Manage Quantity Based Taxes in Brazil

In Brazil, IPI when levied on the basis of quantity then taxable basis is quantity of the product in specific unit of measure example - m3, liters, ml, box, cm, m, kg, ton and unit.

The IPI amount is predefined for each product (in BRL) by the Brazil Government with the formula:

IPI tax amount = quantity x IPI per unit.

Here's an example showing how IPI is calculated.

• Product - Cigars
• Unit - Packet
• IPI tax in BRL per Packet - 0.764
• Quantity of the product - 10 Packets
• IPI tax amount = 10*0.764 = 7.64

To create a tax rate, follow these steps:

1. Verify the unit of measure (UOM) Packet in the list of values. If this is not available, create a new UOM for Packet.
2. Define a new tax rate and select Quantity as a tax rate type.
3. Select these values:
   • Line level for UOM
   • Unit of Measure = Packet Rate Quantity = 0.764 BRL

To create a taxable basis rule, follow these steps:

1. Sign in as a Tax Manager.
2. Click Navigator, Setup and Maintenance.
3. Search for Manage Tax Rules.
4. Define a taxable basis rule by using the appropriate tax determining factor. IPI at a specific rate is levied on a particular type of products, and a product fiscal classification based tax determining factor is used for the taxable basis rule.
5. For the tax condition set, select STANDARD_QUANTITY as the taxable basis formula, which is a seeded formula.

To create a tax rule, follow these steps:

1. Sign in as a Tax Manager.
2. Click Navigator, Setup and Maintenance.
3. Search for Manage Tax Rules.
4. Define tax rate rule by using appropriate tax determining factor set. IPI at specific rate is levied on a particular type of products, and product fiscal classification based tax determining factor is used for tax rate rule.

You can create and validate the invoice in Payables using these transaction lines:

Line	Item	UOM	Unit Price	Quantity	Line Amount	Ship To	Ship From
1	Cigars	Packet	100 BRL	10	1000.00	SP	SP
Transaction Total						1000.00 BRL	-

Tax Determination Process

The tax amount is calculated by multiplying quantity with IPI per unit.

This tax line is created after you configure the tax determination process.

Tax Line	Rate Name	Rate	Tax Amount	Tax Regime	Tax Name	Tax Status	Tax Jurisdiction
1	IPI_Packet	0.764	7.64	IPI	IPI	Standard	Brazil