If you’re willing to set-up a business in Brazil, you might have heard of the E-social service. In the following lines, we’ll give you all the info regarding this digital system which directly impacts the local companies. You’re planning to start a new business in Brazil and need advice to optimize the launching and management of your activity ? Feel free to contact our team of experts on the brazilian labour market and accounting firms in Brazil.

What’s the E-social service about ?

The digital accounting system for social security and work obligations (eSocial) is a project that is part of the public digital accounting system (Sped), carried out by the federal government.

Its goal is to maintain a virtual national environment for receiving social security, labor and tax information from businesses of all segments and sizes.

Through this platform, a unified communication is established in a place that has different information of workers, such as social security contributions, payroll, notice, Workplace Compensation Communication (WCB), etc. .

The data is managed by the following organizations:

• Ministry of Labor and Employment;
• IRS;
• Caixa Econômica Federal;
• National Institute of Social Security (INSS);
• Ministry of Social Security

The emergence of eSocial

This project was created with the aim of computerizing worker data and simplifying their sending by companies.

Its official institution took place by Decree 8 373/2014.

It is a process of digital transformation. Its main objective was to fight tax evasion and the underground economy, which generated a turnover of 16.3% of the gross domestic product (GDP) in 2016, according to Jornal Contábil.

Along with these intentions, the new environment also reduces bureaucracy, increases security and autonomy in the processing and use of organizational data.

Therefore, even if it seems at first glance an obstacle, the new system tends to become a facility for companies in the medium to long term, as long as they are prepared for this scenario.

The impact of the E-social service on brazilian companies

Medium and large companies, with revenues of over R $ 78 million, have been using the platform since January 2018.

However, as of July 1, this requirement began to be made for micro and small businesses – which cover 99% of establishments in the country, according to Sebrae – and, therefore, they must also adapt.

In fact, it is expected that even rural producers and individual microentrepreneurs (MEIs) will have to use this new environment in the future.

Why is this happening?

The explanation is simple : the platform allows all employers and workers to be connected to federal government agencies.

In addition, the obligations of the various entities have been unified and information is now centralized.

The result is greater transparency for the company and employees, as well as increased control and the assurance that all requirements are strictly observed by the parties involved.

Despite these positive points, the Contábeis website pointed out that 80% of companies do not meet the legal deadlines to make these adjustments. However, this measure can lead to heavy fines.

You’re planning to start a new business in Brazil and need advice to optimize the launching and management of your activity ? Feel free to contact our team of experts on the brazilian labour market.