1. Localizations for Brazil Implementation Guide
  2. Understanding Fiscal Classification Types

Understanding Fiscal Classification Types

The Brazilian government tax authorities created a classification system for items and services that assigns them a specific fiscal classification number. According to the nature of the item or service, there are 3 possible codes that identify the tax authority that defines the fiscal classification number:

  • NCM: It stands for Mercosul Common Nomenclature. It is a code used for goods, it has 8 digits, and it identifies items according to a classification list that the government issues.

  • NBS: NBS stands for Brazilian Nomenclature of Service. It is a code that identifies and classifies services and intangibles according to a list that the government issues.

  • LC116: This code stands for Lei Complementar 116. It lists and classifies specific services that meet certain criteria, and that are subject to very specific taxing rules.

The Brazilian Institute of Tax Planning (IBPT) issues the list and provides a text file with the approximate average tax burden of all products and services, based on the NCM and on the NBS classifications.

You use the IPI - IBPT Tax Revision program (P76B18) to set up the tax rates and tax reductions that the system uses to calculate the taxes that you pay to the customers and suppliers.

You can work with fiscal classifications to set up the applicable tax rates to goods and services. Use this program to add, change, or delete fiscal classification records.