Value Added Margin (MVA)
You can configure taxable basis formula with an option to specify the Value-Added-Margin (MVA).
A taxable basis formula determines the taxable basis of a transaction line. The tax rate is applied on the taxable basis amount to derive the tax amount on a transaction line. In this scenario, the formula type is Line Amount, which uses the amount on the transaction line to derive the taxable basis.
If the country associated with the tax regime is Brazil, then the taxable basis formula includes an option to specify MVA. Different value addition percentages can be configured based on the transaction parameters such as:
- Ship-from geography
- Ship-to geography
- Product fiscal classification
- Transaction business category
- Intended use
To create taxable basis formula:
- Sign in as a Tax Manager.
- Click Navigator, Setup and Maintenance.
- Search for Manage Tax Formulas.
- Click Add.
- Select the Apply Value Additions check box to enable the Value Additions tab.
- Complete the fields in the Value Additions tab. Most fields are optional, however
the geography related parameters are mandatory.
The derivation of the value addition percentage for the adjusted MVA is manually calculated based on the formula provided by the tax authority. If the MVA is applicable, then the tax authority directly provides the value addition percentage, the manual derivation of value addition percentage not required.
In summary, the MVA for the intrastate trade is 80% and the adjusted MVA for the interstate trade is 50.2%. Define one taxable basis formula for both MVA and adjusted MVA with these parameters.
| Tax | Priority | Geography Type | Ship From | Ship To | Value Added Percentage (VAP) |
|---|---|---|---|---|---|
| ICMS_ST | 1 | State | SP | SP | 1.8 |
| ICMS_ST | 2 | State | SP | BA | 1.502 |
You can set the priorities to evaluate the sequence of these transaction conditions. In this scenario, intrastate trade is configured as the first priority and the interstate trade is the second priority.
VAP: Derived by a simple formula (1+MVA percentage/100).
For this example, if MVA is 80%, then VAP (1+80/100) is 1.8. If the adjusted MVA percentage is 50.2%, then VAP (1+50.2/100) is 1.502.