Brazil

Welcome to the high-level summary of Covid-19 related actions by the Brazilian Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan and Support Programs”; and are simply extracts from the more detailed information available on the websites of the Brazilian Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in Brazil are Mazars and VBR Brasil Group.

Tax Filing Affected

Income Tax

  • Filing of Income Tax returns have been postponed from April 30th to June 30st, 2020.

Social Contributions The Government changed the deadline for the payment of PIS / PASEP and COFINS due by companies, related to March and April 2020 powers, which would take place in April and May 2020, for August and October 2020, respectively.

  • March / 2020 - will expire on 08/25/2020 (original expiration on 04/24/2020)
  • April / 2020 - will expire on 10/23/2020 (original expiration on 05/25/2020) Unemployment Benefit Fund
  • Extension of the FGTS payment period from March to May 2020 may be deferred (postponed) for up to 6 months.
  • The FGTS payment of these competences may also be made in up to 6 monthly installments, with maturity on the seventh day of each month, starting in July 2020, without the impact of updating, fine and charges - reference rate and interest of 0.5 % am

To reduce the economic impacts of Covid-19 on companies, the federal government has extended the deadline for paying taxes. Companies won a longer term for payment of PIS / Pasep, Cofins and Employer Social Security Contributions for May 2020 . Contributions referring to the competence of May 2020 must be paid on the due date of the contributions due in the competence of October of this year.

Unemployment Benefit Fund

  • Extension of the FGTS payment period from March to May 2020 may be deferred (postponed) for up to 6 months.
  • The FGTS payment of these competences may also be made in up to 6 monthly installments, with maturity on the seventh day of each month, starting in July 2020, without the impact of updating, fine and charges - reference rate and interest of 0.5 % am

Excise tax (IPI) e Import Tax (II) - Rates of hygiene items, products and medical-hospital accessories. Reduction to zero of II and IPI rates on imports of ethyl alcohol, acids, disinfectants, antiseptic gels, clothing, accessories, safety equipment and protective devices until September 2020.

Simple national Extension of the period for payment of federal taxes for up to 180 days:

  • Generating event of March 2020, maturing on 4/20/2020 has the maturity extended until 10/20/2020.
  • Generating event of April 2020, with maturity on 20/05/2020 has the maturity extended until 11/20/2020.
  • Generating event of May 2020, maturing on 06/22/2020 has the maturity extended until 12/21/2020. Extension of the deadline for payment of state and municipal taxes for up to 90 days:
  • Generating event of March 2020, with maturity on 04/20/2020 has the maturity extended until 07/20/2020.
  • Generating event of April 2020, maturing on 5/20/2020 has the maturity extended until 8/20/2020.
  • Generating event of May 2020, maturing on 06/22/2020 has the maturity extended until 09/21/2020. DIRPF
  • The extension of the (i) DIRPF delivery term and (ii) the maturity of the first or single quota to 06/30/2020.

Government Employee Wages Benefits Programs

MP 936 - Emergency Employment and Income Maintenance Program The government has disciplined labor measures aimed at maintaining jobs, among which the following stand out: 1.The payment of Emergency Benefits for the Preservation of Employment and Income.

  • The Benefit will be financed by Federal Union resources for the duration of the reduction or suspension of the contract and will be paid directly to the employee who has accepted to reduced working hours or suspension of employment contract
  • The value of the benefit will be based on the monthly unemployment insurance amount to which the employee would be entitled and does not prevent the concession or change the amount of unemployment insurance to which the employee is entitled
  • Anyone who receives any benefit from the continued provision of the General Social Security Regime or the Public Servants` Social Security Regimes or on unemployment benefits program will not be entitled to the benefit.
  • Pensioners and accident-relief holders can receive it.
  • The monthly compensatory allowance eventually granted by the employer (provided for in item 3) will not have a “salary nature” (for payroll taxes purposes), and therefore will not be part of the calculation base of income tax or in the individual's adjustment statement, nor of the basis of calculation of the social security contribution and other taxes on the payroll and nor included in the calculation base of the amount due to the FGTS (Unemployment Benefit Fund).

2. Proportional reduction of working hours and wages According to the MP, companies may agree to proportionally reduce their employees' working hours and wages, for a maximum period of 90 days, during the state of public calamity, respecting the following conditions:

  • Maintain the value of hourly wages when calculating the reduction.
  • Sign individual written agreement between employer and employee, the proposal must be sent to the employee 48 hours in advance
  • Do not dismiss the employee during the reduction period and after the reinstatement of the day for a period equivalent to the reduction. Example: reduction of 2 months, guarantees stability of 2 months and of 2 more, for a total of 4 months The reductions may be 25%, 50% and 70% of the workday and proportional to the employee's salary and the government's counterpart will be 25%, 50% and 70% of the amount of unemployment insurance that he would receive if he were dismissed to supplement the salary. employee's income.

3. Temporary suspension of the employment contract By the MP, companies may agree to suspend the employment contract with employees. These employees will receive the Emergency Job and Income Preservation Benefit for a maximum period of 60 days, subject to the following conditions:

  • Sign an individual agreement for the suspension of the written employment contract between employer and employee, and the proposal must be sent to the employee 48 hours in advance;
  • Maintain the benefits paid to employees during the contractual suspension period;
  • During the suspension of the employment contract, the employee cannot remain working for the employer, even partially, through teleworking, remote work or distance work;
  • Do not dismiss the employee during the suspension period and after the reinstatement of the day for a period equivalent to the suspension period.
  • If the gross revenue of the company is up to R$4.8 million a year, then there is no mandatory monthly compensation paid by the employer and the amount of the benefit is 100% of the amount of the unemployment benefit,
  • If the gross revenue of the company is greater than R$4.8 million a year, then there is a mandatory monthly compensation paid by the employer of 30% of the employee’s salary, and the amount of the benefit is 70% of the amount of the unemployment benefit,

Payment of emergency aid for self-employed and informal workers.

  • The government approved the monthly payment of emergency aid, in the amount of R $ 600.00, destined to self-employed, informal workers and without fixed income during the period of three months.

Small and Medium Business Credit line for payment of wages

  • Emergency line of financing for payment of wages of workers employed in small and medium-sized companies.
  • According to the information provided by the Federal Government, this line of financing must comply with the following guidelines: the financing will be available to companies with revenues between BRL 360 thousand and BRL 10 million per year, the money will be exclusive for payroll, the company will have a 6-month grace period and 36 months to repay the loan, and interest will be 3.75% per year.

MP 927/2020 Postponement of FGTS payments

  • The benefit granted to all employees legally registered in Brazil, due by the employers on a monthly basis;
  • The demand for the payment of FGTS by employers, from March through May 2020, may be temporarily suspended;
  • Employers will be able to utilize such model regardless of the number of employees, the taxation regime, the legal nature, the line of service in which the entity operates;
  • The payments related to the periods listed above can now be settled in up to 6 (six) monthly installments, being due on the seventh day of each month from July 2020, with no interests and fines;
  • The employer must submit the information by June 20th, 2020, observing that: the information provided will constitute the recognition of the debt; the undeclared amounts will be considered not settled, hence, in arrears and will require full payment including interest and fines;
  • In the event of termination of the employment contract, the employer will be obliged to: the payment of the corresponding amounts, without penalty and charges, if made on time; Make the deposits of amounts as predicted by Law the establish with future mature days will be done immediately as predict by Law the installments will have their maturity date anticipated for the term appliable to the payment provided for in art. 18 of Law 8.036 of 1990.
  • The installments that aren’t settled within the terms dictated by the MP, will be subject to fines and charges under the terms of art. 22 of Law 8,036 of 1990.

Government Loan and Support Programs

Contributions to " Sistema S "

  • The government has halved the companies' mandatory contributions to the “System S”. Only the contribution rates to Sebrae did not change.
  • National Cooperative Learning Service ( Sescoop ) - 1.25%;
  • Social Service for Industry (Sesi), Social Service for Commerce ( Sesc ) and Social Service for Transport (Sest) - 0.75%;
  • National Commercial Apprenticeship Service ( Senac ), National Industrial Apprenticeship Service (Senai) and National Transport Apprenticeship Service ( Senat ) - 0.05%; and
  • National Rural Learning Service (Senar): 1.25% of the contribution levied on the payroll; 0.125% of the contribution levied on the revenue from the commercialization of rural production owed by the rural producer and by the agroindustry; 0.10% of the contribution levied on the revenue from the commercialization of rural production due by the individual rural producer and special insured.

IOF (Tax on Financial Operations)

  • The IOF rate on credit operations for 90 days has been reduced to zero (period between April 3, 2020 and July 3, 2020)

IPI and II (Tax on Industrialized Products)

  • Reduction to zero of II and IPI rates, until September 2020, of various products, such as: ethyl alcohol, acids, disinfectants, antiseptic gels, clothing, accessories, safety equipment, protective devices, laboratory or pharmacy items , gloves and clinical thermometers.

Assistance in RFB Units and administrative and procedural measures until 05/29/2020:

  • All face-to-face assistance must be scheduled, being restricted to the following subjects: Regularization of CPF; ii) copy of DIRPF and DIRF-beneficiary. Installment payments and installments not available on the Internet. Powers of attorney in the RFB. Services protocol related to tax regularity at the National Treasury, of rural property, registration of civil construction work, payment rectifications and CNPJ.
  • And the following measures are suspended for the same period: Electronic issuance of billing notice and subpoena for payment of taxes. Notification of the launch of the tax network of the individual. Procedure for exclusion of taxpayer in installments due to default of installments. Registration of pending regularization at the CPF due to the absence of a declaration. Electronic issuance of decision-making orders with the rejection of Perd / Comp, and non-approval of Clearing Statements - payments for granted orders will not be impacted.

Suspension of procedural terms and collection of federal debts registered in active debt The following procedures are suspended for 90 days, starting on 03/18/2020:

  • Deadline for challenge and decision appeal Administrative Procedure for Recognizing Responsibility (PARR).
  • Deadline for submitting nonconformities and appeal for exclusion from the Special Tax Regularization Program (Pert).
  • Term of early offer of guarantee in tax execution, time limit for submission of Request for Inscription of Registered Debt (PRDI) and appeal against the decision that rejects it.
  • Presentation of protest of active debt certificates.
  • Establishment of new PARR administrative procedures.
  • Initiation of procedures to exclude taxpayers from installments due to default of installments.

Emergency line of financing for payment of wages of workers employed in small and medium-sized companies. This financing line must comply with the following guidelines:

  • The financing will be available to companies with revenues between R $ 360 thousand and R $ 10 million per year.
  • The money will be exclusive for payroll, for a period of two months, limited to the amount equivalent to up to twice the minimum wage per employee.
  • The company will have a 6-month grace period and 36 months to repay the loan.
  • Interest will be 3.75% per year.

Improvement of the Liquidity Ratio rules

  • Improvement of the liquidity coverage ratio rules to safely reduce costs of liquidity requirements of Brazilian institutions – Brazil has traditionally high interest rates to consumers and Companies. This specific measure has had very small impact in the general reduction of rates to the public. A small number of large banks prevent competition. Reduction in Reserve Requirements
  • Additional reduction in reserve requirements to release liquidity to banks – Central Bank zeroed the “compulsory deposits” mechanism used for decades to reduce general liquidity, as a form to control the monetary base.

Extraordinary Tax Transaction Law

  • Law 13,988 / 2020 (conversion of Provisional Measure No. 899/2019) establishes the guidelines for tax transactions and highlights the end of the quality vote in CARF - Administrative Council for Tax Appeals (Brazilian Administrative Tax Court).
  • The law regulates the tax transaction (agreements for payment of debts by granting benefits, if necessary) provided for in the National Tax Code (CTN) for cases of collection of the Union's active debt and tax litigation. The transaction cannot reduce the principal amount, and may have the following: Granting discounts on fines, interest on late payments, and legal charges, when classified as irrecoverable or difficult to recover; Term and payment methods, including deferral and moratorium; and Offering, replacement or sale of guarantees and constraints.
  • The debts that may be the subject of the transaction are those with the Brazilian Internal Revenue Service that have not yet been judicialized, those within the jurisdiction of the Federal Attorney General's Office (PGU), the Federal Attorney General's Office (PGF) and the National Treasury Office (PGFN) . Debts of a non-tax nature are also included.

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Further Covid-19 advice

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The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.