“Creating more than a “simple” migration from the concepts of paper documents to electronic format.”

The electronic invoice (NF-e) is transforming every year the relation between the taxpayer and the tax administration, and B2B processes of Brazil. This is mainly due to the tax cooperation of the Brazilian tax administrations and the bold and innovative management strategy of ENCAT (National Meeting of State Tax Coordinators and Administrators), which have been adopted in the development and improvement processes of the various electronic tax documents of Brazil.

Since the launching of the electronic invoice, in 2006 and other types of electronic tax documents (DF-e), such as Electronic Bill of Lading (CT-e), the Electronic Tax Manifest (MDF-e) ), And the consumer electronic invoice(NFC-e), we have focused on creating more than a “simple” migration from the concepts of paper documents to electronic format. We are permanently seeking the implementation of creative innovations to enable the exponential evolution of the Tax Administration processes and all the other actors that are interrelated with the electronic invoicing.

This is how, from the year 2010, we have developed innovative concepts such as the NF-e Events (NF-e 2G), going through the Fiscal Cloud, launched in 2012 and more recently the concept of Fiscal IoT (Fiscal Internet of Things). It is represented by a set of actions that will integrate the electronic documents to artifacts that enable the tracking of cargo vehicles and their respective merchandise, with an “integrating system”, based on the Virtual Sefaz of Rio Grande do Sul, called National State Operator (ONE in Portuguese). It is part of the infrastructure of another important project of ENCAT, the Brazil-Id System (www.brasil-id.org.br).

Through the ONE, we have already carried out more than 6.2 million of automatic Transit Records Events in the invoices, cargo manifests, and electronic bill of ladings. These events are captured by almost one hundred license plate reading antennas, which use OCR technology (Optical Character Recognition) and identification via Radio Frequency (RFID) installed by the state finances secretariats and the National Land Transport Agency (ANTT) on the main Brazilian highways.

More than a simple transit registry, these readings performed through the ONE, which operates integrated to the MDF-e System, allow the States Operations Centers (COE), responsible for controlling the physical flow of goods destined to their territories, to access all information contained in these cargo units. They include information on the goods transported, their route, weight, information on the driver’s CPF/CNH and even the value and number of the insurance policy for the cargo contained in that vehicle. This fantastic integration of information, unique in the world, has enabled the creation of the concept of “Inspection of Cargo Vehicles in motion”, which starts as soon as the cargo vehicle exits the loading site, even before the goods enter the federal territory of destination.

All these achievements were possible only with the cooperation initiatives adopted by ENCAT and ANTT. Through a set of actions of the Canal Verde of Brazil Project, they began to operate in an integrated way, having as objective at the joint control of the flow of cargo vehicles and goods in the main Brazilian highways, considering their respective areas of performance and competencies.

This type of integration between different government bodies that use information from electronic documents as primary source, allows for significant gains in efficiency. In the case of the partnership with ANTT, this integration permits un-authorizing cargo manifests for transport vehicles that do not have their National Registry of Cargo Vehicle (RNTRC), duly updated and activated in the ANTT database. This will reduce the provision of clandestine transport services, allowing competition that is more loyal for legal carriers, in addition to an exponential increase in the inspection capacity of this important Federal Government control agency.

For the year 2017, in order to consolidate the concept of Fiscal IoT (Fiscal Internet of Things) and allow a perfect integration between standard Brazil-Id tracking devices (OCR Cameras, RFID TAGs, Electronic Seals) and the fiscal electronic documents used by the different modalities of transportation. We have included a new information group in the Electronic invoice (Product Traceability Group – I80). It allows tracking products subject to sanitary regulations, recall cases, agricultural pesticides, veterinary products, dental products, Medicines, beverages, bottled waters, packaging, etc.. It enables the registration of batch number information, manufacturing/production date, which aggregated with the other information of the fiscal electronic documents will allow the tracking of these products until the last link of the chain through the NFC-e (NT2016.002).

In 2017, the ENCAT technical team will also carry out a series of actions to extend the scope of the DF-e. These are the implementation of new electronic documents for the control of transport services carried out through pipelines, travel agencies performing transport of persons, transport of assets and excess baggage (see adjustment SINIEF 10/2016), in addition to the Electronic Ticket of road transit, to be used from January 2018. This is being discussed jointly with the segment of Inter-municipal transport companies and ANTT.

However, of all the planned actions, we consider most important the action of integrating a set of isolated actions that have already been adopted by some state tax administrations and that will bring to a new level the services of these institutions. As is already common in our articles, informally we are calling this process “Google of fiscal goods”.

The consolidation of this concept will enable state tax administrations to operate in Big Data environments using “mathematical algorithms” aimed at the correct identification and classification of each item of merchandise described in NF-e and NFC-e. They take into account their different categories, brands, prices, units of measurement and commercial specificities within the various regions and distribution channels, from the production chain, through the wholesale and retail distribution chain, from the production outlet until the arrival of the product to the final consumer.

The efficiency maximization of the products classification algorithms, which are being improved every day by IT companies and Secretariats of Finance, with those of the States of Ceara, Amazonas, Minas Gerais, among others, will allow a high degree of accuracy in the electronic verification of the tax payments included. It will involve partial anticipation, differential aliquot and other calculation regimes, directly from the analysis of the information contained in the Electronic invoice, facilitating the massive use of self-regulatory processes by taxpayers in cases where errors are identified.

The combination of these technologies applied to the details of the product items described in the electronic documents will provide the opportunity for Tax Administrations to start providing new services previously considered unimaginable.

The concrete and most recent example of this transformation was the recent launch by Sefaz Paraná, in Apple Store as well as Google Play, of the “Lower Price” application. It allows the local consumer to consult within a radius of up to 20 km from their position, the products prices practiced in the various establishments, by reading the bar code (GTIN) or typing the item name. It is important to note that many other applications are on the market and offer some features of this application, but only the Tax Administration, such as the Sefaz of Paraná, has the capacity to provide a database on more than 10 million of product items. These are provided by more than 60 thousand retail establishments, updated weekly, from the daily emission of more than 3.8 million of electronic invoices, according to the secretariat itself. This capacity of processing data and providing new services by the Tax Administrations is what we wish to highlight here.

Of course, maturing this type of service will require heavy investments in order to implement powerful data warehouse appliances capable of processing huge daily volumes of Electronic invoice and NFC-e, at product item level. The current classification structure based on the Mercosur Common Nomenclature (NCM) is very comprehensive and does not allow the objective identification of the product and the GTIN (Global Trade Item Number), used at retail sales level, although provides better conditions for this purpose. However, it still does not have a centralized infrastructure grouping the codes of each company that adopt this system (Each company has its own GTIN code, even in the case of equal products), and even the new CEST (Tax Substitution Specifier Code) does not solve our problems. Therefore, it is of great importance to focus on developing techniques of products identification and classification through powerful mathematical algorithms, which also use these reference codes already available.

Another important direct benefit to be obtained in the internal scope of the Tax Administrations is the capacity to produce statistical analyzes to subsidize the definitions of products prices and margins of added values (MVA) applied in the calculation of products achieved by the Tax Substitution. Today this is done through field surveys that have a low index of precision, since without a computerized processing capacity up to the product level, it is impossible to determine precisely the price variations in the various distribution channels and location in a state.

On the side of reducing costs, another great opportunity will be to expand this analytical capacity for price processing for public procurement. I am not referring here to some successful experiences already adopted by some states. I am referring to the mapping and provision of reference prices, by the State Finance Secretariats to their respective Secretaries of Administration, for “a large part” of the products items acquired by the public administration, from the purchase of medicines to the simplest item of consumer material. This will represent a much better transparency and the end of the application of overprices for government purchases, which mean a considerable saving in the costs of the public purchases of the states.

In short, many challenges and obstacles lie ahead, however, this is the first step towards achieving innovation by building a strategic vision for the future and a clear definition of an action plan, with resilience and above all in a teamwork.

I wish an excellent year 2017 for all of us, who work in the taxation field.

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