Brazil's Lula camp weighs social security levy on firms using contractors
Brazil's government, eyeing Lula's re-election, is studying measures to make firms with many contractors pay social security contributions.
The Brazilian government is exploring ways to limit the widespread practice of hiring workers as independent legal entities, a move that could help reduce the country's pension deficit and extend social security coverage, Finance Minister Dario Durigan said on Monday.
Speaking to the news service of local newspaper Estadao, Durigan outlined a potential mechanism: companies with a large share of their workforce classified as contractors could be required to make social security contributions on their behalf.
"A company that has 80% of its workforce employed as independent contractors, you may eventually require that firm to make a social security contribution," he said.
The arrangement, common in Brazil, allows workers to receive higher gross pay while firms avoid payroll taxes, severance-fund payments, and other benefits. Durigan, introduced as a representative of President Luiz Inacio Lula da Silva's re-election campaign, also called for a broader review of corporate taxation, including discussions on payroll taxes and interest on equity, a form of shareholder remuneration.