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By Ed Taylor
March 13—After a delay of nearly a year, the Brazilian government on Feb. 25 released the final version of the manual that will guide companies in adapting to the country's new digital system for the presentation of employee data.
Under what is being called the E-Social system, information on company employees must be registered online with the tax department as soon as it becomes available. Newly hired employees must be immediately included in the system and any alterations in their status registered within a specified period.
Companies will also be required to maintain up-to-date information on their total payroll, tax and social security payments.
With this wealth of information, provided practically in real time, tax department auditors will be able to cross check company tax information with data on salaries and benefits paid to employees. In addition, the labor ministry will have immediate access to information on dismissals, vacations, sick leaves and overtime pay.
The E-Social system was supposed to take effect last April but was delayed at the request of companies that warned they were confused by the first instruction manual released in January 2014.
With the release of what is being called version 2.0 of the 205-page manual, companies with annual revenues in excess of $27 million that pay their taxes based on real profits will now have six months to develop their internal systems and another six months to test them. The new manual is available in Portuguese on a special E-Social web site: http://www.esocial.gov.br/leiautes.aspx.
Human resources consultants and attorneys reacted favorably to the revised manual.
“The manual is much more simplified,” said Angela Rachid, products manager for the Brazil unit of ADP.
Excluded from the new version are requirements to include information on vacation notices, the start and end of job stability periods and invoices from service providers retaining social security payments, although “this doesn't mean that such information won't be demanded via other means,” Rachid said.
Rachid added that the manual now permits incomplete information on new employees to be filed under certain circumstances, for example: “If the person responsible is outside the company, he can include just an identify card number and the starting date of the new employee and he will have three more days to provide all of the required information.”
For attorney Caio Taniguchi of the law firm Aidar SBZ Attorneys, “the new manual is more clear and detailed than the previous one but the characteristics and goals of E-Social remain the same.”
Any change in the circumstances of a particular employee must be entered into the system. Information on new employees must be sent before they start work rather than within seven days of their start dates as currently. Information on workplace accidents and employee terminations must be sent by the next working day, and on-the-job deaths must be reported immediately.
Company payments for payroll, social security, severance, union fees and income taxes must be entered into the system by the seventh day of the following month.
To be compliant with the E-Social system, companies will have to provide information from their human resources, finance and legal departments, requiring greater integration of company data, and some continue to be concerned that with this wealth of information provided to government agencies in real time, they will face an increase in tax and labor assessments.
To contact the reporter on this story: Ed Taylor in Rio de Janeiro at email@example.com
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The E-Social manual is available in Portuguese at http://www.esocial.gov.br/leiautes.aspx.
For more information on Brazilian HR law and regulation, see the Brazil primer.
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