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17 February 2023
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Payroll compliance in Brazil

In late 2017, Brazil implemented major reforms to its labour laws designed to create a more business-friendly environment, promote job creation and make it easier for employers to pay their employees. However, Brazil still ranks number one for the complexity of its business environment in TMF Group’s 2022 Global Business Complexity Index, making the most challenging country in which to do business and stay compliant with payroll-related labour laws.

As part of its 2017 labour reforms, the Brazilian government also introduced ‘eSocial’, a digital system for bookkeeping, tax, social security and labour obligations. It is intended to help employers meet their obligations around hiring, paying and firing employees by enabling electronic declaration and submission of information to government.

  • Brazil’s labour laws are constituted in the Federal Constitution and Consolidated Labour Laws (CLT), which guarantee specific rights to every employee.
  • All employees in the country must have a work booklet (carteira de trabalho e seguridade social, CTPS), where employers record the terms of the employment. This paper document is starting to be replaced an app (carteira de trabalho digital).
  • Brazilian employees are typically paid monthly, with a mandatory 13th month paid as a bonus in two parts – the first must be paid by 20 November and the second in December. It is also common for companies in Brazil to have a profit-sharing plan that provides a percentage of company earnings to employees once a year.
  • With almost all companies in Brazil operating under several different unions, employee benefits vary widely. They might include meal cards, food store cards, health insurance and life insurances, and typically the cost of these benefits is covered by a small deduction from employees’ payroll with the rest covered by the employer.

If you’re doing business in Brazil and are looking to learn more about Brazil’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Brazil

Payroll compliance guide

The global payroll compliance landscape can be a difficult one to navigate and interpret. Overseas businesses can be subject to greater scrutiny on the part of local governments, regulators and tax authorities.

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