While Brazil is the most complex corporate regulatory environment in the world, it’s also a very attractive country in which to do business. The emerging market’s GDP is expected to grow 22.3% between 2013 to 2017. With access to raw materials and proximity to a booming population of both talent and consumers, global businesses are opening up in Brazil en masse.
At the same time, many of these global companies are placing an increased focus on corporate governance, making significant investments into standardizing their ERPinto a single, global instance. With its complex laws and regulations, implementing and maintaining SAP in Brazil can be quite a challenge. In this three part blog series, we’ll examine the challenges and best practices of implementing SAP in Brazil.
As with any SAP implementation project, the first step to executing SAP in Brazil is preparation. Unlike implementation in other countries, the SAP template in Brazil will look vastly different because of the country’s complex regulations and reporting requirements. Matching the global instance of SAP with Brazil’s unique laws is a complex process. The following are some of the considerations that must be taken into account
- Fiscal calendar: Brazil mandates the use of fiscal calendar K4: Gregorian calendar (January to December), which may not conform to a company’s traditional fiscal year.
- Payables/receivables: Electronic banking is the norm in Brazil, so the ERP must be configured using specific payment methods (boleto, TED - same-day electronic transfers, DOC - next-day low value transfers) to link with banks.
- Nota Fiscal: This required document is the only way to invoice in Brazil, and must be submitted to and authorized by the Brazilian tax authority before it can be issued or paid. The SAP template must integrate the required fields, some of which aren’t included on typical invoice templates.
- Revenue recognition: Revenue that can be recognized in Brazil varies from other parts of the world, and is based on the Nota Fiscal and receipt of goods.
- SPED: Brazil’s e-accounting regulations require companies to submit detailed ledgers and reporting documents, so SAP must be configured to report the required numbers accurately.
- Fixed Assets: Specific fixed asset reporting based on the Nota Fiscal database must be submitted along with other SPED reports, and needs to be documented in SAP accordingly.
- Tax Filings: The motivation behind Brazil’s strict regulation is ensuring the country receives accurate, maximum tax payments from companies operating there. As such, it’s critical that filings match the SPED reports submitted and are backed up by government approved Nota Fiscal XML documentation.
Despite these challenges, it is imperative that companies maintain Brazilian compliance within their ERP – not using external third-party solutions and plug ins that leave them vulnerable to discrepancies, inaccuracies, manipulation and ultimately millions of dollars in fines and penalties. In the coming weeks, we’ll explore considerations for implementing and maintaining SAP in Brazil.