Understanding ICMS Tax

ICMS is a state tax that the government levies on purchasing and sales transactions in Brazil. The tax rate varies from state to state, and some products can be taxed at different rates. The price of the product always includes ICMS tax, but the amount of this tax also appears on the nota fiscal.

When you set up ICMS tax rates, you must complete these fields in the ICMS Tax Revision program (P7608B) before the system can calculate the ICMS differential:

• Item Origin

• From State

• To State

• ICMS State Tax

• ICMS Interstate Tax

The system applies tax rates by exception. Set up all of the general tax rates first. Then, if a transaction has special or unique settings, use the ICMS Tax Revisions program to set up the ICMS tax on a case-by-case basis. Enter the data of the transaction as a record, and then enter the exceptions.