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Brazil: the Public Digital Bookkeeping System (SPED)

SPED represents an integrated initiative to promote a transparent relationship between taxpayers and tax authorities.

Is your company ready for the challenges and commitments required to adapt to the new model of reporting?

With effect from 1 January 2008, Brazilian corporate taxpayers are required to record electronically every tax and accounting operation for filing with the federal, state and municipal tax authorities.

SPED introduced a new era in the Brazilian business landscape by focusing on tax evasion and preventing unfair competition.

Since 2007, the Brazilian government has enacted a number of legal measures to spur the Brazilian economy and significantly increase gross domestic product (GDP).

These measures are combined into the Growth Acceleration Program, which is aimed at stimulating specific industries in the Brazilian economy.

The program also includes measures to foster technological development and the implementation of the electronic accounting and SPED tax bookkeeping system.

SPED represents an integrated initiative by the federal, state and municipal tax authorities to promote a transparent relationship between tax authorities and taxpayers.

In general terms, it consists of modernizing the current method of complying with accessory obligations filed by taxpayers with the tax authorities and inspection agencies for the purposes of:

  • Integrating the different levels of taxation (federal, state and municipal) by standardizing and sharing accounting and tax information
  • Allowing broader data cross-checking for tax purposes, working toward greater efficiency in detecting irregularities
  • Speeding up and improving tax inspection processes
  • Rationalizing, standardizing and consolidating the accessory obligations required of taxpayers
  • Reducing the costs of taxpayers’ accessory obligations
  • Protecting the environment by reducing the use of paper

The three main pillars of SPED

SPED is divided into three projects:

  • Digital Accounting Bookkeeping (ECD) — affects more than 130,000 companies
  • Digital Tax Bookkeeping (EFD) — affects more than 500,000 branches and locations
  • Electronic Invoicing (NF-e) — affects more than 290 activities and sectors


Accounting SPED (ECD)

Introduced by the Brazilian Internal Revenue Service, the Accounting SPED is compulsory for legal entities that compute their taxable profits based on accounting records.

Its purpose is to digitize the following documents:

  • Journal register and supporting records
  • General ledger and sub-ledgers
  • Daily trial balances and balance sheets

The documents are combined into a single file, which must be signed by the digital certificate of both the company’s legal representative and its accountant.

The accounting file must be filed/transmitted annually by the last working day of June of the calendar year following the year when the information was generated by the system (e.g., by Friday, 29 June 2012 for information generated in 2011).

The penalty for failing to transmit the file is BRL5,000.

Tax SPED (EFD) for ICMS and IPI

The Digital Tax Bookkeeping (EFD) is a set of digital tax documents and other information required by the state and federal tax authorities.

Its use is compulsory for taxpayers that are subject to State VAT (ICMS) and Federal VAT (IPI) and it replaces bookkeeping and printing of the following books and records:

  • Inbound Fiscal Book Register
  • Outbound Fiscal Book Register
  • Inventory Ledger
  • IPI Control Register
  • ICMS Control Register
  • Control over ICMS credits for fixed asset expenditure

The documents must be gathered into a single file, which the company’s legal representative must sign using a digital certificate, and the information must be transmitted monthly.

The main issue for taxpayers is that EFD is under the states’ authority and there are 27 states in Brazil.

Therefore, a taxpayer must meet the deadline for transmitting the file to each individual tax authority. Penalties apply in each state for delays or failure to transmit the electronic file.

Given the frequent deadlines and the large number of states, taxpayers could incur significant fines if they do not adopt robust processes for timely submission.

By way of illustration, the São Paulo State tax authorities require transmission of the Tax SPED file by the 25th day of the month following the month that the information relates to, and failure to transmit the file is subject to a 1% fine on the total amount shown in the missing file.


Using the EFD for the Social Contribution Tax on Gross Revenue for Social Integration Program (PIS) and for the Social Contribution Tax on Gross Revenue for Social Security Financing (COFINS) is compulsory for legal entities that compute their taxable profits based on accounting records and as a percentage of gross sales.

While an electronic form is already in place for these contributions, the Brazilian Internal Revenue Service has defined a much more detailed and comprehensive layout to be completed with data about the purchase of goods and services that give rise to tax credits and about the income subject to these contributions.

The EFD file consolidating information of all of the company’s branches must be signed with the digital certificate of the company’s legal representative and it must be transmitted monthly.

The penalty for failing to transmit the file is BRL5,000.


E-invoicing (NF-e)

The electronic invoice (NF-e) is a document issued and stored electronically that is used to document operations involving the sale of goods and services and that exists only in a digital format.

An electronic invoice is legally effective if the issuer’s digital signature and the relevant state tax authority’s authorization for its use are added to the document before the event that gives rise to the tax liability occurs (i.e., sale of goods or supply of a service).

An NF-e issuer generates a digitally signed electronic file containing tax information related to the sale.

The e-invoice is then transmitted via the internet to the Revenue Department, which issues an authorization for the issuer to use the electronic invoice; without this authorization, the goods cannot be transported.

The electronic document is also sent to the Internal Revenue Service, which is the national repository of all electronic invoices issued in Brazil.

Implementing the NF-e system correctly is an important commercial step, as companies are permitted to issue only electronic invoices.

Therefore, any companies that have not implemented the NF-e system will be unable to bill their clients.


Future projects

The tax authorities have other digitization initiatives in progress and they have invited some companies to take part in pilot projects.

The following projects have been announced by the Brazilian Internal Revenue Service as the next projects to become part of SPED, but their effective date is yet to be defined:

  • Electronic taxable profit control register (e-Lalur)
  • Electronic payroll (e-FOPAG)
  • Inventory manufacturing control
  • Financial statements data center (eXtensible Business Reporting Language (XBrl))

New routines and challenges

SPED is regarded as a revolutionary change in the relationship between the tax authorities and taxpayers, and it may also improve Brazil’s image in the eyes of the international community.

The system provides legal entities with opportunities for improving processes and reducing costs, in addition to consolidating data and allowing for better information management.

Besides the higher degree of transparency provided by a digital platform, the new tax and accounting bookkeeping system offers the additional benefit of reducing the chance of mistakes arising from typing errors and miscalculations, as well as errors in completing any accessory obligations.

It also reasonably cuts costs by potentially reducing the volume of hard copies and filing areas.

Adapting to this new model of reporting, however, requires significant commitment from legal entities, including investment in process organization, training and technology.

SPED affects how tax and accounting records are issued and kept, as well as how legal entities relate to the tax authorities.

To ensure a seamless cultural change within an organization, four aspects of this transitional stage must be observed:

  1. Confidentiality: ensure that only authorized personnel operate the system
  2. Files: reliable backup and correct transaction processing must be in place, as reporting becomes a realtime operation
  3. Deadlines: the system must be online within the required period
  4. Compliance: the company must adjust its operations to the rules defined in each applicable law

These changes require significant efforts to integrate personnel from different areas of the company, such as tax, IT and internal control departments.

For example, while, from an IT perspective digitization demands careful compliance with technical requirements to generate the files as legally defined, a tax professional must identify the legal requirements applicable to each operation.

The internal controls team also plays a key role in the process; it should be in charge of defining the flow of activities necessary to properly issue documents and keep the related records.

Since digitization imposes a significant change in an organization’s culture and routine, including new operating tasks, it is highly recommended that all personnel involved in generating information should be aware of the challenges and be trained accordingly.

An organization may require tax specialists skilled in IT and IT technicians skilled in tax and accounting to manage this new level of relationship with the tax authorities.

This may remain the case for some time, considering the continuous changes and the progress in tax and technology that seem likely in the future.

Overview of indirect taxes in Brazil (1)

The Brazilian tax system comprises different indirect taxes, including:

  • Federal level — Federal VAT (IPI)
  • Social contribution taxes on gross revenue (PIS/COFINS)
  • State–level — State VAT (ICMS)
  • Municipal-level — Tax on Services — ISS

Federal level — Federal VAT (IPI)

IPI is a VAT levied on imported goods and on the value added to goods through processing, i.e., assembly, transformation, packaging and reconditioning.

The tax is calculated on the customs’ value plus import duties or, for local sales, on the transaction value.

IPI rates vary from 0% to 365% depending on the product’s tariff code based on the Mercosul Common Nomenclature (MCN).

IPI is generally recoverable excepting the case of transactions involving fixed assets.

Social contribution taxes on gross revenue (PIS/COFINS)

PIS and COFINS are social contribution taxes levied on corporate gross revenues at the rates of 1.65% and 7.6%, respectively (9.25% in total), under the noncumulative taxation regime, and at the rates of 0.65% and 3%, respectively, under the cumulative taxation regime.

Non-cumulative taxation allows taxpayers to recognize PIS and COFINS credits against the related amounts due on transactions in the future or, in specific cases, against other federal taxes payable by the company.

Although the non-cumulative taxation regime is legally required, entities engaged in certain business activities (e.g., banking and telecommunications) must calculate their contributions in accordance with the cumulative taxation regime.

State–level — State VAT (ICMS)

Brazil is divided into 27 states and, despite the general taxation rules laid down at the federal level, each state is empowered to regulate its own implementation and enactment of specific tax rules.

ICMS is levied on imported goods and transactions relating to the circulation or movement of goods and to the rendering of certain types of transportation and communication services.

ICMS rates vary from 7% to 18% depending on whether a transaction is carried out within a state or between different states.

ICMS tax amounts are generally recoverable by reducing the amount due on transactions with the amounts paid on previous transactions (i.e., under the non-cumulative system).

Municipal-level — Tax on Services — ISS

ISS is a tax on services imposed on the rendering of services of any nature, except those taxed by the ICMS.

The legislation contains a list of more than 100 taxable services. The tax is calculated on the service value.

Rates vary from 2% to 5% according to the nature of the service rendered and on the municipality in which the service provider is located.

ISS is always a cost to the extent that no tax credits are available.


  • Frank de Meijer, Tel: +1 201 867 0435, Email: frank-de.meijer@br.ey.com
  • Jefferson Sanches, +55 11 2573 3576, jefferson.sanches@br.ey.com
  • Roberto Paiva, +55 11 2573 3338, roberto.paiva@br.ey.com

This article was first published in the Ernst & Young Indirect Tax Briefing which can be accessed using the link below:


  1. You can find out more about indirect taxes in Brazil in our Worldwide VAT, GST and sales tax guide 2011 available at www.ey.com

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