BRAZIL Law and Practice Contributed by: Ricardo Barretto Ferreira da Silva and Camila Sabino Del Sasso, Azevedo Sette Advogados
optional but encouraged to promote direct dia - logue. In addition, for workplace safety, companies must establish an Internal Commission for Acci - dent Prevention ( Comissão Interna de Prevenção de Acidentes , or CIPA) when they reach a certain number of employees, depending on the sector. The CIPA was established by NR-5 (a regula - tory standard that refers to CIPA, created by the Ministry of Labour and Employment). The CIPA includes employee representatives elected by the workforce and plays a key role in monitor - ing and improving health and safety conditions at work. In summary, employee representation in Brazil is union-based and supported by mechanisms such as the CIPA and optional workplace rep - resentatives. Obligations for consultation or information-sharing depend on company size, sector regulations, and collective agreements. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers As part of an employment relationship, employ - ees and employers are required to pay various taxes and contributions in Brazil. These taxes are intended to finance social security, the health system, unemployment benefits, and other gov - ernment programs. Employees must pay income tax ( imposto de renda retido na fonte , or IRRF), social security ( Instituto Nacional do Seguro Social , or INSS) contributions, and FGTS contribution (which is not directly paid by the employee but is deduct - ed from their salary). On the other hand, employ - ers need to pay employer social security contri -
butions, FGTS severance funds, labour accident insurance ( Seguro de Acidente de Trabalho , or SAT), social contributions for third parties, and payroll taxes – namely, the Social Interaction Programme ( Programa de Integração Social, or PIS )/Civil Servant Asset Formation Programme ( Programa de Formação do Patrimônio do Servi- dor Público , or PASEP) and the Contribution for the Financing of Social Security ( Contribuição para o Financiamento da Seguridade Social , or COFINS). In December 2023, Brazil’s Congress and Sen - ate approved a constitutional amendment that marks a major step in the country’s tax reform. However, the transition to this new system will take place gradually, starting in 2026. Considering the new rules, minor changes are planned regarding taxes currently paid by employers and employees, such as the follow - ing. • The rate of the social security contribution on payroll has been reduced for certain sectors, with progressive rates until 2027. By way of example, for collective road passenger transport companies, the rate will be 10% in 2024, gradually increasing to 16.5% in 2027. For other sectors, the rates vary from 15% to 18.75% over the same period. • Taxes such as PIS, COFINS, sales tax ( Imposto sobre Circulação de Mercadorias e Serviços , or ICMS) and service tax ( Imposto Sobre Serviços , or ISS) will be combined into two new taxes: the Contribution for Goods and Services ( Contribuição sobre Bens e Serviços , or CBS) and the Tax on Goods and Services ( Imposto sobre Bens e Serviços , orIBS).
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