Brazilian Tax Authority Rule No. 1,597/2015: Regulation Of The Choice Between Social Contribution Levied On Gross Revenues To Replace Social Contribution Levied On Payroll, As Established By Law No. 13,161/2015 - Withholding Tax

On December 3rd, 2015, Brazilian Tax Authority Rule No. 1,597/2015 ("IN 1,597/2015") was published regulating the choice that taxpayers should make between Social Contribution levied on Gross Revenues or Social Contributions levied on Payroll, as established by Law No. 13,161/2015.

In accordance with IN 1,597/2015, companies that develop the activities or produce the goods contemplated by Annexes I and II to Brazilian Tax Authority Rule No. 1,436/2013 will have to pay Social Contribution levied on Gross Revenues until November 30th, 2015. From December 1st, 2015 onwards, companies will be able to choose between Social Contribution levied on Gross Revenues or Social Contributions levied on Payroll.

In this sense, the option for December/2015 should be made upon payment of Social Contribution levied on Gross Revenues in such month. From 2016 onwards, the choice will be made upon payment of Social Contribution levied on Gross Revenues relating to January of each year or the first month in which there are accrued gross revenues. This option will be irreversible for the whole calendar year.

The withholding of 3.5% of the total amount of an invoice provided through the assignment of labor will be compulsory for the cases in which the provider of services has chosen Social Contribution on Gross Revenues. If the provider of services has chosen Social Contributions levied on Payroll, the withholding will be due at the rate of 11%.

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.