How Are SD and MM Tax Codes Related in SAP Brazil?

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Many SAP users still struggle to understand how to properly maintain tax codes for Brazil, especially when it comes to the relationship between MM (Materials Management) and SD (Sales and Distribution) tax codes. In one case, I was contacted by a company facing recurring tax issues, only to discover they had been applying manual adjustments for years due to a simple configuration oversight in their tax calculation system.

Let’s clarify how this works and where common mistakes happen.

The First Golden Rule

TAXBRJ = FTXP
TAXBRA = FV11

Here’s what that means:

  • TAXBRJ (Legacy Schema): Tax calculation and postings are controlled in transaction FTXP.

  • TAXBRA (Current Schema): Tax calculation values (rates, amounts) are maintained in FV11, via condition records.

❌ You should never maintain condition values directly in FTXP when using the TAXBRJ schema.

FTXP is only used to activate the tax condition types and control posting behavior. It doesn’t hold actual tax percentages or amounts anymore in modern SAP setups.

Understanding FTXP Behavior in TAXBRJ

In older SAP versions like 4.6C, the logic in FTXP determined what tax types would be calculated and posted. This was done by maintaining condition values like:

  • 100.000 → Calculate and post the tax (e.g., ICM1 for ICMS)

  • -100.000 → Copy from another condition and post as a negative (e.g., IC1O to reverse ICM1)

  • 0.000 → Just display on the nota fiscal; no posting

These values determined behavior such as:

  • Tax inclusion on NF-e (Nota Fiscal Eletrônica)

  • Accounting impact (if any)

Important: The 0.000 rule has exceptions. Today, SAP recommends using 100.000 and controlling the posting behavior through dynamic exceptions and proper configuration—not by entering zeroes manually.

From SAP 4.7 Onward: FTXP Can Be Discontinued

From version SAP 4.7 onward, FTXP can be considered obsolete for Brazilian tax configurations. The recommended method is using:

  • J1BTAX (View J_1BTAXCODEV) for MM Tax Codes

  • Transaction FV11 for tax condition values

  • View J_1BTXSDCV for SD tax code mapping

How Are MM Tax Codes Related to SD Tax Codes?

Even though MM and SD are different modules, in Brazil they share the same tax engine and calculation logic—especially when using the TAXBRJ schema.

Here’s how it works:

  • All taxes are calculated via the same function module: J_1BCALCULATE_TAXES.

  • That function is triggered by the MM tax code, even when the transaction is in SD.

  • As a result, SD tax codes must always be linked to an MM tax code.

MM Tax Codes in SD Scenarios

SAP recommends creating generic MM tax codes for SD scenarios:

  • One MM tax code for Free Trade Zone

  • One MM tax code for Services

  • One MM tax code for Regular Sales

Each of these MM tax codes should have all possible conditions active (ICMS, IPI, PIS, COFINS, etc.). The control of which taxes are actually calculated depends on the SD tax code used in the sales order and its configuration in J_1BTXSDCV.

Example:

  • MM Tax Code: “SD” (used for regular domestic sales)

  • Activated Conditions: ICM3, IPI3, ICN3, IPS3, etc.

  • SD Tax Code: “C3”

    • Only ICM3 and IPI3 will be calculated for that specific process.

The MM tax code works as a “container” for all possibilities, and the SD tax code narrows down the final result.

Key Takeaways

  • Don’t maintain tax rates directly in FTXP for Brazil—use condition records in FV11.

  • MM tax codes trigger the calculation, even for SD processes.

  • SD tax codes are mapped to MM tax codes and filter which taxes apply.

  • Keep MM tax codes generic for each SD process type and never edit them frequently.

  • Tax configurations should be centrally maintained via J1BTAX and aligned with fiscal/legal requirements.

Disclaimer

The information presented in this article reflects SAP behavior and tax configuration logic as of the date it was written. However, SAP technology and Brazilian tax legislation evolve rapidly. Please consult updated SAP OSS Notes, SAP documentation, or a certified consultant to ensure compliance and accuracy at the time of reading.

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