1. Localizations for Brazil Implementation Guide
  2. Understanding Tax Calculations for INSS

Understanding Tax Calculations for INSS

Instituto Nacional do Seguro Social (INSS) is the national social security tax. Some types of services are subject to INSS tax, and the tax amount is added to the value of the provided service.

If a transaction is subject to INSS tax for individuals, the system:

  1. For standard vouchers in domestic or foreign currency, verifies the existence of a tax code in the F76011 table.

  2. Accesses the purchase order for the nota fiscal.

  3. Uses the Description 02 field in the Purchase Use (76/PU) UDC table to determine the INSS aggregation and INSS retention rates.

    You set up INSS aggregation and INSS retention rates in the Tax Code table (F76B0401).

  4. Calculates the aggregation and retention amounts.

  5. Accesses the F76B0403 table to determine the amount of INSS tax, if any, that was withheld for the supplier by other companies.

    The system accesses the F76B0403 table to track the monthly maximum tax amount.

  6. Accesses the INSS Maximum Monthly Tax Amount (76B/TX) UDC table to determine the maximum INSS retention amount for the associated tax code in the F76B0401 table.

  7. Compares the sum of the calculated INSS retention amount and the INSS tax that was withheld for the supplier by other companies to the maximum retention amount in UDC 76B/TX, and returns the greater of the calculated tax or the maximum INSS retention amount.

  8. The INSS tax is calculated for the entire voucher and the tax amount is paid when the first line of the voucher is paid.

If a transaction is subject to INSS tax for corporate entities, the system:

  1. For standard vouchers, verifies the existence of a tax code in the F76011 table.

  2. Accesses the Withholding Minimum Amount Setup table (F76B210) to determine the minimum withholding amount.

  3. Accesses the purchase order for the nota fiscal.

  4. Calculates the amount of the withholding, based on the reduction percentage.

    The INSS tax is calculated for the entire voucher and the tax amount is paid when the first line of the voucher is paid.

Note:
  1. In the rare situation in which the calculated tax exceeds the amount of the first pay item, the amount for the first item becomes a negative amount. You must manually adjust the pay item according to your procedures.

  2. When you run this program (R76B4310), the aggregate INSS tax is debited from the account number that was entered during purchase order entry. This tax is calculated for non-inventory items such as services. You can review whether the INSS tax is debited from the appropriate account using the Work With Journal Entries Application (P0911).