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Sector: Steel and Metallurgy

Steel and metallurgy in SAP: the tax follows the scrap, the weight and the batch

The mill buys scrap with deferred tax, stops the furnace for major relining and exports part of its output, which builds up credit. The product is measured by weight, and the invoice, the stock and the tax books must close on the same number.

The rule sits in a complementary law, in state legislation and in administrative rulings, and the SAP design starts from it. DFSpro designs the setup and proves that it follows the rule. The tax decision belongs to the client.

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The short answer

What changes for the sector, in four areas

The direct answer

Scrap deferral, credit reversal, the export credit balance and steel weight must reach SAP, the invoice and the tax books with the same totals. When one of them closes differently, the gap shows up in the tax assessment, not in the mill.

To start the conversation: if you take one month of scrap receipts, can you say in minutes at which step the deferred tax ends and which ledger line it landed on?

The short answer: if you can, governance is in place. If it depends on a spreadsheet per state, the first step is to measure the gap between stock, invoice and tax calculation in a closed period.

ICMS: deferral and reversal

Scrap deferral is set by each state, as in the 2022 Sefaz/SP ruling, and a steelmaker's special regime may require reversing credit tied to a deferred sale, as in the case judged in Minas Gerais.

Fixed assets: furnace relining and CIAP

CPC 27 treats the new furnace lining as a replaced part and requires depreciating the component separately. LC 87, art. 20, § 5, gives the asset credit in 48 installments, and a furnace shutdown affects both.

Export: accumulated credit

LC 87, art. 25, § 1, allows the export credit balance to be offset and transferred to other taxpayers in the same state, and the balance needs a documented origin.

Reform: ICMS credit balance

Art. 134 of the ADCT covers ICMS credit balances that still exist at the end of 2032, which are validated and offset against IBS. The history by state and origin is the point to watch.

Index

Choose your entry point by your role

Four entries, one for each role, straight to the block that answers your question.

01Tax and fiscal

Which laws govern the sector and where the rule meets the document and the tax books.

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02IT and SAP integrator

Six points where SAP usually gets stuck, and what changes when the design comes ready and proven.

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03Management and decision

When the tax process becomes a project, and where DFSpro steps in.

Go to section

04Scrap and steel weight

Scrap, reversal, export credit balance and steel weight: the same totals in SAP, on the invoice and in the tax books.

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Direct links
Direct links:direct answerobligations and legislationwhat DFSpro solvessector situationsfrom diagnostic to supportsourcesquestionswhere to start
Obligations and legislation

What the sector rule requires from SAP

Where the rule meets the document and the tax books.

ICMS

LC 87/1996 and the legislation of each state (UF).

Credit reversal

LC 87/1996, art. 21.

PIS and Cofins credits

Law 10.833/2003, art. 3.

Drawback

Law 11.945/2009, art. 12.

NF-e

Commercial unit and taxable unit: Tax Ruling 31787/2025 of Sefaz/SP.

Reform

Constitution, ADCT, art. 134.

Where DFSpro solves it

What DFSpro solves in this sector

Six points where SAP usually gets stuck, and what changes when the design comes ready and proven.

ICMS

Deferred scrap with no control of where the deferral ends

The tax is only booked at the step that ends the deferral. DFSpro builds the rule by state and operation and proves the deferred balance by material.

Reversal

Credit tied to a deferred sale

The Minas Gerais Taxpayers' Council, in Ruling 24.721/23/3ª, upheld an assessment for reversing too little credit, in breach of a special regime. DFSpro designs the credit record by item and sale destination.

Fixed assets

Blast furnace and rolling mill overhaul

The new component, the write-off of the old one and CIAP must move together. DFSpro designs the record per component and proves the balance before and after.

Weight

Weight, commercial unit and taxable unit

A weight difference becomes a mismatch in the invoice and in stock. DFSpro aligns the commercial unit, the taxable unit and the conversion by material.

Energy

Energy credit in the process

The ICMS and the PIS and Cofins credit depend on proving industrial use. DFSpro separates consumption by purpose and links the bill to the unit.

Export

Credit balance with no documented origin

The recognition request asks for the origin of the credit. DFSpro builds the ledger by state and the file by invoice.

The tax thesis always belongs to the client.

Request the Tax Diagnostic

Sector situations

Where the tax process of steel and metallurgy in SAP becomes a project and DFSpro shortens the path

Scrap that comes in with deferred tax, a furnace that stops for relining and exports that build up credit. In the mill, the tax team follows weight, batch and material status, not only the invoice.

11sector situations where the tax process becomes a project
  • ICMS (2)
  • Fixed assets (1)
  • Credits (2)
  • Electronic documents (1)
  • Foreign trade (1)
  • Master data (1)
  • Close (1)
  • Migration (1)
  • Reform (1)

The legal basis of each situation is an official source read on 23/10/2026. The SAP design is DFSpro's judgment, to be checked on each company's system version. No savings were measured.

01ICMS

Scrap with deferred ICMS: the tax is only booked when the deferral ends

What weighs: Scrap goes through several links with deferral, and the end of the deferral depends on the next operation and on each state's rule.

What DFSpro changes: Deferral rule by state and by operation in the master data, with the end of the deferral triggering the debit.

See the situation, the legal basis and the proof

The situation

The semi-integrated mill buys scrap from scrap dealers and from other industries, with receipt invoices of different natures.

Legal basis in line

  • Tax Ruling 25314/2022, Sefaz/SP: summary: the deferral in art. 392 of RICMS/2000 ends on a sale to another state, abroad or on receipt at an industrial plant

Proof delivered

Deferred scrap balance by state reconciled with the documents, with the expected and the obtained end-of-deferral event.

02ICMS

Credit tied to a deferred sale: the reversal that came out too low

What weighs: The company's special regime may require reversing stock and input credit tied to deferred sales, and a reversal that is too low becomes an assessment.

What DFSpro changes: Tax calculation that separates credit by sale destination and reverses what the special regime requires, with a record per item.

See the situation, the legal basis and the proof

The situation

A steelmaker in Minas Gerais was assessed for reversing too little of the credits tied to sales with deferred tax, after changes to the special regime.

Legal basis in line

  • Ruling 24.721/23/3ª, Minas Gerais Taxpayers' Council: summary: reversal that was too low for stock credit, work in progress and inputs tied to deferred sales, in breach of a special regime

Proof delivered

Calculation record of the reversal by item and by period with expected and obtained, and the trail of the credit booked.

03Fixed assets

Blast furnace and rolling mill: CIAP and depreciation by component in a major overhaul

What weighs: An overhaul of a blast furnace or rolling mill replaces parts with different lives, and the replaced part must be written off, the new one capitalized and CIAP adjusted.

What DFSpro changes: Record per component, write-off of the replaced part and CIAP following along.

See the situation, the legal basis and the proof

The situation

The mill stops the unit every cycle to replace the lining and the rolls, in a large investment.

Legal basis in line

  • CPC 27, CVM: items 13 and 43: replaced parts and a significant component depreciated separately
  • LC 87/1996: art. 20, § 5, I: credit taken at 1/48 per month
  • Law 10.833/2003: art. 3, VI and § 1, III: credit on depreciation of fixed assets

Proof delivered

Record per component, write-off, new capitalization and CIAP balance before and after the shutdown, by expected and obtained.

04Credits

Electricity in the process: ICMS, PIS and Cofins credit

What weighs: Electric furnaces and rolling consume energy on a large scale, and the ICMS credit depends on proving that the use was in the industrial process.

What DFSpro changes: Energy calculation by purpose, with metering and allocation kept on file.

See the situation, the legal basis and the proof

The situation

The mill has a free-market energy contract and partial own generation, with a bill in more than one unit.

Legal basis in line

  • LC 87/1996: art. 33, II, b: credit for energy consumed in the industrial process
  • Law 10.833/2003: art. 3, III: credit on electric and thermal energy consumed in the establishments

Proof delivered

Bill, metering, allocation and credit by unit reconciled with the ledger of the period.

05Electronic documents

Coil and rebar: weight, commercial unit and taxable unit on the invoice

What weighs: The product is sold by weight, and the unit used to invoice may differ from the taxable unit, which becomes a mismatch in the invoice, in stock and in tax.

What DFSpro changes: Unit of measure and conversion factor in the master data, with the commercial and the taxable unit defined by material.

See the situation, the legal basis and the proof

The situation

The same item is measured in pieces, in meters and in tons, depending on the customer.

Legal basis in line

  • Tax Ruling 31787/2025, Sefaz/SP: summary: uCom and qCom follow the invoicing; uTrib and qTrib follow the unit of the taxable product

Proof delivered

Sample of invoices with invoiced weight, weighed weight and stock, with the difference explained.

06Credits

Export and accumulated credit: the balance that neither turns into cash nor disappears

What weighs: Export creates no debit but keeps the credit, and the balance grows until it needs recognition by the state authority before it can be used.

What DFSpro changes: Credit balance control by state, with the origin of the credit and the path of use.

See the situation, the legal basis and the proof

The situation

The mill exports a large share and accumulates ICMS credit in one or more states.

Legal basis in line

  • LC 87/1996: art. 25, § 1: offset and transfer of the export credit balance, through a document from the competent authority

Proof delivered

Credit balance ledger by state, with the origin by invoice and the transfer request report.

07Foreign trade

Drawback on imported inputs and proof of export of the product

What weighs: The input comes in with suspended taxes and must leave as an exported product, and control by concession act is what supports the suspension.

What DFSpro changes: Control of the concession act by item and by invoice, with the balance left to export.

See the situation, the legal basis and the proof

The situation

The mill imports inputs such as ferroalloys and electrodes for use in making a product that is exported.

Legal basis in line

  • Law 11.945/2009: art. 12: suspension of II, IPI, PIS and Cofins on purchase or import for making an exported product

Proof delivered

Concession act balance report, with import and export invoices.

08Master data

By-products and waste: each output with its own treatment

What weighs: The mill generates slag, gases and process dust, which are sold, reused or discarded, and each destination may change the credit on the inputs.

What DFSpro changes: By-product master data with classification and allocated cost, by destination.

See the situation, the legal basis and the proof

The situation

Part of the by-product is sold, part is used internally and part is discarded.

Legal basis in line

  • LC 87/1996: art. 21, I to III: credit reversal depending on whether the output is not taxed or exempt, or the use is unrelated to the business

Proof delivered

List of by-products with NCM, taxation and destination, and the result of the output test by destination.

09Close

Tax and accounting close: recoverable credit in the cost of steel

What weighs: The product cost does or does not carry recoverable tax depending on the item, and the difference between tax and accounting shows up in the monthly reconciliation.

What DFSpro changes: Automatic monthly reconciliation between ledger and tax calculation, by item.

See the situation, the legal basis and the proof

The situation

The month-end close must explain the balance of ICMS to recover over thousands of items.

Legal basis in line

  • LC 87/1996: art. 20: general rule of the right to ICMS credit

Proof delivered

Reconciliation report by item, with the difference classified and the expected and obtained.

10Migration

From the mill to S/4HANA: batch, special stock and deferred balance in the load

What weighs: Steel batches, deferred balances and assets under construction must reach the new system without losing traceability.

What DFSpro changes: Load reconciled by batch, by state and by concession act.

See the situation, the legal basis and the proof

The situation

The group migrates SAP with a large asset base and balances under suspended regimes.

Legal basis in line

  • LC 87/1996: art. 20, § 5: CIAP in progress at migration

Proof delivered

Reconciliation by batch and by asset between source and target, and a report of the first close.

11Reform

Tax reform: ICMS credit balance and the history by state and origin

What weighs: The Constitution covers ICMS credit balances that still exist at the end of 2032, which will be used after validation, and the history must be organized by state and by origin.

What DFSpro changes: Credit balance file by state and origin, with the supporting documents.

See the situation, the legal basis and the proof

The situation

The mill has an old credit balance and a long chain of purchases and sales between industrial links.

Legal basis in line

  • Federal Constitution, ADCT, art. 134 (EC 132/2023): art. 134, caput and § 3: ICMS credit balances at the end of 2032, validation and offset over the remaining CIAP period or in 240 installments

Proof delivered

Credit balance file by state and origin, with the list of supporting documents and open items.

The tax thesis of each situation is the client's decision. DFSpro designs the behavior in SAP, configures it and proves it with scenarios, so that the decision is carried out the same way in every document. Where to start: the SAP Tax Diagnostic.

Request the SAP Tax Diagnostic
SAP modules and GUEPARDO Tax

From diagnostic to support, and the limit of our role

Where DFSpro steps into the company's environment.

Diagnostic

A survey of what is configured, compared with the rule. See the SAP tax diagnostic.

Project

Setup and testing of the tax rule, the electronic documents and the tax books, and preparation for IBS and CBS.

AMS Fiscal

Monthly follow-up of the changes that hit the sector. See AMS Fiscal for governance.

GUEPARDO Tax

A product of NTT DATA, GUEPARDO Tax reaches the client through DFSpro, which sells the license and implements it as an Authorized Channel. The reach over your case is confirmed in the diagnostic, according to the version and the design.

Related reading

The limit of our role

DFSpro adjusts SAP and shows, with data from the client's environment, that it follows the rule the company chose. The tax thesis, the legal opinion and the reply to the tax authority stay with the client. Our method is in methodology.

Sources

Texts that support this sector

The list separates law, ruling and tax ruling.

Laws and rules (Planalto)

Ruling and tax rulings (official sources)

Accounting standards (CVM)

Frequently asked questions

Frequently asked questions about steel and metallurgy in SAP

01Does DFSpro give an opinion on deferral or credit reversal?+

No. The thesis belongs to the client and its legal team. DFSpro turns the thesis into a setting in SAP and proves the behavior.

02Can SAP control the balance of scrap with deferred ICMS?+

It can, if the master data and the rule by state exist. In São Paulo, Sefaz answered in 2022 that the deferral in art. 392 of RICMS/2000 ends on a sale to another state, abroad or on receipt at an industrial plant. SAP must record the receipt without credit, keep the balance by material and book the tax at the right event.

03What does the Minas Gerais decision on reversal teach?+

That a reversal required by the company's special regime, when made too low, becomes an assessment. SAP must know which sale each input went to and keep the calculation record. It is one specific case, and each company's rule is in its own regime.

04How should the overhaul of a blast furnace be handled in fixed assets?+

By component: write-off of the replaced part, capitalization of the new one and CIAP adjustment, with the asset record in order.

05Is the electricity credit automatic?+

No. LC 87 gives the ICMS credit for energy consumed in the industrial process, and Law 10.833 gives PIS and Cofins credit on energy consumed in the establishments. Separating industrial use from administrative use and linking the bill to the unit is set up and tested.

06Why does coil weight cause a mismatch?+

Because the product is sold by weight and the invoice has a commercial unit and a taxable unit, which may differ. SAP needs a conversion by material and a tolerance defined in the master data.

07What does drawback require from SAP?+

Linking the import declaration, the concession act and the export invoice, and controlling the balance left to prove, because the suspension of taxes in Law 11.945, art. 12, depends on the product being exported.

08Can the export credit balance be transferred?+

LC 87, art. 25, § 1, allows transfer to other taxpayers in the same state, through a document from the competent authority that recognizes the credit. SAP needs the file by state and origin for the request.

09Does GUEPARDO Tax cover scrap deferral?+

The product belongs to NTT DATA and reaches you through DFSpro as an Authorized Channel. DFSpro has not confirmed coverage of scrap deferral and does not promise it. According to the GUEPARDO documentation from NTT DATA, the drawback concession act number comes from the import data and goes to the EFD-Contributions. The reach over your case is confirmed in the diagnostic.

10How to start?+

With the SAP Tax Diagnostic of one closed month, comparing scrap receipts, deferred balance and tax calculation.

11Does the migration to S/4HANA affect CIAP and drawback?+

Yes, because the load carries the asset record, CIAP in progress, the drawback balance and the deferral balance. DFSpro proves the reconciliation before and after go-live.

Next steps

Bring one month of scrap receipts and the tax calculation, and we see what needs proof. No price and no promise of timeline.

Request the Tax DiagnosticCheck your readiness in 2 minutes

To read more first: Tax Reform CBS and IBS and electronic tax documents.