As more companies in Brazil move to SAP—whether through new implementations, ERP migrations, or rollouts to additional legal entities—it’s common to encounter challenges that go far beyond system configuration. Many of these challenges lie in aligning complex Brazilian tax and business requirements with SAP functionality.
A key concern during these projects is ensuring that the existing business processes adapt smoothly to SAP and that SAP can accommodate localized practices that vary between different company units. On top of that, there are numerous legal and tax requirements to comply with: NFe (electronic invoicing), SPED, SPED Social, Incoming NFe, FCI, CTe, and federal, state, and municipal obligations—just to name a few.
Even with thorough planning, many companies overlook one of the most important elements of operating SAP in Brazil: the tax calculation schema, specifically TAXBRJ vs. TAXBRA.
Why TAXBRA Matters (and TAXBRJ Is Becoming Obsolete)
Some organizations mistakenly believe they can save time and cost by continuing to use the older TAXBRJ schema instead of migrating to TAXBRA. This is a serious misstep.
As far back as 2005, SAP began recommending the use of TAXBRA for all new implementations. SAP also urged customers to migrate their legacy systems from TAXBRJ to TAXBRA. Here’s why:
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TAXBRA is more robust and flexible
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It better supports legal tax calculation rules (e.g., MP135, ISS, cumulative WHT)
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It’s designed for condition-based tax calculation (CBT), now SAP’s strategic direction for Brazil
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SAP delivers new legal requirements and updates primarily for TAXBRA, not TAXBRJ
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Support for TAXBRJ is gradually being phased out
Companies that delay this migration will soon face major compliance risks, added costs, and the burden of developing custom workarounds without the backing of SAP support.
Common Pitfalls: Wrong Resources, Wrong Ownership
Another recurring mistake—especially with global SAP support teams—is assuming that tax schemas in Brazil fall under the FICO team. In reality, Brazil is unique in the Americas, as tax schemas are configured primarily by MM and SD consultants.
Migrating to or implementing TAXBRA typically takes 1 to 4 months, depending on factors like company size, number of tax codes, pricing complexity, and resource allocation. For success, the right team must be in place:
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Full-time: MM and SD consultants
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Part-time: FI, CO, ABAP, BASIS, and a Project Manager
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Key Users: Experienced fiscal/tax professionals who understand Brazilian requirements
What Does TAXBRA Implementation Involve?
The process includes technical and functional tasks such as:
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TAXBRA (CBT) activation
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Configuration of:
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Tax Codes
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Tax Groups and Dynamic Exceptions
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Tax Rates and Jurisdictions
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Condition Types and Records (via FV11/FV12)
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Access Sequences
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Account Keys and Tax Posting Strings
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ISS, WHT, and MP135 rules
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Maintenance via J1BTAX (not FTXP)
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Adjustments to existing SD/MM pricing procedures (e.g., RVABRA)
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Checking CFOP, legal tax situations, and mapping fiscal codes
FI/CO roles will handle WHT on payments, account determination (OB40), and controlling-related flags (CO-PA, CO-PC). Security roles must also be updated to reflect access to new configuration and transactions (especially in J1BTAX).
Success = Expertise + Testing
Testing is critical. All tax scenarios, exceptions, and regional business cases must be carefully validated through User Acceptance Testing (UAT) in close collaboration with fiscal teams. Don’t skip this step—what looks like a minor tax miscalculation in SAP can lead to serious compliance issues in Brazil.
Key SAP Notes and References
For deeper insights, refer to:
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SAP Note 1538088: SAP’s strategy for condition-based tax calculation in Brazil
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Additional relevant notes: 664855, 727475, 747607, 916003, 947670
Final Thoughts
Migrating to TAXBRA is not just a technical upgrade—it’s a strategic necessity for doing business in Brazil through SAP. While the initial investment may seem high, the long-term benefits in compliance, efficiency, and supportability far outweigh the costs. Avoiding the migration or assigning the wrong resources can lead to costly delays and non-compliance down the road.
At SAPBR.COM, we help foreign companies successfully run SAP in Brazil. If you’re implementing SAP, rolling out new entities, or planning to migrate to TAXBRA, our experts can guide your team through every step.
Disclaimer: The information above reflects the status and best practices known at the time of writing. SAP technologies and legal requirements in Brazil evolve rapidly. Please consult with SAP or legal/fiscal experts to validate the latest guidelines before making decisions.
Copyright Notice: © Leo Anderson and SAPBR.COM (SAP Brazil) WordPress Blog, 2013.
Reproduction or use of this material without the express written permission of the blog’s author and/or owner is strictly prohibited. You are welcome to share brief excerpts or link to content, provided that full credit is given to Leo Anderson and SAPBR.COM, along with a clear and direct link to the original post.
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Dear Sir,
In case that we implement only FI/CO module in our system, no MM/SD, is TAXBRA still recommended or we can just apply TAXBRJ?
with best regards,
Jittima
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Hi, Thanks for the great informative Post.
I need to know , how are Import duties handeled in Purchasing in Brazil. Is it controlled by the Tax procedure? or by the Pricing Procedure? and what duties are required.
2. Is standard Vendor consignment process sufficient for Brazil? or is there some localization required there as well?
-RVJ
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There are few taxes on purchasing, mainly ICMS, IPI, PIS, COFINS for goods, ICMS for freight, and ISS for Services, without mention the WHT.
Depending on the usage of the product (Consumption/Expense, Industrialization/Manufacturing, Resale, or Fixed Asset) the behavior of these taxes change in the PO, and also de calculation. Taxes can also be recoverable (credit) or non recoverable.
On the procurement side, the taxes are handled via tax procedure/Tax Schema, and the most updated tax schema for Brazil is the TAXBRA;
The Consignment process in BRazil is unique for Brasil, I mean, the Global Consignment process doesn’t fit all local legal requirements. There are especial movement types for GR (821) and tax codes for this process.
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Thanx a Lot for your reply, I hope I can Bother you a bit more as and when I have more such Doubts. Just not able to find much good documentation online regarding Brazil Localization from System config and transcational point of view.
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Thank you for a detailed post explaining various terminologies used in Brazil.
I had a question on NFS-e. Could you please provide the different steps that need to be considered while implementing NFS-e on the SD side.
Thank you,
Ravi
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Hi Leandro,
Any ideas about REPNBL tax exemption configuration , Just want some hints what all activities are to be done .
I am sure you already know about it ,however I will just add the details .
We have to implement REPNBL tax exemption in brazil which is IPI, PIS, COFINS exemption for the telecommunication industry for improving communication infrastructure.
Thanks in advance,
Naval
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Naval, I didn’t have chance to go through all the details on the REPNBL, but if you need to do the IPI, PIS and COFINS exemption to the customer, you should be able to do that using the concept of Tax Groups (J_1BTXTAXGRUOP) and Tax Dynamic Exceptions (J(J_1BTXIP1, J_1BTXCOFV and J_1BTXPISV). If you don’t want enter those exceptions customer by customer, you might be able to do that using other fields on TAXGRUOP if your customers are sorted for example based on industry type…
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Hi Leandro,
Yes, Based on the govt regulation only customers from telecommunication industry can avail this tax exemption.
The issue is, That in each sales order created for a project there can be several line items and not all the materials may be approved by the govt. for the exemption.
So each line item has to be dealt individually .
If that was not enough, Same customer may not get approval for another project with same materials 🙂 .. which makes its tricky to do automatic determination .
Do you think if we request users to change tax codes for the approved line items(Read materials) manually when creating the SO , Will it work ???
If Yes , Please suggest what all activities are to be done (Just a hint, Please )???
Kind Regards,
Naval
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Check my post: https://sapbr.com/2015/01/15/customers-and-vendors-new-fields-nfe-3-10/
You have some options… you can for example use the Industry Type in your customer master records as a key to the J_1BTXGRUOP and create the dynamic exception based on Industry Type + NCM.. I am saying NCM because when the government approves one group of products to be affected by a special tax rate or exemption, this is usually done by NCM. So, instead creating exception to each customer + NCM, you may want do based on industry type + NCM… Of course, you will need to maintain customer master records with proper industry type.
BUT, since you said the same material may be approved or not depending on the project, that’s definitely tricky. I am thinking here, you can do exception based on sales order type… I mean, it will be an user decision.. if for that project he is approved to the exception, go to Order type XYZ… You may need research online on how to do dynamic exception based on sales order…I don’t have any document here now.
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Hi,
We are not using MM or SD. SAP is mainly used as financial system. There will be interfaces with existing Procurement and distribution systems. But tax codes needs to be maintained as there will be some misc. billing and purchases directly booked in SAP. So can you please advise –
1. should we still go with TAXBRA
2. There are no SD or MM consultants so should we (FICO) consultant maintain the tax codes using J1BTAX?
3. Can you please suggest anything specific we need to keep in mind?
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You should absolutly go for TAXBRA. You’ll need to configure the Tax Codes via J1BTAX and activate the conditions via FV11/FV12 following the CBT Guide to know the right conditions to activate to each tax code and what are the settings to each of them.
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While posting the customer or vendor invoices directly in SAP, tax codes will be entered. Tax codes should be available for selection and based on that, tax rates should be derived and calculate the taxes. Here no condition based tax rates, code will be derived. Just curious to know if this will work with the CBT with procedure TAXBRA. Can you please advise.
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It will not. the CBT is condition based technique e most of the tax data comes from source documents (PO and Sales Order). I would not recommend TAXBRA in this case.
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Hi Leandro,
Do you know if there is a S_ALR transaction for maintenance of PIS (J_1BTXPIS) and COFINS (J_1BTXCOFINS)? I searched but could only find it for IPI and NCM.
Thanks,
Michele
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It does….
> Maintain PIS Values tcode: S_P6D_40000013
> Maintain COFINS Values tcode: S_P6D_40000014
Sorry for the delay, I was in a personal vacation and took me sometime to catch-up on emails and blog comments.
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Hi Leandro,
We need to derive the PIS/COFINS tax rate in the SD order/contract based on the official service type field (J_1BSERVASSIGN2V-SERVTYPE_OUT) assigned to the material. However this field is not there in the dynamic key field in the tax group setting to select from. So i cannot maintain tax rates based on the service type. Do you think we can add a new field in the domain for dynamic key field? What are my options?
Thank you
Prakash
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Prakash, You can’t add new field values to the Tax Group Exceptions. Since you have a Material Number, can’t you use MATNR?
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Thanks Leandro for the recommendation. A follow up on that – If we use MATNR, we will have to update 10000 records for PIS and COFINS tax rates for about 5000 relevant MATNRs. Is there a mass transaction to update tax entry? SM30 is not allowed and somewhere I read LSMW does not work? Any suggestion?
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You can mass upload the data and then run the Migration of Condition Records to tax Tables on J1BTAX to the PIS and COFINS tables/Tax Group.
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Boa tarde Leandro.
Quando efetuo a MIRO e seleciono NOTA FISCAL, os valores estão corretos, mas não há um esquema de calculo. Saberia me informar onde consigo?
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Gustavo, não tem esquema de calculo na MIRO. Os valores vêm do pedido de compra e é lá onde está o esquema de calculo. O que voce esta tentando fazer?
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Boa tarde Leandro esto com dificuldades de indentificar quais condições devo ativar via FV11 VK11 no guia do CBTBrazil_Condition_Based_Tax_Calculation_V1.9 fornecido na nota e Docu_CBT_302
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Oi Daniel…. para a TAXBRA/RVABRA funcionar… se eu nao deixei passar nenhuma, voce precisa ativar via VK11 as condicoes: ICZF, IBRX, ICMO, ICSO, IPBS, IPIC, IPIO e pela FV11 BIC0, BI00 BIC1, BIC6, BCI1, BXWT e BXWA… Tirando as condicoes de impostos que voce pode tivar via F1 ou direto na tela do imposto via J1BTAX se a tabela estiver abert ara manutencao pelos fags no imposto.
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valeu leandro obrigado
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Hi Leandro,
We have maintain the tax code I0 and it has tax condition type IPI0, ICM0 and IGEW in J1BTAX. The tac condition IGEW is assigned to Account Key “WTG” but this account key is not detectable in OBCN due to this reason it is not part of OBYZ. When we create a PO with I0 tax code we are getting the error message as “No posting rules exist for account key” and unable to s ave the PO.
Please suggest me how to fix this issue.
Regards,
Sada
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