Brazilian Economy 2020: Tax, financial, labour and social security initiatives in Brazil in response to Coronavirus

Aug 19, 2020

Brazilian Economy 2020: Given the health crisis caused by coronavirus we are currently facing and the forecast of the reduction of business activities in various segments, it was necessary to adapt and develop new strategies to get through the new global economic reality.

In a close perspective, we expect an economic recovery where revenues will grow again, and jobs are maintained. However, in the scenario of uncertainties and the constant growth of cases in Brazil. Has generated concerns and impacts on companies, putting many of them in crisis.

The Federal Government has been editing measures to minimize the negative impacts of Covid-19 on business, either by postponing the payment of taxes, the presentation of ancillary tax obligations or by developing programs to preserve employment.

Here are some aspects for you to escape the Business crisis in Brazil.

Labor and Social Security Management

The expected interim measures set to prevent mass layoffs and help companies maintain their employees during the coronavirus pandemic.

  • Use of the benefits established through Provisional Measures 927, 932 and 936 to cope with the crisis. Among the benefits are collective vacation, the anticipation of holidays and holidays, reduction of the Employer’s Social Security Contribution for Other Entities, suspension of the employment contract and reduction of the work hours.
  • Labor and Social Security Review: to identify and quantify possible liabilities and presenting suggestions and recommendations for improvement in the processes adopted by the company to mitigate risks.
  • Review of the social security framework and the Accident Prevention Factor (FAP) that affect the rates applicable to the company.

Financial Management

It is time to maintain a high level of control over finances, given the economic instability of the moment and the drop-in revenues that affect most businesses. Therefore, you must: Analyze cash flow, identifying expenses that can be eliminated. Plan in the short term by establishing an action plan on top of provisioning of expenditure and cuts that can be adopted. Evaluating the hiring of specialized advice, having support for both the performance of operational tasks and consulting makes a difference at a time when the entrepreneur has so many strategic points of the business to rethink.

Tax Management

With the advance of Coronavirus, the Federal Union and states adopted some measures to assist taxpayers throughout the country in fulfilling their tax obligations, postponing several obligations, within their competences.

Because measures can ensure more time to organize or even contribute to account relief, it’s good to keep up with the changes. Here are a few:

  • Extension of the delivery period of EFD Contributions and DCTF due for April, May and June: extended to 14/07/2020 and 21/07/2020 respectively.
  • Extension of the delivery time of ECD 2020 for the calendar year 2019 to 31/07/2020.
  • Postponement of delivery of CBE – Brazilian Capitals abroad Quarterly: presentation between 15/06/2020 and 15/07/2020.
  • Postponement, suspension and/or instalment of taxes:

There are also recent measures published allowing the extension of the payment of taxes and in instalments. There are both rules in force for federal tax debts, as well as for states and municipalities. One of them is the suspension of contributions to the FGTS for three months. Amounts from April to June will be paid from July to December, in 6 instalments, without fines or charges.

Given the scenario caused by the coronavirus, an accounting, financial, labour and administrative advisory takes a strategic position for those who seek not to enter into business crisesassuming a role with an integrated vision, assisting managers with the most up-to-date and accurate information. With that, the company can make the most assertive decisions and expanding the vision for new opportunities. Choose GM Venture, as your partner to support your company that is already in the country or if you consider opening a company in Brazil.

 

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