Among the many business impacts brought on by the COVID-19 pandemic and resulting economic unrest are a slew of legislative changes and recommendations. Here are some important updates to know about if you have employees, and thus payroll, in Brazil.
Extensions for compliance filings
The Brazilian IRS has extended the transmission deadlines for the digital tax bookkeeping system (EFD-contributions) for April, May and June to the 10th working day in July.
For individuals, income tax declarations for the 2019 calendar year have been extended to June 30.
Extensions for payment deadlines
The Brazilian government has suspended federal tax debt and collection procedures for 90 days. Social security contribution (COFINS) and social integration contribution (PIS/PASEP) payments have also been postponed from April and May to August and October.
Additionally, Brazilian entities taxed under Simples Nacional Tax Regime may receive a six-month deferral of the federal portion of taxes and Guarantee Fund for Time of Service (FGTS) payments have been suspended for three months.
Special considerations or recommendations—as an employer or for employees—to keep in mind
To reduce economic effects from the global pandemic, social contributions collected from companies by Sistema S have been reduced by 50% for three months.
Micro and small companies have gained access to a total of $5 billion (BRL) in financing credit from the Workers’ Assistance Fund. And you’re no longer required to have a debt and federal tax clearance certificate to renegotiate the terms of credit.
For employees, the right to receive FGTS payments previously made by the employer to their individual accounts has been suspended.
Programs or initiatives to help employers manage employee relations
The Brazilian government has issued several provisional measures to help employers better manage employee relations during the current crisis. Here are some of the policies outlined in these new measures.
Reducing salary and working hours: Salary and work hour reductions are allowed for up to 90 days. Upon the employees’ return to work, their pay rate, hours and tenure must be reinstated.
The government is responsible for paying the Income Preservation Benefit (the “Benefit”) if salary or hours are reduced. Employees who receive the Benefit can still receive unemployment insurance benefits. And there is no obligation to have collective negotiations for employees who earn less than $3,135 or more than $12,202 (BRL).
Employers must give notice for salary and hours reduction or they may receive legal sanctions or fines for failing to comply. Collective bargaining agreements may provide different reduction and notice requirements.
Using accrued or unused paid leave: The use of accrued and unused paid leave is authorized, in addition to the use of holidays still being accrued and holidays for which the accruing period has not even started.
Suspending employment agreements: Suspension of employment agreements, or furloughs, are allowed for up to 60 days. During the suspension period, employees’ current pay rate, hours and tenure must be preserved and employees are entitled to all employer-provided benefits.
The Brazilian government pays 100% of the unemployment insurance that employees would normally be entitled. For employers who earned more than $4,800,000 (BRL) gross revenue in 2019, the government will pay 70% of the unemployment insurance, as long as employers pay 30% of their employees’ salary during suspension.
Employers must give notice for any reduction. If employees work during a suspension, including telework, then employers may receive legal sanctions and fines.
Although this information is correct and up to date as of this publishing, changes are happening frequently. Our local market teams and in-country experts are keeping up with all regulatory amendments, and we’re available to assist you and your organization as you work through payroll and HR challenges in Brazil. Contact us today.
You can also find more information for payroll, HR and workforce impacts in our COVID-19 Resource Center, which we’re updating frequently.
The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.