or 7111) without tax
14.1- Incoming of Consignment Products
Remittance consignment Nota Fiscal valued at 1100.00, with CFOP 5.917 and taxed by
ICMS / IPI.
Nota Fiscal value
ICMS value
IPI tax base amount
IPI Value
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
In Nota Fiscal body, must state that the products are under consignment process.
Rafael Vanderlei
Pgina 79
14.2 Fiscal books

CFOP Code= 1.917 Incoming of Consignment remittance
Accounting amount
ICMS credit
IPI tax base amount
IPI credit
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
14.3 Accounting
DB Inventory material on consignment
CR Temporary material account on consignment
DB - ICMS tax to recover
CR ICMS tax clearing account
DB IPI to recover
CR IPI tax clearing account
$ 1,100.00
$ 1,100.00
$ 180.00
$ 180.00
$ 100.00
$ 100.00
14.4 Posting scheme

Inventory Mat.on
Consignment
Temporary Mat on
Consignment
(1)
1,100.00
(D)
(1)
1,100.00
(C)
ICMS tax clearing

account
(1)
180.00
(C)
Recoverable IPI
(1)
100.00
(D)
Recoverabe ICMS
(1)
180.00
(D)
IPI tax clearing
account
(1)
100.00
(C)
Rafael Vanderlei
Pgina 80
Let's imagine that the sent quantities were sold / industrialized effectively. The buyer
should at that time authorize the supplier the issuance of symbolic sales Nota Fiscal for
goods on consignment.
In this Nota Fiscal there will be no taxes, as they were collected on prior Nota Fiscal at
the time of remittance. It is mandatory a text stating the number of Nota Fiscal of
consignment remittance.
14.5 Sale of Consignment Material
Sales Nota Fiscal (symbolic) of material on consignment without taxes and with CFOP
5.111.
Nota Fiscal value
= $ 1,100.00
In the body of this Nota Fiscal must be informed that this refers to the consignment
process in accordance to the consignment Nota Fiscal number previously issued
14.6 Fiscal book

CFOP Code= 1.111 - Consignment material sale
Accounting amount
= $ 1,100.00
= $ 1,100.00
= $ 1,100.00
14.7 Accounting
DB -Resale Inventory
DB ICMS tax clearing account
DB - IPI tax clearing account
CR Accounts Payable
DB Consignment clearing account
CR Inventory material on consignment
.=$ 820.00
=$ 180.00
=$ 100.00
.=$ 1,100.00
=$ 1,100.00
=$ 1,100.00
Rafael Vanderlei
Pgina 81
14.8 Posting scheme

Inventory material on
consignment
(*)(1)
1,100.00
(D)
(3)
1,100.00
(C)
Temporary Mast on
Consignment
(3)
1,100.00
(D)
IPI on Consignment
(2)
100.00
(D)
(*)(1)
100.00
(*)(1)
1,100.00
(C)
Resale Inventory
ICMS on
Consignment
(2)
180.00
(D)
(*)(1)
180.00
(C)
Accounts Payable
(1)
820.00
(2)
1,100.00
(D)
(C)
(C)

Note that the temporary accounts were also offset at the end of the process. If goods
are used for resale, CFOPs used in incoming books will be 1.113, 2.113 and 3.113.
Accounting procedures and fiscal books remain the same.
15.0 Third Party Process
Triangular transaction is divided into three parts:
Sale third part
Sale by third part
Sale on behalf and for industrialization
All of these transactions include participation of three taxpayers.
Rafael Vanderlei
Pgina 82
15.1 - Third Part sales

Concept:
This transaction occurs when a particular company sells a product to its customer, but
did not have the goods for delivery. So that company creates a purchase order to a
supplier for the goods to be delivered to the said customer to which the sale occurred
first.
Example:
Lets take in into account 3 different sites, A, B and C.
"B" sells but does not have the goods for delivery, but sells to "C which will receive
only one Nota Fiscal of sale order (single billing) with their taxes and nature 5.118,
6.118 or 7.118.
"B" sends a purchase order for "A" requesting that the said material must be delivered
physically to "C".
In this case, "B" only waits for a sale Nota Fiscal from A in which this will be stated the
number of Nota Fiscal issued for shipping.
(2ndNF)
- NF sales third parts
A
- Sales Nota Fiscal with taxes

(1stNF)
NF
C
shipping
3rd.NF
Rafael Vanderlei
Pgina 83
15.2 Purchase on third part order

Let us imagine on figure "C".
Incoming of Nota Fiscal sales order with the ICMS / IPI with CFOP 5120.
This Nota Fiscal must mention that this material will be delivered by "A".
Nota Fiscal value
ICMS tax amount
IPI tax base amount
IPI tax amount
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
15.3 Fiscal books

CFOP Code= 1.120 Purchase third part/industrialization
Accounting amount
= $ 1,100.00
= $ 1,000.00
ICM credit
= $ 180.00
IPI tax base amount
= $ 1,000.00
IPI credit
= $ 100.00
15.4 Accounting
DB Temporary purchase at order
DB Recoverable ICMS
CR - ICMS at purchase order
DB Recoverable IPI
CR - IPI at purchase order
$ 1,100 .00
$ 180.00
$ 180.00
$ 100.00
$ 100.00
$ 1,100.00
Rafael Vanderlei
Pgina 84
15.5 Posting scheme

Temporary Purch.order
(1)
1,100.00
(D)
Recoverable IPI
(1)
100.00
(D)
REcoverable ICMS
ICMS at Purchase
order
(1)
(1)
180.00
(D)
180.00
(C)
IPI at Purch.order
Accounts Payable
(1)
100.00
(C)
(1)
1,100.00
(C)
Upon receipt of the physical commodity, the entries will occur as follows:
Invoice of simple remittance (on behalf of third parties) in the amount of $ 1,100.00
15.6 Fiscal Books
In this note should be posted only the data of Nota Fiscal and field observations and
print the expression this Nota Fiscal is for consignment/industrialization on behalf of
third parties. At that Nota Fiscal should include the number of Nota Fiscal and data of
"B" issued to "C".
15.7 Accounting
DB - Raw material inventories
DB ICMS at purchase order
DB - IPI at purchase order
CR Temporary purchase at order
$ 820.00
$ 180.00
$ 100.00
$ 1,100.00
Rafael Vanderlei
Pgina 85
15.8 Posting scheme

Temporary Purchase
at order
Inventories
(2)
820.00
(D)
(*)(1)
1,100.00
(D)
ICMS at order
(2)
180.00
(D)
(2)
1,100.00
(D)
IPI at order
(*)(1)
180.00
(C)
(2)
100.00
(D)
(*)(1)
100.00
(C)

Note that pre-defined as temporary accounts were zeroed
15.9 Sales order third party
In the process of sale by the order is exactly the same as before, is focused only on the
issue of two Notas Fiscais of the same issuer.
Imagine "A" purchased goods from "B", and B wills delivery to the "C".
(2ndNF)
Sales order third party with tax
A
NF
Sales
(3rdNF)
remittance
(1stNF) C
Rafael Vanderlei
Pgina 86
15.10 Purchase on Third party order

Let us imagine that we are figure A", where we buy goods from "B" to be delivered by
"C".
At this point, it is assumed that "A" has already issued sales Nota Fiscal to "C".
Receipt of sales Nota Fiscal at order with the ICMS / IPI with CFOP 5.120.
NF must mention that this material was delivered to "C" by the order of "A" according
Nota Fiscal. xx.
Nota Fiscal value
ICMS tax amount
IPI tax base amount
IPI tax amount
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
15.11 - Fiscal Books

CFOP Code= 1.120 Purchase on behalf and order
Accounting amount
ICMS credit
IPI tax base amount
IPI credit
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
15.12 - Accounting
DB Temporary on behalf and order
DB Recoverable ICMS
CR ICMS on behalf and order
DB Recoverable IPI
CR - IPI on behalf and order
CR Accounts Payable
$ 1,100.00
$ 180.00
$ 180.00
$ 100.00
$ 100.00
$ 1,100.00
Rafael Vanderlei
Pgina 87
15:13 Posting scheme
Temporary Acc
behalf/order
(1)
1,100.00
(D)
ICMS on behal/order
Recoverable ICMS
Recoverable IPI
(1)
180.00
(C)
(1)
100.00
(D)
IPI on behalf/order
Accounts Payable
(1)
180.00
(C)
(1)
100.00
(C)
(1)
1,100.00
(C)
After these postings, due to the existence of a previously issued purchase Nota Fiscal,
it is necessary to make the entries of goods in stock with the following accounting:
Raw Material Inventory

(2)
820.00
(D)
Temporary Acc
behalf/order
(*)(1)
1,100.00
(D)
(2)
1,100.00
(C)
Rafael Vanderlei
Pgina 88
ICMS on behal/order
IPI on behalf/order
(2)
180.00
(D)
(2)
100.00
(D)
(1)
180.00
(C)
(1)
100.00
(C)

Note that pre-defined temporary accounts were zeroed.
15.14 - Sale on Account and Order for Industrialization
This operation is quite similar to the previous ones, and what changes is that the
transaction is done among the three companies.
It occurs for example when "B" buys a particular material from "A", and shall remit to the
"C", and then B shall issue a Nota Fiscal of remittance for industrialization to the "C".
So "A" shall issue a Nota Fiscal of sale by the order (symbolic) with all taxes to "B" and
a Nota Fiscal of remittance on behalf and with all the prerequisites outlined above.
Then "B" shall issue a Nota Fiscal of remittance for industrialization to "C"
(Subcontractors), then closing the transaction among the three companies.
Exemplo:
(1stNF)
- NF vda cta ordem
A
(3rdNF)
B Nota Fiscal of remittance for industrialization
C
NF remittance (2ndNF)
Rafael Vanderlei
Pgina 89
15.15 Purchase at Order for Industrialization

Let us imagine we are figure A", where we buy goods from "B" to be delivered in "C"
for purposes of industrialization.
Receipt of sales Nota Fiscal at order with ICMS / IPI and CFOP 5.120.
This Nota Fiscal must mention that this material was delivered to "C" by the order of
"A" according to Nota Fiscal # xx.
Nota Fiscal value
ICMS tax amount
IPI tax base amount
IPI tax amount
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
15.16 Fiscal Books

FOP Code = 1121- Purchase at order for industrialization
Accounting amount
= $ 1,100.00
= $ 1,000.00
ICMS Credit
= $ 180.00
IPI tax base amount
= $ 1,000.00
IPI credit
= $ 100.00
15.17 Accounting
DB- Inventory of raw material
DB Recoverable ICMS
DB Recoverable IPI
CR Accounts Payable
$ 820.00
$ 180.00
$ 100.00
$ 1,100.00
15.18 Posting scheme

Inventory of Raw
Material
(1)
820.00
(D)
Recoverable ICMS
(1)
180.00
(D)
Rafael Vanderlei
Pgina 90
Recoverable IPI
(1)
100.00
(D)
Accounts Payable
(1)
1,100.00
(C)
After this entry, A" shall issue a remittance Nota Fiscal for industrialization to "C"
according topic 13.0.
16.00 - Complementary Nota Fiscal
The Supplementary Nota Fiscal always occurs when the value of a goods was charged
less than the previously traded price, or when the values of lower taxes were charged.
Both situations should be included in the body of the Nota Fiscal, data concerning the
first Nota Fiscal in which it was issued with errors.
If pricing supplement, should be observed if in the first Nota Fiscal taxes ICMS / IPI
were calculated normally, because they should be recalculated again.
When processing the incoming of this document , if the Nota Fiscal was previously
issued crediting of ICMS / IPI, the amount of taxes should be deducted from the total
complement, and the difference will be posted in the in the inventory account versus
recoverable ICMS / IPI
If supplementary Nota Fiscal is a purchase related to material for use and
consumption, applies the same criteria but excludes the IPI for the purpose of credit.
If the supplementary Nota Fiscal is only of ICMS, it is not generating a posting in
accounts payable, because ICMS is added tax to the product and the same was
included in the value of the goods previously
When processing incoming of this document, if the Nota Fiscal previously issued was
of credit of ICMS, the value of the complement should be deducted from the inventory
account / expenditure against ICMS to recover.
Rafael Vanderlei
Pgina 91
If supplementary Nota Fiscal is of IPI, it will be generating a posting in accounts payable

because the tax does not have features like the ICMS, or whether it is charged out of
the value of the goods. When processing the incoming of this document, the value of
the supplement should be recorded in the IPI to be recovered versus Accounts
Payable.
Remember that for purchases of materials for use and consumption, do not permit IPI
credit.
We will see the two situations:
Supplementary Prices
Supplementary taxes.
16.1 - Supplementary Price
Receipt of a supplementary price Nota Fiscal with CFOP 5.101 and ICMS / IPI totaling $
550.00, relating to previously issued Nota Fiscal of raw materials purchasing.
Nota Fiscal value
= $ 550.00
= $ 500.00
ICMS tax amount
= $ 90.00
IPI tax base amount
= $ 500.00
IPI tax value
= $ 50.00
16.2 - Fiscal Books

CFOP Code= 1101 - Supplementary Price
Accounting amount
ICMS Credit
IPI tax base amount
IPI credit
= $ 550.00
= $ 500.00
= $ 90.00
= $ 500.00
= $ 50.00
Rafael Vanderlei
Pgina 92
16.3 - Accounting
DB- Inventory of raw material
DB Recoverable ICMS
DB Recoverable IPI
CR Accounts Payable
$ 410.00
$ 90.00
$ 50.00
$ 550.00
16.4 Posting scheme

Inventory of Raw
Material
(1)
410.00
(D)
Recoverable IPI
Recoverable ICMS
(1)
90.00
(D)
Accounts Payable
(1)
50.00
(D)
(1)
550.00
(C)
16.5 Supplementary of ICMS tax

Supplementary Nota Fiscal in the amount of $ 30.00 with CFOP 5.101, issued to
complement prior Nota Fiscal.
ICMS Value
= $ 30.00
16.6 Fiscal Books

CFOP Code = 1.101 Supplementary of ICMS
ICMS tax Credit
= $ 30.00
Notes: Supplementary ICMS of Nota Fiscal # xx
Rafael Vanderlei
Pgina 93
16.7 - Accounting
DB Recoverable ICMS
$ 30.00
CR-Inventory of raw material
$ 30.00

Recoverable ICMS
Inventory of Raw
Material
(1)
30.00
(D)
(1)
30.00
(C)
Note that in this case there was no accounting entry in the account of suppliers,
because when it comes as supplementary ICMS, it is included in the value of the goods
in prior Nota Fiscal.
16.9 Supplementary IPI
IPI supplementary Nota Fiscal in the amount of $ 50.00 with CFOP 5.101, regarding to
Nota Fiscal issued before
CFOP Code= 1.101 Supplementary of IPI
Incoming legal books
Accounting amount
IPI credit
= $ 50.00
= $ 50.00
16:10 Accounting
CR Accounts Payable
$ 50.00
$ 50.00
Rafael Vanderlei
Pgina 94

Recoverable IPI
Accounts Payable
(1)
50.00
(D)
(1)
50.00
(C)
17.0 Importation purchasing

Concept
Import is any purchase coming from other country .This operation occurs for two
reasons:
When the national prices are higher than outside prices, or when there is lack of a
Brazilian manufactured product.
Regardless of the material for industrialization, resale or consumption material, ICMS
tax base amount will always be the value of the goods plus IPI.
Government has determined this rule in order to control the trade balance, as
hindering the purchase of imported materials, it means there are less dollars outgoing
from Country, while on the other hand on exports, Government gives benefits to the
taxpayer with non-payment of taxes on sales abroad, which means more dollars
inflows to the Country
17.1 Purchases for Industrialization - Imports
Import purchase of raw materials where on this one there are no taxes due they are
calculated and paid at the custom when goods arrived and later on cleared
(*)Then, based on that clearance process broker prepare every data so that tax can be
calculated and paid at the customer and incoming Nota Fiscal can be posted with all
taxes paid.
Purchase posted to a certain foreigner vendor where its total amount is about $
2,000.00.
Rafael Vanderlei
Pgina 95
International invoice normally comes firstly than the goods and it is posted in accounts
payable to that the foreigner vendor.
Accounts payable posting must be exactly that amount related to international invoice
in which is the same purchase document amount
Invoice amount value
=$ 2,000.00
17.2 - Fiscal Books

No incoming legal books is posted once that refers to an international invoice
17.3 Accounting
DB Importation process clearing account
=$ 2,000.00
CD Accounts payable
=$ 2,000.00
17.4 Posting scheme
Importation process
clearing account s
(1)
2,000.00
(D)
Accounts Payable
(1)
2,000.00
(D)
(*) After broker pays taxes on behalf of buyer for incoming NF posting, a down
payment must be done to that broker so that importation control and tax to recover
can be done.
Lets suppose that amount for all taxes (ICMS, IPI, PIS and COFINS) paid was about $
852,87 where:
ICMS
=$
IPI amount = $
PIS amount = $
COFINS amount=$
505.43
255.27
15.59
76.58
Down payment posting
Rafael Vanderlei
Pgina 96
DB Broker vendor down payment

CR Bank
$ 852,87
$ 852,87
Broker vendor down

payment s
(2)
852,87
(D)
Bank
(2)
852,87
(D)
As soon as broker sends information about importation process clearance, an incoming

NF from buyer form itself informing foreigner vendor as main vendor must be posted
so that goods can be moved from custom to buyer inventory.
When that incoming NF is posted, immediately ICMS and IPI taxes are credited on
incoming legal book.
Incoming NF importation with CFOP 7.101
Nota Fiscal value
= $ 2.807.92
= $ 2.807.92
ICMS tax amount
= $ 505.43
IPI tax base amount
= $ 2.552.65
IPI tax value
= $ 255.27
PIS tax base amount
= $ 2.552.65
PIS amount
.=.$
= $ 2.552.65
COFINS amount
.=.$
15.59
76.58
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17.5-Fiscal books
CFOP Code= 3101 - Supplementary Price
Accounting amount
ICMS Credit
IPI tax base amount
IPI credit
= $ 2.807.92
= $ 2.807.92
= $ 505.43
= $ 2.552.65
= $ 255.27
After NF posted, goods are moved from custom to buyer inventory and goods receipt
is posted as given:
17.6 Accounting
DB Inventory
CR Importation process clearing account
DB ICMS to recover
DB-IPI to recover
DB-PIS to recover
DB-COFINS to recover
CR- Vendor(Broker)
CR- Broker vendor down payment
CR- Vendor(Broker)
=$ 2,000.00
=$ 2.000,00
=$ 505.43
=$ 255.27
=$ 15.59
=$ . 76.58
=$ 852,87
=$ ...852,87
=$ 852,87
17.7-Posting scheme
Importation process
clearing account
(3)
2,000.00
(C)
ICMS to recover
(3)
505.43
(D)
Inventory
(3)
2,000.00
(D)
IPI to recover
(3)
255.27
(D)
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Pgina 98
PIS to recover
(3)
15.59
(D)
(3)
76.58
(D)
Vendor Broker
(3)
852.87
(D)
COFINS to recover
(3)
852,87
(C)
Broker vendor down

payment s
(*)
852,87
(D)
(3)
852,87
(C)
(*) Existing posting done before when down payment is created.

See that importation clearing account and vendor down payment are completely
cleared at the end of the process.
If an import is related to consumption material, accounting is the same, changing
inventories account of raw material for appropriate expenses account
18:00 Inventory counting.
Concept:
Inventory counting is a required law practice, where companies should on the last day
of the fiscal year (12) count all its physical materials in inventory and verify that these
quantities are absolutely equal to the balance of each material recorded in inventory
legal book.
During the financial year, there were several inbound and outbound deliveries of
goods being performed from purchasing or sale side, and the final balance in the
inventory legal book should be exactly equal the amount computed by the counting of
inventory.
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This process should be officially done once a year and it must be accompanied by
external auditing company, where the irregularities found should be available to the
fiscal authorities for further analysis through reports developed by the auditors.
The irregularities become important because they cause significant effects in profit
and loss, where these differences could affect corporate income tax payment or
increase the values of expenses relating to costs, which would also be changing the
basis for calculating the tax
The technique works as follows:
If the physical count sheets of a material is greater than that recorded in the
inventories book register, means you have more materials in stock than registered, so
you need to readjust to balance in both side either physically and fiscally.
In this situation, you have to make an entry in the amount of difference in its fiscal
inventory, which means making a journal entry where you will be involving the
inventory account versus an account, that in this case is one o profit and loss and will
be a revenue account that will be offering a credit to the corporate income tax.
If the form of physical count of a particular material is lower than that recorded in the
book inventory record, means you have less material in stock that is registered, so you
need to readjust the balance so that it is both physically and equal fiscally.
In this situation, you have to make an adjustment in physical inventory , which means
making a journal entry where you will be involving the inventory account versus your
profit and loss and it will be an expense account, which is changing company
corporate income tax.
The journal entry of expenses and revenue will be represented by an account called
inventory adjustment, where the balance of this account is that will determine
whether to offer the taxation of corporate income tax or increasing the costs changing
the calculating basis and collection of the corporate income tax
18.1 - Adjustment Inventory Incoming
Let's imagine a situation where after the physical count of a given material there is a
difference of 20 pieces higher than in inventory as compared to inventory book
register. Difference value represents $ 10,000.00.
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Pgina 100
18.2 - Fiscal Books

For this type of transaction, there is no entries in Incoming legal books, being required
only in the inventory legal one.
18.3 - Accounting
DB Raw material/Finished goods Inventories
CR P&L Inventory Adjustment
$ 10,000.00
$ 10,000.00
18.4 Posting scheme
Inventories
P&L Inventories Adjustments
(1)
10,000.00
(D)
(1)
10,000.00
(C)
18.5 - Adjustment Inventory Outgoing

Let's imagine another situation where after the physical count of a given material
there is a difference of 20 pieces less in physical inventory as compared to inventory
book register. Difference value represents a value of $ 5,000.00.
18.6 Fiscal Books
For this type of transaction, there is also no entry in the outgoing fiscal book being
required only in inventory book register.
18.7 Accounting
DB - Inventory Adjustment
CR Raw material/Finished goods inventories
$ 5,000.00
$ 5,000.00
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Pgina 101
18.8 Posting scheme
Inventories
(1)
5,000.00
*10,000.00
(D)
P&L Inventories Adjustments
5,000,00
(1)
*10,000.00
(C)
(*) Existing entry in prior document

After these entries, you must determine the balance of the inventory adjustment
account to make sure that this value being charged to income or expense, i.e., will be
paid more or less income tax.
In the above case, the situation is an addition to the corporate income tax as the
account balance is a credit of $ 5,000.00, which means that the value of the expenses
is lower than the offered revenue.
If instead the value of expenses would be $ 5,000.00, which would be deducted from
revenues earned during the period for the purpose collecting income tax also.
The only difference is that the more you increase costs, lower becomes the basis for
corporate income tax.
Remember that the IRS understand that during the operation of business , the
company is manipulating results with the intention of evading the tax, it may arbitrate
the said corporate income tax.
After verify the incoming processes, we will now see all the possible outgoing processes
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5.7 Outgoing Process

1.0 - Sales for Industrialization (ICMS / IPI)
2.0 - Sales for Consumption
3.0 Sales of Material Exempt / Suspended ICMS / IPI
4.0 Sales of Material with reduced ICMS tax base amount
5.0 Sales to Customers Exempt of ICMS / IPI
6.0 - Sales with Freight
7.0 Sales of Service
8.0 Complementary Nota Fiscal
9.0 - Credit Note
10.0 - Return of Sales
11.0 - Delivery / Return of Packaging
12.0 - Sales / for future delivery
13.0 - Consignment, Remittance and Sales
14.0 Triangular Operation
15.0 - Exports Sales
16.0 - Sale for Free Zone
17.0 Nota Fiscal Free Sample Outgoing
18.0 Nota Fiscal for demonstration
19.0 Donation Nota Fiscal
20.0 - Other non-specified outgoing
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1.0 - Sales for Industrialization

Concept
A sale for industrialization occurs when the buyer of goods will use this product to
manufacture other products for future sale.
For this process, the ICMS/IPI tax base amount will always be the value of the
merchandise.
In our examples below, remember that the values of PIS / COFINS are not highlighted
in Nota Fiscal but appear in our postings, that because they have already been made in
the sales price gross up.
Nota Fiscal of sale for industrialization CFOP 5.101 taxed by ICMS / IPI totaling $
10,500.00
Total value of outgoing Nota Fiscal
Value of goods
IPI 5% tax rates
IPI tax base amount
ICMS 18% tax rate
PIS 0.65%
COFINS 3%
= $ 10,500.00
= $ 10,000.00
= $ 500.00
= $ 10,000.00
= $ 1,800.00
= $ 10,000.00
=$
65.00
= $ 300.00
Note that in 99.9% of cases, when the goods are for industrialization or
commercialization, the calculation basis of ICMS / IPI will always be the value of the
merchandise.
In this situation, if the issuer or seller of the goods is a taxpayer for both taxes, we
must remember that the debts should be recorded in outgoing legal books because
the credits in the Incoming legal book.
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Pgina 104
1.1 Fiscal Books

In addition to the Nota Fiscal data posted in outgoing fiscal book, the entries should
behave as follows:
CFOP Code= 5.101 Sales of own production.
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 10,500.00
= $ 10,000.00
= $ 1,800.00
= $ 10,000.00
= $ 500.00
1.2 - Accounting
DB Customer
CR Sales revenue
DB - ICMS tax sales deduction
CR ICMS payable
CR - IPI payable
DB PIS tax sales deduction
CR - PIS payable
CR COFINS payable
DB COGs example only
CR - Inventories
$ 10,500.00
$ 10,000.00
$ 1,800.00
$ 1,800.00
$ 500.00
$
68.25
$
68.25
$ 315.00
$ 315.00
$ 3,000.00
$ 3,000.00
1.3 Posting scheme
Customer
(1)
10,500.00
(D)
Sales Revenue
(1)
10,000.00
(C)
ICMS Tax Sales

Deduction
(1)
1,800.00
(D)
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Pgina 105
ICMS Payable
IPI Payable
(1)
1,800.00
(C)
(1)
500.00
(C)
PIS Payable
(1)
68.25
(D)
(1)
68.25
(C)
COFINS Payable
(1)
315.00
(C)
Cost of Sales
(2)
3,000.00
(D)
COFINS Tax Sales

Deduction
(1)
315.00
(D)
Inventories
(2)
3,000.00
(c)
Remarks:
If a sale to industrialization without ICM / IPI, excludes only the entries relating to such
taxes
In outgoing fiscal books, entries, would be as follows:
In addition to Nota Fiscal data in outgoing legal books , entries should behave as
follows:
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Pgina 106
CFOP Code= 5.101 - Sales of own production.

Accounting amount
= $ 10,500.00
= $ 10,500.00
= $ 10,500.00
If sales are destined for other states, the CFOP Code will be 6.101 and 7.101 will be to
other countries.
It should be noted also taxation, as foreign sales (7.101) is given benefits by
Government of non-payment of taxes (ICMS, IPI, PIS and PIS).
In case of resale, should be observed that the CFOP's rather than 5.101, 6.101 or 7.101,
will use 5.102, 6.102 or 7.102 beyond the forms of taxation.
2:00 Sales for consumption
Concept:
Sales for consumption occur when the buyer of a particular commodity will be using it
for their own consumption.
Note that in this case, the IPI tax base amount remains the same as sale for
industrialization, but the ICMS basis becomes different, i.e., value of goods plus the
portion of IPI.
Nota Fiscal of sale for consumption CFOP 5.101 taxed by ICMS / IPI
Nota fiscal total amount 11,000.00.
Nota Fiscal value
Value of goods
IPI 10% tax rates
IPI tax base amount
ICMS 18% tax rates
PIS 0.65% tax rates
COFINS 3% tax rates
= $ 11,000.00
= $ 10,000.00
= $ 1,000.00
= $ 10,000.00
= $ 1,980.00
= $ 11,000.00
=$
71.50
= $ . 330.00
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Pgina 107
2.1 - Fiscal Books

In addition to Nota Fiscal data in outgoing legal books, the entries should behave as
follows:
CFOP code: 5.111 - Sale own production.
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
=
=
=
=
=
$ 11,000.00
$ 11,000.00
$ 1,980.00
$ 10,000.00
$ 1,000.00
2.2 - Accounting
DB Customer
CR - Sales revenues
CR ICMS payable
CR - IPI payable
DB PIS tax sales deduction
CR - PIS payable
DB - COFINS tax sales deduction
CR COFINS payable
DB COGs - example.
CR Inventories
$ 11,000.00
$ 10,000.00
$ 1,980.00
$ 1,980.00
$ 1,000.00
$ 71.50
$ 71.50
$ 330.00
$ 330.00
$ 3,000.00
$ 3,000.00
2.3 Posting scheme
Customer
(1)
11,000.00
(D)
Sales Revenue
(1)
10,000.00
(C)
ICMS Tax Sales

Deduction
(1)
1,980.00
(D)
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Pgina 108
ICMS Payable
IPI Payable
(1)
1,980.00
(C)
(1)
1,000.00
(C)
PIS Paybale
(1)
71.50
(D)
(1)
71.50
(C)
COFINS Payable
(1)
300.00
(C)
Cost of Sales
(2)
3,000.00
(D)
COFINS Tax Sales

Deduction
(1)
330.00
(D)
Inventories
(2)
3,000.00
(c)
If sales are destined for other states, CFOP Code will be 6.101 and 7.101 will be to
other countries.
Please note also taxation, as foreign sales (7101) has benefits given by Government of
non-payment of taxes (ICMS, IPI, PIS and PIS).
will use 5.102, 6.102 or .102 beyond the forms of taxation.
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Pgina 109
3.0 Sales of materials exempt/suspended ICMS/IPI

Please see sub-topic 1.3 Outgoing process Remarks
Definition:
This kind of sales occurs to determined taxpayer (Seller) or product sold by it, which
has some benefit of ICMS tax base amount reduction given by State Government. This
reduction is given in any percentage.
For these cases, should be observed the values of taxes and appropriation of them
according to Nota Fiscal
Nota Fiscal for sales of finished goods containing ICMS / IPI, with reduced ICMS tax
base amount at 60%, with the CFOP Code5.101 (within the State).
- Nota Fiscal value
- Value of Merchandise
- ICMS tax base amount
- ICMS Value 18%
- IPI tax base amount
- IPI tax amount 10%
=$ 1,100.00
= $1,000.00
= $ 400.00
= $ 72.00
=$ 1,000.00
=$ 100.00
-PIS tax base amount
= $ 400.00
- PIS tax amount 0.65%
=$
-COFINS tax base amount

-COFINS tax amount 3%
= $ 400.00
=$ 30.00
6.50
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Pgina 110
4.1 - Fiscal Books

In additional to Nota Fiscal data, entries in outgoing legal book should behave as
follows:
CFOP Code= 5.101 - Sale of own production.
Accounting amount
ICMS debit
ICMS Exempt / other
IPI tax base amount
IPI credit
= $ 1,100.00
= $ 400.00
= $ 72.00
= $ 600.00
= $ 1,000.00
= $ 100.00
4.2 - Accounting
DB Customer
CR Sales revenues
DB ICMS tax sales deductions
72.00
CR ICMS payable
DB - IPI tax sales deductions
CR - IPI payable
DB - PIS sales expenses
CR - PIS to collect
DB - COFINS sales expenses
CR COFINS payable
DB Cost of sales - example
CR Inventory
$ 1,100.00
$ 1,100.00
$
$
$
$
$
$
$
$
$
$
72.00
100.00
100.00
6.50
6.50
30.00
30.00
100.00
100.00
4.3 Posting scheme

Customer
(1)
1,100.00
(D)
Sales Revenue
(1)
1,100.00
(C)
ICMS Sales
Deduction
(1)
72.00
(D)
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Pgina 111
ICMS Payable
(1)
72.00
(C)
PIS sales deduction
IPI tax sales

deductions
(1)
100.00
(D)
(1)
100.00
(C)
PIS Payable
(1)
6.50
(D)
(1)
6.50
(C)
COFINS Payable
(1)
30.00
(C)
IPI Payable
Cost of Sales
(2)
100.00
(D)
COFINS sales
deduction
(1)
30.00
(D)
Inventories
(2)
100.00
(c)
If sales were destined for other states, the CFOP Code will be 6.101 and 7.101 will be
to other countries.
Please note also the form of taxation, if it is foreign sales 7.101) benefit is given by
Government generates non-payment of taxes (ICMS, IPI, PIS and PIS).
will use 5.102, 6.102 or 7.102 beyond the forms of taxation.
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Pgina 112
5.0 - Sales to Customer Exempt ICMS / IPI

See subtopic 2.3 outgoing processes Comments
6.0 - Sales with freight
Concept:
This operation occurs when in the sale of the finished goods exists the carrier figure.
Besides the values in Nota Fiscal, may also be included or not, the amount of freight.
According to current legislation, both ICMS and IPI will be calculated adding the value
of freight in its calculating basis; it should form the basis of calculation of ICMS and IPI.
If in the same Nota Fiscal values regarding packaging and insurance, they must be part
of ICMS tax base amount and IPI
Another possibility is when the freight is charged separately from the NF, i.e., this value will be
charged by carrier to the recipient or sender of the goods. This collection shall be made to one
who was responsible for paying the freight
If the receiver or seller, carrier shall issue CTRC charging the value of service transport.
The receiver or seller should proceed in accordance with topic 10.0 incoming
procedures.
6.1- Sales with Freight Included in Nota Fiscal
Nota Fiscal of sale for industrialization with freight included and CFOP 5.101 taxed by
ICMS/ IPI totaling $ 10,700.00.
Nota Fiscal value
Value of goods
Freight value
IPI tax rate 5%
IPI tax base amount
ICMS 18% tax rated
PIS tax base amount
= $ 10,710.00
.= $ 10,000.00
=$
200.00
=$
510.00
= $ 10,200.00
= $ 1,836.00
= $ 10,200.00
= $ 10,000.00
PIS 0.65% tax rate
=$
= $ 10,000.00
COFINS 3% tax rate
=$
65.00
300.00
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Pgina 113
6.2 - Fiscal Books

In addition to the Nota Fiscal data in the outgoing legal book, entries should behave as
follows:
CFOP Code= 5.101 - Sale own production.
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 10,710.00
= $ 10,200.00
= $ 1,836.00
= $ 10,200.00
=$
510.00
6.3 - Accounting
DB Customer
CR - Sales revenues
DB - ICMS tax sales deductions
1,836.00
CR ICMS payable
CR - IPI payable
CR - PIS payable
CR - COFINS payable
DB Cost of sales - Value only for example.
CR Inventories
$ 10,710.00
$ 10,710.00
$
$ 1,836.00
$ 510.00
$ 510.00
$ 65.00
$ 65.00
$ 300.00
$ 300.00
$ 3,000.00
$ 3,000.00
6.4 Posting scheme

Customer
(1)
10,710.00
(D)
Sales Revenue
(1)
10,710.00
(C)
ICMS Sales
Deduction
(1)
1,836.00
(D)
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Pgina 114
ICMS Payable
(1)
1,836.00
(C)
PIS sales deduction
IPI tax sales

deductions
(1)
510.00
(D)
(1)
510.00
(C)
PIS Payble
(1)
65.00
(D)
(1)
65.00
(C)
COFINS Payable
(1)
300.00
(C)
IPI Payable
Cost of Sales
(2)
3,000.00
(D)
COFINS sales
deduction
(1)
300.00
(D)
Inventories
(2)
3,000.00
(c)
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Pgina 115
7.0 - Sale of Service

Concept:
The sale of service occurs when a particular company is has its main activity sales of
service. There are companies that in addition to sales of products, also have activity of
sales service.
In sales of service, beyond the ISS (Service Tax) which is a municipal tax, the income tax
withholding tax may be levied (tax withholding) which is a Federal Tax.
7.1 - Sale of Service
Nota Fiscal of service sales in the amount of $ 10,000.00 with ISS and IRRF (Income tax
withholding).
Nota Fiscal Value
ISS value 5%
IRRF 1.5%
PIS 0.65%
COFINS 3%
= $ 10,000.00
= $ 500.00
= $ 150.00
=$
65.00
=$
300.00
7.2 - Fiscal Book

This Nota Fiscal cannot be posted in the outgoing fiscal book, because this document is
mandatory to be posted in services book register.
In addition to the Nota Fiscal data entries in the services book register, should behave
as follows:
Accounting amount
ISS calculating basis
Rate = 5%
ISS Value
= $ 10,000.00
= $ 10,000.00
=$
500.00
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Pgina 116
7.3 - Accounting
DB Customer
CR - Sales Service Revenue
DB - ISS expenses on sales
CR - ISS payable
DB Recoverable IRRF
CR Customer
DB - PIS expenses on sale
CR - PIS payable
CR COFINS payable
DB - Cost of service
CR Payroll appropriation
$ 10,000.00
$ 10,000.00
$ 500.00
$ 500.00
$ 150.00
$ 150.00
$
65.00
$
65.00
$ 300.00
$ 300.00
$ 1,500.00
$ 1,500.00
7.4 Posting scheme

Customer
Sales Revenue
(1)
(1)
10,000.00 150.00
(D)
(C)
ISS Payable
(1)
500.00
(C)
(1)
10,000.00
(C)
ISS Sales
Deduction
(1)
500.00
(D)
IRRF Recoverable
(1)
150.00
(D)
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Pgina 117
PIS sales deduction
PIS Payable
(1)
65.00
(D)
(1)
65.00
(C)
COFINS Payable
(1)
300.00
(C)
Cost of Services
(2)
1,500.00
(D)
COFINS sales
deduction
(1)
300.00
(D)
Payroll
appropriation
(2)
1,500.00
(c)
8 - Supplementary Nota Fiscal

Concept:
The supplementary Nota Fiscal always occurs when the value of a commodity was
charged less than the previously traded price, or when the values of lower taxes were
charged.
Both situations should be included in the body of the Nota Fiscal, data concerning the
previous Nota Fiscal in which it was issued with errors.
If pricing supplement should be observed in the first Nota Fiscal, taxes ICMS / IPI were
taxed normally, because they should be charged normally.
If ICMS supplementary, there will be no collection, because the ICMS is a tax added to
the product and the same was included in the value of the goods before. When
processing of this outgoing document if prior Nota Fiscal was previously issued debit
feature of ICMS, the supplementary value should be posted in the ICMS payable versus
ICMS expenses
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Pgina 118
If IPI supplementary, it will be generating an accounts receivable open item, because

the tax does not have features like the ICMS, or whether it is charged out of the value
of the goods. When processing of this outgoing document, this value should be posted
in the IPI receivable versus customers.
We will see the two situations:
- Supplementary Price
- Supplementary taxes.
8.1 - Supplementary Price
Nota Fiscal of supplementary price with CFOP 5.101 and ICMS / IPI totaling $ 550.00,
related to previously issued Nota Fiscal of sales for industrialization.
Nota Fiscal value
ICMS Value
IPI tax base amount
IPI Value
= $ 550.00
= $ 500.00
= $ 90.00
= $ 500.00
= $ 50.00
8.2 - Fiscal Books

In addition to the Nota Fiscal data in the outgoing fiscal book, entries should behave as
follows:
CFOP Code= 5.101 - Supplementary Price
Accounting amount
ICMS tax amount
IPI tax base amount
IPI tax amount
= $ 550.00
= $ 500.00
= $ 90.00
= $ 500.00
= $ 50.00
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Pgina 119
8.3 - Accounting
DB - Customers
CR Sales revenues
DB ICMS tax sales deductions
90.00
CR ICMS payable
DB IPI tax sales deductions
CR - IPI payable
CR - PIS payable
CR - COFINS payable
$ 550.00
$ 550.00
$
$
$
$
$
$
$
$
90.00
50.00
50.00
3.25
3.25
15.00
15.00
8.4 Posting scheme
Customer
Sales Revenue
(1)
550.00
(D)
(1)
550.00
(C)
ICMS Payable
(1)
90.00
(C)
IPI tax sales

deductions
(1)
50.00
(D)
ICMS Sales
Deduction
(1)
90.00
(D)
IPI Payable
(1)
50.00
(C)
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Pgina 120
PIS sales deduction
PIS Payable
(1)
3.25
(D)
(1)
3.25
(C)
COFINS sales
deduction
(1)
15.00
(D)
COFINS Payable
(1)
15.00
(C)
8.5 ICMS supplementary

NF supplementary Nota Fiscal of ICMS in the amount of $ 200.00, taxed lower than in
prior Nota Fiscal issued.
In the body of this document must contain the information of previously Nota Fiscal
issued.
8.6 - Fiscal Books
follows:
CFOP Code= 5.101 ICMS supplementary
ICMS Value
Remarks =Data of previous Nota Fiscal issued.
= 200, 00
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8.7 - Accounting
CR ICMS payable
$ 200.00
$ 200.00
8.8 Posting scheme

ICMS tax sales
deduction
ICMS Payable
(2)
200.00
(D)
(1)
200.00
(C)
8.9 - IPI supplementary

IPI supplementary Nota Fiscal in the amount of 100.00, lower charged in previous Nota
Fiscal issued.
In the body of this document must contain the information of prior Nota Fiscal.
8.10 - Fiscal books
In addition to the Nota Fiscal data output record in outgoing book, the entries should
behave as follows:
CFOP Code= 5.101 - IPI supplementary
Accounting amount
IPI Value
Remarks = Data of Nota Fiscal previously issued.
= 100.00
= 100.00
Rafael Vanderlei
Pgina 122
8.11 - Accounting
CR - IPI Payable
DB Customers
CR - Sales revenue
$ 100.00
$ 100.00
$ 100.00
$ 100.00
8.12 Posting scheme

IPI tax sales deductions
(1)
100.00
(D)
Customers
(1)
100.00
(D)
IPI Payable
(1)
100.00
(C)
Sales revenue
(1)
100.00
(C)
9.0 - Credit Note

Definition:
Credit note is a document issued by a company that serves to do deductions on
accounts receivable.
One of the situations is when the issuer of a Nota Fiscal collect unduly more value than
that negotiated in the sales order and instead the recipient of goods issue a returning
Nota Fiscal, the vendor sends a credit note.
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Pgina 123
Credit note is not a valid fiscal document because it is only an accounting practice.
9.1 - Credit note posting
Let's imagine for a specific sale, there was the issuance of Nota Fiscal with a value
greater in $ 500.00 .
9.2 - Fiscal Books
There is a requirement because it is not a fiscal document.
9.3 - Accounting
DB Sales revenue
CR Customer
$ 500.00
$ 500.00
9.4 Posting scheme

Sales revenue
(1)
500.00
(D)
Customer
(1)
500.00
(C)
For these cases, it should be noted the taxes, although there is no need and obligation
to entry it in the fiscal books.
10.0 - Sales Return
Concept:
Sales return is caused by discrepancies in receiving goods by the buyer depending on
price, terms, product quality and so on.
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Pgina 124
It can occur in two situations:
- Return with same Nota Fiscal itself, or

- Return with Nota Fiscal from buyer.
The only difference between them is that returning with the same Nota
Fiscal itself should contain in the reverse in a handwritten statement from the
recipient that he does not agree with that merchandise. The issuer when receiving the
Nota Fiscal with the goods, shall issue an "incoming" Nota Fiscal as a procedure to
clear that outgoing one.
The accounting and register in fiscal books remain the same for both situations.
10.1 - Return / Return of Goods not delivered
Sales return Nota Fiscal example of topic 1.0 - Outgoing Process
Sales return Nota Fiscal with 5.201 CFOP taxed by ICMS / IPI totaling $ 10,500.00
Total Nota Fiscal
Value of goods
IPI 5% tax rate
IPI tax base amount
ICMS 18% tax rate
PIS tax base amount
= $ 10,500.00
= $ 10,000.00
= $ 500.00
= $ 10,000.00
= $ 1,800.00
= $ 10,000.00
= $ 10,000.00
PIS 0.65% tax rate

=$
65.00
= $ 10,000.00
COFINS 3% tax rate
=$
300.00
Rafael Vanderlei
Pgina 125
10.2 Fiscal Books

In addition to Nota Fiscal data in incoming fiscal book, the entries should behave as
follows:
CFOP Code= 1.201 Sales return of own production.
Accounting amount
ICMS Credit
IPI tax base amount
IPI credit
= $ 10,500.00
= $ 10,000.00
= $ 1,800.00
= $ 10,000.00
= $ 500.00
10.3 - Accounting
DB Sales revenue (reversing of sales)
CR Customer
DB ICMS payable
CR - ICMS tax sales deduction
DB - IPI payable
DB - PIS payable
CR - PIS tax sales deduction
DB - COFINS payable
CR COFINS tax sales deduction
DB Cost of sales - Value only for example.
CR Inventories
$ 10,000.00
$ 10,500.00
$ 1,800.00
$ 1,800.00
$ 500.00
$
65.00
$
65.00
$ 300.00
$ 300.00
$ 3,000.00
$ 3,000.00
10.4 Posting scheme
Customer
(1)
10,500.00
(D)
(1)
10,500.00
(C)
Sales
Revenue(Reversing of
sales)
(1)
10,000.00
(D)
ICMS tax Sales

Deduction
(1)
1,800.00
(C)
Rafael Vanderlei
Pgina 126
ICMS Payable
IPI Payable
(1)
1,800.00
(D)
(1)
500.00
(D)
PIS tax sales deduction

(1)
65.00
(C)
COFINS Payable
(1)
300.00
(C)
PIS Payable
COFINS tax sales

deduction
(1)
65.00
(D)
(1)
300.00
(C)
Cost of Sales
(2)
3,000.00
(C)
Inventories
(2)
3,000.00
(D)
Sales returns accounts of ICMS / IPI payable can be replaced by recoverable ICMS / IPI.
The account of sales revenue may also be replaced by another account called sales
returns which is a reduction of the revenue account. This account is mostly used to
better identification in financial statements and accounting, to demonstrate the
amount of returns during the period.
If there are partial sales return, the procedure adopted is the same, but just check the
quantities and values of this returns
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Pgina 127
11.0 - Remittance/ Packaging returns

Definition:
It is a product type used to pack goods during transportation.
There is also the case of packing remittance, by the buyer to pack products being
manufactured by third parties.
These packages are part of the buyer assets and are under on the same physical and
financial control.
Physical control is quantity in inventory and financial quantities are those physical
quantities represented in the accounts by a financial value. Its control is very similar to
the raw materials or finished goods.
This shipment of returnable packaging occurs along with the sale of a product, i.e., it
goes packing the material being sold.
An example for easy understanding, are the pallets that goes along with the goods and
thereafter shall return to the vendor.
To do so, in this transaction there are two CFOPs in a single operation for Nota Fiscal,
the nature of sale (5.101, 6.101, 5.102, 6.102, etc...) and the nature of packaging
shipping (5.949, 6.949 and so on ...)
The value of packaging in Nota Fiscal exists only as symbolic value for transportation
and taxation should not occur, since these quantities will be returning back later.
When remitting Nota Fiscal for sale with packaging, in addition to the accounting of
sales, it is also registered the packages as follows.
Sales Nota fiscal of $ 1,100.00 and the value of the package equal to $ 2,000.00 with
CFOP's 5.101 and 5.949, containing values of ICMS / IPI.
- Nota Fiscal value
- ICMS / IPI tax base amount
- ICMS value 18%
- IPI Value10%
- PIS 0.65%
- COFINS 3%
= 3100.00
= 1000.00
= 180.00
= 100.00
=
6.50
= 30.00
Rafael Vanderlei
Pgina 128
11.1 Fiscal Books

In addition to the Nota Fiscal data in the outgoing fiscal book, the entries should
behave as follows:
CFOP Code= 5.101 Sales of own production
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
CFOP Code= 5.949 - Packing remittance

Accounting amount
= $ 2,000.00
= $ 2,000.00
= $ 2,000.00
In the body of the Nota Fiscal must state that packaging going along goods shall return
later.
11.2 - Accounting
DB Customer
$ 1,100.00
CR Sales revenues
$ 1,000.00
$ 180.00
CR ICMS payable
$ 180.00
CR - IPI payable
$ 100.00
$
6.50
CR - PIS payable
$
6.50
$ 30.00
CR COFINS payable
$ 30.00
DB Cost of sales - (example)
$ 450.00
CR Inventory
$ 450.00
DB - Packaging Material in 3rd Power
$ 2,000.00
CR Finished goods Inventory (Pallets, Cardboard and Box etc.). $ 2,000.00
Rafael Vanderlei
Pgina 129
11.3 Posting scheme

Customer
ICMS tax Sales

Deduction
Sales Revenue
(1)
1,100.00
(D)
(1)
1,000.00
(C)
ICMS Payable
IPI Payable
(1)
180.00
(C)
(1)
100.00
(C)
PIS Payable
(1)
6.50
(D)
(1)
6.50
(C)
COFINS Payable
(1)
30.00
(C)
(1)
180.00
(D)
Cost of Sales
(2)
450.00
(D)
COFINS tax sales

deduction
(1)
30.00
(D)
Inventories
(2)
450.00
(c)
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Packaging at 3rd parties
(3)
2,000.00
(D)
(3)
2,000.00
(D)
The return of these packs, please observe sub-topic 11:11 of the incoming processes.
12.0 - Sale / Remittance for Future delivery
Concept:
This operation occurs when a buyer (customer) makes purchase of a particular line of
production for some period.
It can also occur when due to physical space the buyer (client) got a lot of goods, but
guides the vendor to do partial deliveries.
So at first there is the issue of a simple billing Nota Fiscal providing the taxation of IPI.
Talking about ICMS, it should be paid only in the physical movement of goods as
required by rules.
Referring further to ICMS, the calculating basis and the value may change if there is an
economic instability in the Country
Each state must create a currency for indexing these values. In case of So Paulo State,
the currency created was UFESP (Fiscal Unit of the State of So Paulo).
The rule operates as follows:
The value of the goods of the first Nota Fiscal (Simple Billing) will be divided by the
currency of that day (e.g. UFESP). On the effective day of Nota Fiscal (day, month or
year), the value got in UFESP (previous calculation result) will be multiplied by UFESP
of the day of the Nota Fiscal of the goods. This calculation is applicable only to find the
base and value of the ICMS.
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Examples:
First Nota Fiscal, CFOP 5.116 - Future delivery sales (single billing), with a total value of
$ 2,000.00 without ICMS / IPI.
UFESP quotation at the day of the simple billing issuance = 1.17
$ 2,000.00 / 1.17 = 1709.401709 UFESP
Second Nota Fiscal, 5.922 Shipment of future delivery two months after the billing.
We must remember that this product is taxed by IPI; it may be registered also in that
Nota Fiscal.
For example purposes, consider a 10% rate of IPI.
First find the calculating basis and value of the ICMS.
UFESP Value for that day = 1.21
Results of the previous division UFESP= 1709.401709 * 1.21 = $ 2068.38
Therefore, the value of NF is as follows:
Nota Fiscal value
Value of goods
ICMS value 18%
IPI tax base amount
IPI value 10%
= $ 2,200.00
= $ 2,000.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
In the body of Nota Fiscal must contain to which Nota Fiscal this remittance refers to.
If at the time this process there is no change in the currency index, the tax base
amount will be the same as the value of the goods issued on simple billing Nota Fiscal.
12.1 Sale for Future Delivery
We will utilize the previous example to observe tax and accounting entries.
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Pgina 132
First Nota Fiscal CFOP 5116 - Sales for future delivery (single billing) with a total value
of $ 2,000.00 without ICMS / IPI.
CFOP Code= 5.111 - sale for future delivery
Nota Fiscal value
Value PIS 0.65%
Value COFINS 3%
= $ 2,000.00
= $ 13.00
= $ 60.00
12.2 Fiscal Books

CFOP Code= 5.116 - sale for future delivery
Accounting amount
ICMS Excluded or other base
IPI Excluded or other base
= $ 2,000.00
= $ 2,000.00
= $ 2,000.00
12.3 Accounting
DB Customer
CR Future revenue
CR - PIS Payable
DB COFINS expense on sales
CR - COFINS Payable
$ 2,000.00
$ 2,000.00
$ 13.00
$ 33.00
$ 60.00
$ 60.00
12.4 Posting scheme

Customer
(1)
2,000.00
(D)
Future Revenue
(1)
2,000.00
(C)
PIS tax sales

deduction
(1)
13.00
(D)
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Pgina 133
PIS Payable
(1)
13.00
(C)
COFINS tax saled

dedution
COFINS Payable
(1)
60.00
(D)
(1)
60.00
(C)
12.5 Remittance of Sale for Future Delivery

Nota Fiscal of remittance of future delivery CFOP 5.922 totaling $ 2,200.00.
Nota Fiscal value
Value of goods
ICMS Value 18%
IPI tax base amount
IPI value 10%
= $ 2,200.00
= $ 2,000.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
12.6 Fiscal Books

follows:
CFOP Code= 5.922 - Remittance of future delivery
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 2,200.00
= $ 2,068.38
= $ 372.31
= $ 2,000.00
= $ 200.00
Rafael Vanderlei
Pgina 134
12.7 - Accounting
DB Cost of sales
CR Inventory
CR ICMS Payable
CR - IPI Payable
DB Future revenues
CR - Sales revenue
DB - Customers
$ 300.00
$ 300.00
$ 372.31
$ 372.31
$ 200.00
$ 2,000.00
$ 2,000.00
$ 200.00
12.8 Posting scheme

Cost of Sales
(1)
300.00
(D)
(1)
300.00
(C)
ICMS Payable
Future Revenues
(*)
2,000.00
(C)
(1)
372.31
(D)
IPI Payable
(1)
372.31
(C)
(1)
2,000.00
(D)
ICMS tax sales

deductions
Inventory
(1)
200.00
(C)
Sales revenue
(2)
2,000.00
(C)
Customer
(3)
200.00
(D)
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Pgina 135
(*) Existing values in previous document.

Note that the revenue temporary account to hold revenues was also zeroed at the end
of the process.
If this transaction occurs outside the State or Country, we should observe the CFOP's
and taxation.
13.0 - Consignment Sale
Concept:
This operation occurs when a particular company will not pay immediately the goods
purchased for resale or industrialization, due to high disbursement, considering that
the sale or production of these products could be time-consuming or even risk in
turnover.
Soon, he makes a contract with the seller to sell goods under consignment mode which
means that, regardless of the amount sent as a consignment, the vendor may issue a
Sales Nota Fiscal under buyer authorization only
If the vendor issue a consignment Nota Fiscal of 100 pieces of a product, and at this
time there is no ongoing sale, but a commitment by the recipient that sale of these
products, the vendor may issue a Nota Fiscal of sales to collect the amount of said
products
If there is no any sale of these goods, the buyer may return to vendor without any
onus to pay.
Remember that when this process occurs, the values relating to taxes must be paid in
the first shipment on consignment Nota Fiscal (5.917, 6.917 or 7.917).
For this process, there will be two Notas Fiscais, the first one is a remittance in
Consignment (5.917, 6.917 or 7.917) with the appropriate tax (ICMS / IPI) and the
second as selling stuff on consignment (5.111,6.111 or .111) without any tax.
Rafael Vanderlei
Pgina 136
13.1 - Remittance of Consignment Material

Remittance of consignment Nota Fiscal valued at 1100.00, with CFOP 5.917 taxed by
ICMS / IPI.
Nota Fiscal value
ICMS values
IPI tax base amount
ICMS values
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
In the body of this document, must state that the material contained in Nota Fiscal
follows as consignment.
13.2 - Fiscal Books
CFOP Code= 5.917 Remittance of Consignment Material
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 1,100.00
= $ 1000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
13.3 - Accounting
DB - Temporary material on consignment
CR Customer Consignment clearing account
DB - ICMS Consignment
CR ICMS Payable
DB - IPI consignment
CR - IPI Payable
$
$
$
$
$
$
1,100.00
1,100.00
180.00
180.00
100.00
100.00
The amounts recorded in the inventory account and temporary material on

consignment are the same for the total of the Nota Fiscal, that is why this value is the
amount to be collect at the time of sale of goods effectively, and at that moment will
be posted the values regarding cost of sales versus inventories.
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Pgina 137
13.4 Posting scheme
Temporary
Consignment Material
Customer
Consignment clearing
account
(1)
1,100.00
(D)
(1)
1,100.00
(C)
ICMS Payable
(1)
180.00
(C)
IPI Consignment
ICMS Consignment
(1)
180.00
(D)
IPI Payable
(1)
100.00
(D)
(1)
100.00
(C)
13.5 - Sale of Consignment Material

Nota Fiscal of sales-material on consignment with CFOP 5.111.
Total value of NF
PIS value 0.65%
COFINS value 3%
= $ 1,100.00
=$
7.15
= $ 33.00
In the body of this document must state that the sale relates to the consignment
previously issued as Nota Fiscal #. xx.
13.6 - Tax Books
CFOP Code= 5.111 - Consignment Sale material
Accounting amount
= $ 1,100.00
= $ 1,100.00
= $ 1,100.00
Rafael Vanderlei
Pgina 138
13.7 - Accounting
DB Customer
CR - Sales revenue
DB Customer consignment clearing account
CR - Temporary material on consignment
DB COGS
CR Inventory
CR - ICMS Consignment
CR - IPI assignment
DB - PIS tax sales deductions
CR - PIS payable
DB COFINS tax sales deductions
CR - COFINS payable
$ 1,100.00
$ 1,000.00
$ 1,100.00
$ 1,100.00
$ 200.00
$ 200.00
$ 180.00
$ 180.00
$ 100.00
$ 7.15
$ 7.15
$ 33.00
$ 33.00
13.8 Posting scheme
Customer
Sales Revenue
(1)
1,100.00
(D)
(1)
1,000.00
(C)
Temporary material
Consignment
(*)
1,100.00
(D)
(2)
1,100.00
(C)
COGS
(3)
200.00
(D)
Customer
consignment
clearing acocunt
(2)
(*)
1,100.00 1,100.00
(D)
(C)
ICMS Cosignment
(*)
180.00
(D)
(2)
180.00
(C)
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Pgina 139
ICMS sales tax sales

deduction
(2)
180.00
(D)
IPI Consignment
(*)
100.00
(D)

(2)
7.15
(D)
(2)
100.00
(C)
PIS Payable
(2)
7.15
(C)
COFINS tax sales

deduction
(2)
33.00
(D)
COFINS Payable
(2)
33.00
(C)
(*) Amounts existing in prior documents

Note that temporary accounts are zeroed at the end of process.
If this transaction occurs outside State or other Country is mandatory observe the
correct CFOP and its taxation.
Rafael Vanderlei
Pgina 140
14.0 Triangle Operation-Third party sales

Triangle operation is divided as below:
Sales at order
Sales on customer order
Sales by count and order for industrialization
All these operations are foreseen for three types of taxpayers.
14.1 Sales at order
Concept:
This operation occurs when a determined company sells a product to tis customer, but
still there is no product to delivery. Though the seller issue a purchase order to a
determined supplier stating that goods must be delivered to the warehouse where was
done at the first time.
Example: - See the three sites: A, B and C
B sells but still do not has merchandise to be delivered, but does to C that will
receive, just a Nota Fiscal of sales at order (simple billing) with respective taxes and
CFOP Code5.118, 6.118 and 7.118.
B sends a purchase order to A requesting the physical deliverance to C.
In this case, B just waits sales Nota Fiscal from A in which is declared the number
of Nota Fiscal for remittance.
- NF sales at order
A
- NF sales with taxes

(1stNF)
NF
remittance
(3rdNF)
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Pgina 141
14.2 Sales at order

Let us exemplify that we are the B company.
We need to issue a sale at order Nota Fiscal with ICMS/IPI, and CFOP 5.118.
This Nota Fiscal contains the merchandise that will be delivered by A.
Nota Fiscal value
ICMS value
IPI tax base amount
IPI value
PIS value 0.65%
COFINS 3%
=
=
=
=
=
=
=
$ 1.100,00
$ 1.000,00
$
180,00
$ 1.000,00
$
100,00
$
6,50
$
30,00
14.3 Fiscal Books

CFOP Code= 5.118 - Sale order
Accounting amount
1,100.00
ICMS debit
IPI tax base amount
IPI debit
=$
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
14.4 - Accounting
DB Customer
CR - Sales Revenue
CR ICMS payable
CR - IPI payable
CR - PIS payable
DB COFINS expense on sale
CR - COFINS payable
$ 1,100.00
$ 1,000.00
$ 180.00
$ 180.00
$ 100.00
$ 6.50
$ 6.50
$ 30.00
$ 30.00
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Pgina 142
14.5 Posting scheme
Customer
(1)
1,100.00
(D)
ICMS Tax Sales

Deduction
Sales Revenue
(1)
1,000.00
(C)
ICMS Payable
IPI Payable
(1)
180.00
(C)

(1)
6.50
(D)
(1)
180.00
(D)
(1)
100.00
(C)
PIS Payable
(1)
6.50
(C)
COFINS tax sales

deduction
(1)
30.00
(D)
COFINS Payable
(1)
30.00
(C)
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Pgina 143
When "B" receives Nota Fiscal collecting invoice of goods sent to the "C", he will be
posting and registering it physically for tax purposes in accordance with the
procedures of entries, debiting inventory, taxes and crediting suppliers (See remarks in
sub-topic 1.3 of incoming processes ).
After this, "B" should do the posting of Cost of sales accounts versus inventory related
to the sales at order as follows:
Suppose that the value of Cost of sales was equal to $ 200.00
14.6 - Accounting
DB Cost of sales
CR Inventory
$ 200.00
$ 200.00
14.7 Posting scheme

Cost of sales
inventories
(1)
200.00
(D)
(1)
200.00
(c)
14.8 - Sales on customer order

In the process of sale by the order is exactly the same as before, is only focused on the
issue of two Notas Fiscais of the same issuer.
Imagine "A" purchased goods from "B", and this will make the remittance to the "C".
(2ndNF)
- NF sale account and other with taxes
A
NF
sale (1stNF)
(3rdNF)
remittance (1aNF) C
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Pgina 144
14.9 - Sales on customer order

Let us imagine that we are the figure of "B", where will issue a sales Nota Fiscal on
behalf and all taxes for "A" and a remittance Nota Fiscal by the order of "A" to "C".
For this process, should be issued first a remittance Nota Fiscal of goods to "C" and
then immediately a sale Nota Fiscal to A".
At this point, it is assumed that "A" has already issued a sale Nota Fiscal to "C".
Issuance of a remittance Nota Fiscal on behalf and without ICMS / IPI with CFOP 5.923.
NF must state that this material was delivered to "C" by the order of "A" according as i Nota
Fiscal nbr xx issued by "A" to "C".
Nota Fiscal value
= $ 1,100.00
14:10 - Fiscal Books

To this document should be registered only the Nota Fiscal data and observations
fields.
14.11 Accounting
Lets imagine that the value of Cost of sales equals $ 200.00.
DB Cost of sales
CR Inventories
$ 200.00
$ 200.00
14:12 Posting scheme
Cost of Sales
(1)
200.00
(D)
Inventories
(1)
200.00
(c)
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Pgina 145
14.13 - Sales by count and order for industrialization
Nota Fiscal value $ 1100.00 with 5.120 CFOP containing ICMS and IPI.
Nota Fiscal value
ICMS value
IPI tax base amount
IPI Value
PIS 0.65%
COFINS 3%
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
=$
6.50
= $ 30.00
14.14 Fiscal Books

CFOP Code= 5.120 - Sale by account and order.
Accounting amount
ICMS Debit
IPI tax base amount
IPI debit
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
14.15 - Accounting
DB Customer
CR Sales revenues
CR ICMS tax sales deduction
CR ICMS payable
CR - IPI Payable
DB PIS tax sales deductions
CR PIS Payable
DB COFINS tax sales deductions
CR COFINS Payable
$ 1.100,00
$ 1.000,00
$ 180,00
$ 180,00
$ 100,00
$
6,50
$
6,50
$ 30,00
$ 30,00
Rafael Vanderlei
Pgina 146
Customer
(1)
1,100.00
(D)
ICMS Tax Sales

Deduction
Sales Revenue
(1)
1,00.00
(C)
ICMS Payable
IPI Payable
(1)
180.00
(C)

(1)
6.50
(D)
(1)
180.00
(D)
(1)
100.00
(C)
PIS Payable
(1)
6.50
(C)
COFINS tax sales

deduction
(1)
30.00
(D)
COFINS Payable
(1)
30.00
(C)
Rafael Vanderlei
Pgina 147
14.17 Sales at account and order for industrialization Tree companies

This kind of transaction is very similar as prior ones; the only change is that it is among
the three companies.
One example is when B buys a determined material from A and A must remit it
to C, and B must issue a remittance Nota Fiscal for industrialization to C.
Then, A must issue a sales Nota Fiscal by accountant and order (symbolic) with all
taxes to B and one remittance of accountant and order Nota Fiscal with all items
explained before.
Following this process, B must issue a remittance Nota Fiscal for industrialization to
C (subcontracting), closing the circle among the three companies.
Example:
(1stNF)
- NF sales at accountant
A
(3rdNF)
B - NF remittance for industrialization
NF
Remittance
(2ndNF
The tax and posting entries are exactly equal to the example of sales order and
purchase by the order, but is added by "B" the process of subcontracting, in
accordance with the 13.0 topic of incoming processes.
Summary:
When you are the figure "A", the procedure to be adopted will bet as the 15.13 subtopic of outgoing process.
When you are the figure "B", the procedure to be adopted will be that as the 15.10
sub-topic of outgoing processes
Rafael Vanderlei
Pgina 148
When you are figure C", the procedure to be adopted will be that as the 13.0 subtopic
of incoming processes.
15.0 - Export Sales
Concept:
Export is any transaction carried out, to any other country as destination.
Whatever the material for industrialization, resale or consumption material, there will
be no taxation.
The Government has determined this technique aiming to control the trade balance,
as hindering the purchase of imported materials means less dollars out of the country,
while on the other side, exports, government benefits the taxpayer with the nonpayment of taxes on exports, which means more dollar inflows .
15.1 Sales for industrialization / Resale or Consumption Exports
Export sales Nota Fiscal without ICMS / IPI with CFOP 7.101 (export).
Total value of Nota Fiscal
= $ 2,200.00
15.2 - Fiscal Books

In addition to the Nota Fiscal data, outgoing fiscal book entries should behave as
follows:
CFOP Code= 7.101 - Export Sales
Accounting amount
= $ 2,200.00
= $ 2,200.00
= $ 2,200.00
15.3 Accounting
DB Customer
CR - Sales revenues
$ 2,200.00
$ 2,200.00
Rafael Vanderlei
Pgina 149
15.4 Posting scheme
Customer
(1)
2,200.00
(D)
Sales revenues
(1)
2,200.00
(C)
If this is an export sales of imported products a Nota Fiscal must contain all taxes,
because the benefit is granted only for domestic products .
16.0 Tax free zone sales Zona Franca de Manaus Concept:
With intent to grow the region of Manaus up through industrial parks, government
determined the benefit of not paying the taxes ICMS / IPI/PIS and COFINS for sales
intended for that region, which means cheaper products for the end user of that state.
This benefit is extended only for domestic products, i.e., if the sale is an imported
product, seller is not entitled for that benefit.
Another important detail is that the value of ICMS already included in the sale value, it
must be demonstrated in the body of the Nota Fiscal as "discount of ICMS."
Example:
Value of Goods with ICMS included
ICMS Discount of 7%
Total value of Nota Fiscal
= $ 1,000.00
= $ 70.00
= $ 930.00
Note: Value of $ 930.00 relating to ICMS rebate due to interstate operation is aimed at
the north / northeast, which a rate of 7% is applied.
Rafael Vanderlei
Pgina 150
16.1 - Sale for the Manaus Free Zone

Nota Fiscal of sale for the Manaus Free Zone in the amount of $ 2,200.00 with CFOP
6.101.
- Value of goods
- ICMS Discount
- Total value of Nota Fiscal
= $ 2,200.00
= $ 154.00
= $ 2,046.00
16.2 - Fiscal Books

In addition to the Nota Fiscal data, outgoing fiscal book entries should behave as
follows:
CFOP Code= 5.11 Sale of Manaus Free Zone of domestic goods
Accounting amount
= $ 2,046.00
= $ 2,046.00
= $ 2,046.00
16.3 - Accounting
DB Customer
CR - Sales revenues
DB ICMS tax amount
CR ICMS tax amount
$ 2,046.00
$ 2,046.00
$ 154.00
$ 154.00
16.4 Posting scheme
Customer
(1) 2.046,00
(D)
ICMS Payble
Revenue
(1) 2.046,0
0
(C)
(1) 14.30
(1) 14.30
(D)
(C)
Rafael Vanderlei
Pgina 151
17.0 - Free Sample

Concept:
This operation occurs whenever a given company launches a new product, or sends it
to clients to be considered in the application of that material in its production process
or resale.
For this transaction, there is no preview of the return of the goods, as the name
implies, it is a sample. Therefore, the Nota Fiscal to be issued shall contain the taxation
of ICMS and IPI taxes.
For this Nota Fiscal, the ICMS tax base amount will be the value of the goods plus the
IPI value, as in this case who is assuming the costs is the issuer of Nota Fiscal. Once it is
understood that it is the end user.
The amount of Nota Fiscal should be at least the cost value of the product given in
inventory (average cost).
On the other hand, as the commodity is finished good product, the company will be
posting the cost value of the product and value of the ICMS / IPI versus ICMS / IPI
payable versus an expense account of the requesting cost center responsible for this
shipment.
17.1 - Free Sample Nota Fiscal
Free Nota Fiscal in the amount of $ 1,100.00, CFOP 5.911 with ICMS and IPI.
Nota Fiscal value
ICMS values
IPI tax base amount
IPI Value
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 1,000.00
= $ 100.00
Rafael Vanderlei
Pgina 152
17.2 - Fiscal Books

In addition to the Nota Fiscal data, entries in the outgoing fiscal book should behave as
follows:
CFOP Code= 5.911 - Free Sample
Accounting amount
1,100.00
ICMS debit
IPI tax base amount
IPI debit
=$
= $ 1,100.00
= $ 198.00
= $ 1,000.00
= $ 100.00
17.3 - Accounting
DB - Expenses / Cost
CR Inventories
CR ICMS payable
CR - IPI payable
$ 1,100.00
$ 802.00
$ 198.00
$ 100.00
17.4 Posting scheme
Expenses/Cosdt
(1)
1,100.00
(D)
Inventories
(1)
802.00
(C)
ICMS Payable
(1)
198.00
(D)
IPI Payable
(1)
198.00
(C)
Rafael Vanderlei
Pgina 153
18.0 Demonstration outgoing Nota Fiscal

Concept:
This operation occurs when a particular company is shipping goods for demonstration.
Therefore, this means that the product can return to the owner. Even so, taxes may be
paid and when they goods are returned taxes will be credited back. The ICMS tax base
amount in this case, it is also value of the goods plus IPI. Rule is like that because
materials may not return to the sender.
If the issuer does not opt for taxation and goods are not returned within 180 days, this
must compulsorily be collected and the value must be updated as required by law.
18.1 Demo Nota Fiscal for remittance
Demonstration remittance Nota Fiscal in the amount of $ 1,100.00, CFOP 5.912 with
ICMS and IPI.
Nota Fiscal value
ICMS value
IPI tax base amount
IPI Value
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
18.2 Fiscal Books

In addition to the Nota Fiscal data, entries in the outgoing fiscal books should behave
as follows:
CFOP Code= 5.912 Demo remittance
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 1,100.00
= $ 1,000.00
= $ 180.00
= $ 1,000.00
= $ 100.00
Rafael Vanderlei
Pgina 154
18.3 Accounting
DB - Material on of 3rd party inventory
CR Inventories
CR ICMS payable
CR - IPI payable
$ 1,100.00
$ 820.00
$ 180.00
$ 100.00
18.4 Posting scheme

Material on third 3rd
party inventory
(1)
1,100.00
(D)
Inventories
(1)
820.00
(C)
ICMS Payable
(1)
180.00
(C)
IPI Payable
(1)
100.00
(C)
Rafael Vanderlei
Pgina 155
19.0 Donation outgoing

Concept:
Donation occurs whenever a company is shipping goods or equipment as a donation.
In this instance, the law disciplines that any transaction characterized as a donation,
sender must also charge as deductible or nondeductible expenses in the corporate
income tax.
Donation Nota Fiscal of $ 1,100.00, CFOP 5.910 with ICMS and IPI
Nota Fiscal value
ICMS value
IPI tax base amount
IPI Value
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 1,000.00
= $ 100.00
19.1 - Fiscal Books

In addition to the Nota Fiscal data, entries in the outgoing fiscal book should behave as
follows:
CFOP Code= 5.949 Donation
Accounting amount
ICMS debit
IPI tax base amount
IPI debit
= $ 1,100.00
= $ 1,100.00
= $ 198.00
= $ 1,000.00
= $ 100.00
19.2 Accounting
DB - Expenditure / Cost
CR - Inventories
CR ICMS payable
$ 1,100.00
$ 802.00
$ 198.00
CR IPI Payable
$ 100.00
Rafael Vanderlei
Pgina 156
19.3 Posting scheme
Expenditure/Costs
(1)
1,100.00
(D)
Inventories
(1)
802.00
(C)
ICMS Payable
(1)
198.00
(C)
IPI Payable
(1)
100.00
(C)
20.0 - Other Non-specified Outgoing

For these operations, the understanding becomes the easiest of all, because just only
is to consider whether the material is in inventory, or if it is a consumption material.
If the material is an inventory item, there should be an accounting withdraw in
temporary accounts or expenses, taking into account the entries in the fiscal books as
previous topics.
If the material is a consumption material, postings will be in assets accounts versus
temporary or expenses, in addition to the entries in fiscal books.
If both transactions there are return possibility and then, the previously used accounts
should have the corresponding reversals.
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Pgina 157
For the non-specified outgoing, CFOP codes to be used are:

- 5.949
- 6.949 or
- 7.949
These CFOPs are always used when non specified transactions are not given in that
CFOP government table.
5.8 Moving average price concept
Brazil legal requirement
Brazilian General Accepted Accounting Rules (BRGAAP), defines the methodology of
the valuation of the stock values at the end of each month to be calculated according
to the concept of the moving average price (also known in Portuguese as Custo Mdio
Ponderado), so any other types of methodology like FIFI, LIFO and others, which are
normally accepted in other regions, like US and Europe (through different GAAP
principle) are not accepted by the government in the Balance Sheet report accrual
procedure.
So, according to this principle, it is understood that, for instance, all the supplies the
company purchases are evaluated according to the moving average price, in which are
calculated every time the material is posted into the stock, adjusting each material at
the calculated average price affected by the price of the purchase, calculated upon the
quantity purchased vs. the existing quantity of the item. The result is that the stock
value changes by the time new material are posted in the stock pile, real time.
However, the law states that for Balance Sheet purposes, the stock evaluation should
be adjusted according to the moving average price, so this opened the possibility to
have the concept of standard price conceived and applied without impact on the
BRGAAP standards to be applied on Brazilian companies.
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Pgina 158
The general concept of the material ledger (for moving average price) flow is described
below:
Standard price: BRL 100,00
Qty Unit
Total at
price BRL Std Cost
1 Begining inventory
100,00
0,00
2 Goods Receipt (GR)

+ Price difference+
(IR)
60
103,00
6.000,00
Price
Dif
180,00
Unit
Total value at
price BRL purchase price BRL
100,00
0,00
103,00
6.180,00
3 Invoice Receipt
Moving average
price
6.180,00
60
103,00
6.180,00
4 Consumption
10
100,00
1.000,00
30,00
103,00
1.030,00
5 Ending Inventory
50
100,00
5.000,00
150,00
103,00
5.150,00
6 Material Ledger
Material Stock
150,00
GR/IR Clearing
(1) 0,00
1.000,00 (4)
(2) 6.000,00
30,00 (4a)
(3)
6.180,00
Acounts Payable
6.180,00 (2)
6.180,00
(3)
(6) 150,00
30,00
Rafael Vanderlei
Pgina 159
Mat. Consumption
Price Difference
(4)
1.000,00
(2) 180,00
150,00
(6)
(4a) 30,00
During month end process,

that should post the
difference back to the stock
account, to adjust the value.
30,00
1 Beginning inventory = 0,00

2 Purchase of goods, good receipt at standard price on material stock and GR/IR
account posted at purchase price, using a difference account;
3 Invoice Receipt (IR) and posting to Vendor account for payment against GR/IR
Account;
4 Consumption of part of the stock and adjustment of the difference account. During
month end, ML will post again the balance of this account to stock account in order to
adjust the value accordingly.
4a - Adjustment value on material consumption against stock value.
5 Ending balance of the inventory
6 ML posting (direct effect due to the consumption).
Rafael Vanderlei
Pgina 160
5.9 Main required legal reports

Incoming Legal books - Incoming Documents and Vendor List
Outgoing Legal - Outgoing Documents
Overview of Production and Inventory
Physical Inventory Overview
Directory for Calculating IPI Tax
Directory for Calculating ICMS Tax
List of Interstate Goods Movements
Directory for Calculating ISS Tax
File as Per Law ICMS 131/97
IN86: Master Data, Files and Tables
Statements for Customer/Vendor/G/L Accounts
List of Open Items
Issued Notas Fiscais
Vendor Operation (Brazil)
IN359 - Magnetic File from Notas Fiscais
Rafael Vanderlei
Pgina 161
6. Final considerations:
The information presented here was extracted from the government published rules other
State and Federal regulations when treated as rules.
As for the processes and their applications, they were developed based on empiricism and
coexistence of the author in different segments and different types of products called ERP, as
well as graduation and is always observed and applied all the rules as defined under law.
The use of this material should be personal to the professional development activities of the
course participants, being forbidden copies of this literature in question and can be applied to
the penalties provided in the legal order.
Finally, I want to thank everyone for their participation and active attention given during the
event.
Many thanks
Rafael Vanderlei,
Executive partner
rafael.vanderlei@intragroup.com.br
www.intragroup.com.br
+55 11 5507-7727-Ext. 21
+55 11 99911-2248
Rafael Vanderlei
Pgina 162

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