Brazil introduced a new compulsory tax obligation

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The Nota Fiscal Eletrônica (NF-e) is a digital alternative to traditional physical invoices for selling goods or products.

Its primary function is to document commercial transactions between businesses and to enhance tax regulation at the national level. The following outlines the process for issuing and validating the NF-e about goods sales transactions, adhering to the specified requirements:

  1. Generation: The company responsible for issuing the NF-e retrieves transaction information from its ERP system to create an XML file.
  2. Electronic signature: The document is then electronically signed using a digital certificate.
  3. Submission to SEFAZ: The XML file is sent to the Secretaria da Fazenda (SEFAZ) through web services.
  4. Validation and authorization: SEFAZ checks the document for validity and provides authorization for its use.
  5. DANFE issuance: After receiving authorization, the Documento Auxiliar da Nota Fiscal Eletrônica (DANFE) is produced and must accompany the goods during transportation.
  6. Delivery to the recipient: The NF-e is electronically forwarded to the buyer.

The long-standing requirements for various Nota Fiscal (‘NF’) e-invoicing are set to be revised in anticipation of the forthcoming implementation of VAT in Brazil. On December 6, 2024, the tax authority released a new technical note (NT 2024.002) that includes the CST tax code for the three new VAT taxes—CBS, IBS, and IS—to be introduced in 2026.

The updated timeline for the e-invoicing modifications related to the VAT implementation is as follows:

  • September 2025 – testing phase for tax codes
  • November 2025 – operational phase
  • January 2026 – the complete rollout of VAT.

What Impact Will NFCom Have on the Brazilian Market?

The telecommunications industry in Brazil is substantial, boasting more than 336 million contracts as of January 2023. The introduction of the NFCom system is anticipated to bring considerable enhancements to the invoicing processes within this sector. This initiative is expected to alleviate administrative challenges while reinforcing Brazil's tax framework, granting authorities improved control and oversight.

To adhere to NFCom regulations, organizations must prepare for the following requirements:

System Integration: Companies are required to connect their current invoicing systems with the new NFCom framework.
Staff Training: Employees must receive training on the new e-invoicing procedures, particularly regarding XML usage, digital signatures, and event management.

Testing Phase: From June 2023, organizations may test the NFCom system to verify its functionality before the compulsory deadline.

KGT is a SAP partner for PE services and SAP Build partner, and to become an SAP partner, strict due diligence requirements must be met, including having certified SAP consultants. You can find us at: https://partnerfinder.sap.com/profile/0001925409

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KGT SAP add-ons for SAF-T, e-invoicing and MTD UK for VAT work as a standalone application within the SAP system and do not change existing customer SAP functionality or processes. It is fully configurable with a custom namespace /KGT.

KGT partnered up with SAP regarding 'SAP Advanced Compliance Reporting for SAP HANA'. The 'Advanced Compliance Reporting' (ACR) service enables you to configure, generate, analyze, and electronically submit statutory reports that contain indirect taxes, such as value-added tax.

KGT also provides S/4 HANA transformation support.

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