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Benefits of Electronic Invoice

The NF-e project goal is to implement a national model of electronic tax document to replace the existing paper system, with legal valid guaranteed by the digital signature of remitter, simplifying additional obligations for taxpayer and allowing, at the same time, the follow up in real time of business operations performed by Tax Authorities.

The NF-e means great progress to facilitate taxpayer life and tax inspection activities on operations and services provided levied by the Services and Goods Circulation Tax (ICMS), and by the Industrialized Products Tax (IPI). At first, the NF-e will be issued only by major taxpayers and will replace the paper models type 1 and 1A.

Reasons to Run the Project

The search for integration and progress of Tax Administration is related to the federative model adopted by the Brazilian state. In this scope, the Confederacy, States, Federal District, and Cities are enabled of political, administrative, and financial autonomy, and their attributions, limitations, and competencies are established in the Federal Constitution, which grants to each one of them the power to establish and manage their respective taxes.

The integration and cooperation among tax authorities have been much discussed in federative countries, mostly in those that, like Brazil, have high level of tax decentralization. In these countries, tax autonomy has resulted in multiple work routines, bureaucracy, poor information exchange, and lack of compatibility among tax-economical data of taxpayers. Citizens perceive the State as multifaceted, inefficient, and inactive. For the government, it is difficult to control as the system lacks of an integrated view on taxpayers actions. For the country, public and private costs concerning tax obligations are way high, holding up investments and job generation.

Information technology has provided greater mobility to economic agents, as they are able now to act in the entire national territory and are no longer constrained to the territorial jurisdiction concept. Thus, it is common that companies become, at the same time, taxpayers of several government unities, in federal, state, or city levels. The direct consequence to this model is that good taxpayers end up penalized from bureaucracy, as they have to deal with different procedures and rules in each federation or city unit.

Tax authorities face the great challenge to adapt to business globalization and digitizing processes and transactions among taxpayers practices. Transaction volumes made and quantities of activated resources grow intensely and costs related to the State need to detect and prevent tax evasion growth in the same proportion as well.

Concerning tax authorities, great sums of resources must be spent to gather, handle, store, and make available information on operations made by taxpayers, managing a volume of additional obligations that come with new hypothesis of evasion.

Concerning taxpayers, there is a need to allocate human resources and significant material for purposes of registration, accounting, storage, internal auditing, and information services to different government unities that, according to their legal attributions, are required, usually through statements and other additional obligations. Doubtless, the cost related to great volume of paper documents that circulate and are stored, by tax authorities and by taxpayers, is quite high.

Thus, the purpose of information integration and sharing is to simplify and update the Brazilian tax administration, reducing costs and bureaucratic drawbacks, facilitating compliance to tax obligations and tax payment and contributions, in addition of strengthening control and tax inspection through information exchange among tax authorities.

To meet these needs, Constitutional Amendment 42 included item XXII to art. 37 of Federal Constitution, which establishes that tax authorities of Confederacy, States, Federal District, and Cities to act as a whole, including sharing files and tax information.

In general , the project is justified by the need of public investment toward reduction of trade bureaucracy and administrative obstacles faced by business owners throughout the country, demanding modernization of tax authorities in the three government sectors.

The project still establishes investment in technology to improve information systems and technology sites, increasing servicing capacity of administrative unities.

Project History

To comply with content of Constitutional Amendment 42, Item XXII, art. 37, the 1st Tax Administrators National Meeting - ENAT was held in the city of Salvador on July 15th to 17th, 2004.   The event gathered the head officers of federal, state, Federal District, and cities capitals tax authorities.

The purpose of the event was to find joint solutions for the three Government sections, providing greater administrative integration, standardization, and better quality on information; decreasing costs and operational work load in services provided; more effectiveness in tax inspection; greater possibility to perform coordinated and integrated tax actions; greater information exchange among the several government unities; crossover of data in large scale with standardized data and standardization of procedures.

Two technical cooperation protocols were approved in this event: in registration (Synchronized Registration Project) and Electronic Invoice.

To align project guidelines, started by ENAT, to the discussion forum of State Tax Administrators and Coordinators (ENCAT), an ENAT/ENCAT Technical Meeting was held, in the city of São Paulo, on April 27th 2005, to unify different ongoing projects in the Tax Authorities scope.

By the end of August 2005, in the 2nd   Tax Administrators National Meeting - ENAT, in São Paulo, Revenue Department Head Officers of States and Federal District, Head Officer of Federal Revenue Department, and representatives of Finance Departments of cities capitals signed the ENAT Protocol 03/2005, for the development and implementation of Electronic Invoice, consolidating the technical coordination and project development under the supervision of Encat (National Meeting of State Tax Administrators and Coordinators) with participation, of what is today know as Brazil Federal Revenue (RFB).

From November 2005 on, the Superintendence of Manaus Free Trade Zone (Suframa) was included in the project.

Description of Electronic Invoice

In a simple way, the company that issues the NF-e generates an electronic file with tax information of business transaction which is digitally signed, to ensure integrity with emitter's data and authorship. This electronic file, which corresponds to the Electronic Invoice (NF-e), is then sent online to the Revenue Department of taxpayer jurisdiction, which runs a pre-validation of the file and returns with a receipt protocol (Usage Authorization). The transportation of goods is not allowed without such protocol.

The NF-e is also sent to the Federal Revenue Department, which acts as a national warehouse of all NF-e emitted (National Scope) and, in case of interstate transaction, it is sent to the Revenue Department of transaction destination and Suframa, in case of goods sent to areas with tax incentives. The Revenue Departments and RFB (National Scope) will provide online consultation, for the receiver and other eligible interested parties, which hold key to access the electronic document.

To follow up the goods flow, a simplified graphic representation is printed out in the Electronic Invoice, called DANFE (Electronic Invoice Ancillary Document), in ordinary paper, one copy only, which holds the access key, highlighted and engraved, to make online consultation of NF-e, and a bi-dimensional barcode that facilitates NF-e data confirmation by tax unities.

DANFE is not an invoice, nor replaces an invoice, it is only an ancillary tool to NF-e consultation, as it holds its access key, which allows the document owner to confirm the NF-e existence through the National Scope (RFB) or SEFAZ website.

The taxpayer receiver, not NF-e emitter, can bookkeep data found in DANFE for NF-e bookkeeping, and its validity is associated to the effective existence of NF-e in files of tax authorities involved in the process, confirmed through the Usage Authorization. The taxpayer that emits the NF-e, makes the bookkeeping from NF-e received and emitted.

See Also

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