Currently, companies in Brazil must submit two separate types of invoices to the tax authority – product invoices (NFe) and service invoices (NFSe). Product invoices for goods and raw materials are standardized throughout the country, allowing companies to centralize their compliance processes; however, service invoices vary heavily depending on the city.
NFSe are simpler in some ways than product invoices because they don’t involve shipping and logistics. However, the challenge these invoices present is that services are often taxed within different jurisdictions than goods and taxed at different rates in each municipality. In Brazil, that means services are billed at the city level, while taxes on goods are billed at the state level.
When Brazil first implemented e-invoicing for services, the complexity of this tax structure presented several challenges, resulting in over 50 systems used in different manners across hundreds of cities. That is why the country is now attempting to unify e-invoicing for services at the city level in its seven largest jurisdictions. In short, the goal of the NFSe pilot program is to standardize invoices like their NFe counterpart, making the entire process of e-invoicing simpler on businesses and governments alike.
What do these NFSe changes mean for companies?
Companies providing services in the following jurisdictions will begin using the new NFSe schema in December:
- Rio de Janeiro
- São Paulo
- Belo Horizonte
- Porto Alegre
- Maringá and Marabá
Essentially, the revised NFSe model will provide a unified solution for issuing invoices and bring improvements to the business environment by rationalizing and standardizing ancillary obligations and making a national standard available. With this change, companies in Brazil will be able to more effectively centralize their compliance with service invoice requirements.
Though the challenges associated with today’s e-invoicing landscape are cumbersome, an intelligent approach to compliance means that companies will not only meet all the necessary requirements to avoid fines, penalties and operational disruptions, but also that they will be able to find efficiencies and opportunities within these mandates. This new service invoice shift will help companies in Brazil increase those efficiencies.
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