While preparations here in the US continue in earnest for tomorrow’s big birthday celebration, we decided nonetheless to look beyond the US borders as we continue our series that highlights some of the important invoicing and payment requirements when doing business with suppliers in different regions of the world – European invoicing, European payments 1, European payments 2, and Mexico. Today, the focus is going to be on Brazil (Argentina is next), which is largely considered the leader and pace setter for eInvoicing in Latin America.

Brazil in 2013 is known for much more than its samba and its soccer [Publisher’s note: Congrats to the Confederação Brasileira de Futebol for their convincing win of the FIFA Confederations Cup this past Sunday!), it is one of the fast growing “BRIC” economies and the seventh largest economy in the world. But, while there is huge opportunity in Brazil, there is also huge complexity – the World Bank has ranked the Brazilian tax code as the world’s most complex making it more difficult and risky for multinational companies to set up a location  in Brazil. And, while the tax issues remain, Brazil is doing work to improve its invoicing regulations. Perhaps because of the tax issues, it is very important to understand invoicing requirements.

Just to provide some background information, it was in 2000 or thereabouts that Brazil began an initiative to modernize tax and customs administration. It was called SPED – Sistema Público de Escrituração Digital (which translates to digital system for public bookkeeping) which  was created to standardize and computerize the relationship between the tax authorities and the tax payers. One of the initiatives that fell under SPED was electronic invoicing.

Electronic invoicing in Brazil is managed by the tax authority known as SEFAZ (Secretaria de Fazenda). “Nota Fiscal Eletrônica” (NF-e) is the document that is submitted and stored electronically with the purpose of documenting a commercial transaction between buyers and sellers (i.e., the eInvoice). It is obligatory for nearly all enterprises in Brazil. The Nota Fiscal legislation covers not only physical goods (NF-e), but the law also covers service invoices (NFS-e) and logistic invoices (CTe).

Here is a quick overview of the process for sending a NF-e:

• The supplier generates an XML document that contains all the required information required for a NF-e. This document must have a digital signature and certificate in order to guarantee the integrity of the data and the identity of the sender. It is then sent to SEFAZ for registration and approval.
• SEFAZ reviews the NF-e and authorizes its use. Only after authorization is received can the goods be transported. The electronic file is the legal invoice.
• In order to transport the goods, a printed DANFE must accompany goods in transit for validation en route. DANFE stands for Document Auxiliary NF-e.
• eInvoice must be archived for 5 years by sender.
• eInvoice must be validated with SEFAZ by the buying organization.

Electronic Invoice for Services (NFS-e):

• Tax is assessed at the city level as opposed to the State level for the NF-e
• Service invoices can have multiple line items, but only one type of service per NFS.
• NFS number and Return Code provided by the City
• The appropriate city calculates the tax for you and does the validation
• Services can be delivered first and then invoiced later
• Invoices must be archived for 5 years and organized by city

Lastly, just like NF-e, CT-e is a digital document issued and stored electronically. Its purpose is to document the rendering of logistics/transportation services. The validity of this document is guaranteed by the digital signature of the issuer and the authorization of the appropriate state’s tax authority.

Tagged in: ePayables, Globalization, P2P, Suppliers