With the Electronic Invoice, which simplifies tax collection and facilitates the control of tax evasion, the Brazilian tax system enters the digital age once and for all

ETCO Magazine - No 18 - January 2011

The implementation of the Electronic Invoice (NF-e), on April 1, 2008, was an important step towards the modernization of the Brazilian tax system, in addition to being a great advance to facilitate the taxpayer's life and the inspection actions on transactions taxed by the Tax on Circulation of Goods and Services (ICMS). According to data from the Ministry of Finance, until December 6, 2010, 1.812.005.134 Electronic Invoices were issued, totaling R $ 66.379.296.546.620,55, or R $ 66,3 trillion.

As of December 2010, the NF-e includes virtually all segments of the Economy, inserting 560 codes of economic activities in the system. The issuance of NF-e also becomes mandatory in all operations in the public sector and in interstate operations, except retail. “And Brazil will have 1 million issuers of Electronic Invoices”, celebrates Eudaldo Almeida, General Coordinator of the National Meeting of State Tax Administrators (Encat). According to him, the numbers are the result of the joint action of the tax authorities and organized society. "We work for a common ideal: to expand tax justice and reduce costs for taxpayers and public administration," said the Encat coordinator.

The NF-e was created to simplify the inspection of the Finance secretariats, in addition to reducing company costs. Before the NF-e, to inspect a company, the tax authorities needed an auditor to go to the site and analyze all the paper notes, which should remain stored for five years. With the NF-e, this process became electronic and information about what a company sold, for how much and the taxes it paid for that sale can be obtained in real time, over the internet. In addition to reducing costs with printing, purchasing paper, sending the tax document, warehousing, companies will no longer need to waste time at the Border Fiscal Posts when they deliver the goods. Before, all notes needed to be checked and typed in the tax authorities' systems. With the electronic process, information reaches the internet even before the truck.

It works as follows: the issuing company generates an electronic file with the tax information of the commercial operation, digitally signed. It is therefore necessary to obtain a digital certificate from the IRS. This guarantees the integrity of the data and the authorship of the issuer of the note. Then, the electronic file, called an e-note, is transmitted over the internet to the State Finance Department, which, after pre-validating the file, sends a receipt protocol to the issuer, which is equivalent to the official authorization. for the transit of the goods. The NF-e is also transmitted to the IRS, which stores all electronic bills issued on their computers. In the case of interstate operation, the note also goes to the State Finance Department of destination of the operation or to the Superintendence of the Manaus Free Zone, Suframa, when the goods take the course of the encouraged area in the North of the country. This digital process puts an end to the four-way notepad, carbon, stamps and pads smeared with blue ink.

An important mechanism against tax fraud, the NF-e increases the efficiency of the inspection of goods transit, strengthens the crossing of information, intensifies the sharing of information between tax authorities, in addition to reducing costs such as paper consumption, acquisition of forms, typing , storage and redemption of invoices. It is worth mentioning that some companies even had entire buildings to store the files of copies of invoices. Another important contribution that the NF-e brings to the Economy is in the fight against the fiscal war. According to experts, the fiscal war is caused by a tax model that needs to be revised based on a broad discussion between states, municipalities, the Federal Government and society. “With the massification of the NF-e, tax administrations will have the necessary information to assess the impact of the proposed new model, facilitating discussions on the compensation of losses and the distribution of the advantages that each state will have from the adoption of the proposed tax model. ”, Stated the Secretary of Finance of Bahia, Carlos Martins. In 2008, he created a work team to monitor the entire NF-e implementation process. This new system, according to him, brought a series of benefits for the sender and the receiver, such as the elimination of typing of invoices in the reception of goods and consequent bookkeeping errors, in addition to the logistics planning, which is made possible by the early reception information contained in the NF-e.

Celebrating the first year of implementation of the NF-e, in April 2009, Eudaldo Almeida made a very positive assessment of the entire process. "It was a success, both in terms of the taxpayer's technological environment and that of the Treasury," he said.

According to him, the implementation of a system of this size required the commitment of all parties involved. “There was a huge cultural change and it was only possible thanks to the partnership work between the state inspectors, the Federal Revenue of Brazil and the taxpayers. Everyone sat at the table and discussed what would be the best way to do this ”, said the general coordinator of Encat.

On the first anniversary of the NF-e, its obligation was extended to new segments of the Economy, such as distributors, wholesalers or importers of alcoholic beverages, including beers and draft beer, distributors, wholesalers or importers of soft drinks, among others. The first sectors that mandatorily adopted the NF-e, in 2008, were cigarette and liquid fuel manufacturers, with around 400 companies.

The use of NF-e represents a historic advance in the collection and inspection of taxes in Brazil, allowing for a significant reduction in competitive tax imbalances, greater tax justice and a better business environment. However, according to Eudaldo Almeida, tax fraud is still a reality in the country. “The common note was also defrauded. The advantage of the Electronic Invoice is that it allows greater control of tax evasion. The tax authorities are modernizing and looking for electronic forms of control to prevent fraud. ”

NF-e Benefits

New electronic tool in the fight against tax evasion

In September 2009, ETCO signed a Cooperation Agreement with the government of the state of Bahia to coordinate the creation of information analysis tools contained in the database of Electronic Invoices. At that time, the Business Intelligence (BI) software project, developed by Microsoft, was launched, which organizes in a friendly way the information contained in the database of Electronic Invoices from a platform that facilitates the generation of reports and the cross-checking of data by taxpayer, by sector or region. “This new tool will help to carry out a prior audit of the information contained in the Sefaz database, which will undoubtedly speed up and better direct the inspection work,” said Eudaldo Almeida, Encat's General Coordinator, responsible for Electronic Invoice project. Bahia was chosen because it was one of the leading states in the implementation of the NF-e program, in addition to being the headquarters of Encat's coordination. In addition, Bahia is the one that most collects outside the South and Southeast regions and occupies the sixth place among the highest collections of IC MS in Brazil. Microsoft, hired by ETCO to develop the software, delved into state data and operations to shape the product. After the signing of the Cooperation Agreement, the Governor of Bahia, Jaques Wagner, stressed that “the importance of the agreement signed with ETCO goes far beyond the objective described therein. It is just the beginning of a partnership to improve the fight against tax evasion and promote competitive ethics ”. According to Professor André Franco Montoro Filho, Executive President of ETCO, the tool is being developed in partnership with the state of Bahia with the contractual condition of being replicated in other states. “The software is not standardized. It will need small adjustments to adapt to the peculiarities of each state, ”explained André Montoro. He calculates that the use of the new digital platform, within the concept of fiscal intelligence, could result in an increase in the collection of states by more than 10%. The great merit of the NF-e BI is that, in spite of gathering various information about commercial operations, state tax authorities did not yet have a comprehensive integrated solution to analyze the data from Electronic Invoices. With BI, it is possible, for example, to plan prior audits based on the information generated electronically, which raises the quality of inspection and action planning in the states. According to Cláudio Meirelles, Superintendent of Tax Administration at Sefaz / BA, with BI technology, the data can be analyzed to detect evidence of tax evasion or inconsistencies that, with the paper invoice, would be difficult to verify. In the case of Bahia, according to Meirelles, the intention is to map the difficulties of receiving taxpayers and direct inspection. “Based on the national data, that BI can recover 50 billion reais in state taxes withheld (this is the amount that is no longer collected per year in IC MS, according to a study on the Underground Economy), we estimate that Bahia may recover at least 2,5 billion reais, since we represent about 5% of the collection of IC MS in the country ”, he said. Another advantage of BI is the fact that it allows the monitoring of operations in real time, being able to design strategies and better plan State actions, including investment incentive policies. “NF-e and BI are controls that expand tax justice. Without it, those who fulfill their role as contributors cannot compete with those who do not.

A path of no return

About two months before the implementation of the Electronic Invoice (NF-e), in February 2008, ETCO held the Internal Seminar on Electronic Invoice, in São Paulo, which brought together the main authorities on the subject and companies from the most varied sectors . Right at the opening of the event, the ETCO Executive President, professor André Franco Montoro Filho, praised the performance of Eudaldo Almeida, General Coordinator of the National Meeting of State Tax Coordinators and Administrators (Encat), and Paulo Ricardo de Souza Cardoso, then Deputy Secretary of the Federal Revenue Secretariat - Cardoso is currently director of active debt management at the Federal Attorney General's Office (PGFN). "You led a successful public-private partnership with effective collaboration from the federal tax authorities, state tax authorities and companies," said Professor André Montoro. According to Eudaldo Almeida, who coordinated the NF-e project since its inception in 2005, the biggest challenge was reaching a consensus between the state tax authorities and the Brazilian Federal Revenue Service. "But we were successful and all states are signatories to the NF-e, which was made for everyone who wants to end the fiscal injustice," said Almeida. Among the advantages of the NF-e pointed out by him are the increase in fiscal transparency, the reduction in the cost of acquiring forms, safekeeping and redemption of invoices, and the strengthening of the crossing of information between state tax authorities and the Federal Revenue Service. During the seminar, Cardoso stated that the NF-e has no risk for the taxpayer, as it is easier to make an error in filling out the paper form than in the electronic form. Enthusiastic about the project, Cardoso said that he has seen a film very similar to this one: “I was happy to accompany the digitalization of the income tax declaration of individuals and companies. At the time, we had an archaic model and today there is a modern digital system used by most contributors, ”he said. According to Cardoso, the NF-e is on the same path. Just to give you an idea, imagine an amount of paper capable of covering 26 football fields or reaching the height of 40 Everest hills. This volume corresponds to 3,6 billion invoices stored in 2008 in the state of São Paulo alone and which should be available to the tax authorities for five years. In some cases, all this work represents up to 5% of a company's revenue in Brazil. With the arrival of NF-e, this is a thing of the past for most companies in the country. In the opinion of Newton Oller de Mello, from Sefaz-SP, the NF-e is a great tool to combat tax evasion. “And ETCO has participated intensively since the project's launch,” he said. “I call it a win-win project, as it generates an increase in revenue without increasing the tax burden; only the loser is the loser. ”