BLOCK K – ICMS / IPI: What is it and what is it for?

A “Block K” in Brazil is a set of records that is part of the Brazilian Digital Tax Bookkeeping of ICMS and IPI (EFD – ICMS / IPI).

It is intended to allow the country’s Federal Revenue Office to obtain monthly information on the movement and balances of the taxpayer’s inventory and automatically make a comparison with the accounting and tax information sent by the same taxpayer.

Objective: greater control.

A Block K can keep information about stock types, origin of inventories, consumption of inputs, items produced, stock balances and other information that are then migrated to the financial and tax statements.

The operationalization of Block K will substantially impact companies that carry out industrialization or similar activities, and companies that carry goods and inventory movements, which will naturally need to review processes, train their teams, seek solutions with automation and integration of accounting and tax information, and invest in advice and consulting.

Since January 1^st, 2017, companies with revenues equal to or greater than R $ 300,000,000.00, already report the final balances of their inventories (own and third parties) as well as their adjustments in Block K records.

In the beginning of January 2018, it was the turn of companies with a turnover equal to or greater than R $ 78,000,000.00 to generate such information.

Caution!

In 2019, companies with annual sales of less than R $ 78,000,000.00, will also be obliged to send inventory information regarding Block K.

This is a very relevant issue, and it should be emphasized that companies must map and redesign their internal processes, train their teams, integrate accounting and tax information in a timely manner, using a management system (ERP) or through partnership with a company outsourcing accounting and tax services.

The year 2019 will be the first year that all companies will effectively need to submit complete K-Block notices, compulsorily.

In addition, the EFD-ICMS / IPI is a monthly bookkeeping and penalties are heavy at the federal level and may vary according to reference status.

In Rio de Janeiro, for example, in cases of incorrect or omitted information, according to subsections II of art. 62-B of Law no. 2.657 / 1996, penalties may vary from 1500 to 25.000 UFIR’s, by judicial intimation, in addition to a fine of 3% on the value of commercial transactions or financial transactions, specific to the legal entity or third parties for which responsible for tax, according to art. 57 of Provisional Measure No. 2,158-35 of August 24, 2001 and its amendments.

Is your company prepared for these implementations? Questions? Contact us.

Count on the advice of a company that for more than 10 years has been contributing to make its clients more efficient in their back office operations, offering solutions for outsourcing accounting and tax services and achieve better results.