Labor and Social Security Advisory Services

Managing risks and opportunities in the challenging labor and social security environment

www.kpmg.com.br The Brazilian Federal Revenue Service and the e-Social and EFD-Reinf files Ministry of Labor and Social Security (MTPS) As a distinguishing feature, KPMG has VALIDATING LABOR have expanded their a digital compliance tool called KTAX. AND SOCIAL SECURITY inspection activities, for The purpose of KTAX is to validate and COMPLIANCE crosscheck the information inputted example, by enforcing At this level, the validation of several into XML files to uncover possible labor and social security topics will be compliance with accessory differences and inconsistencies in the considered. obligations: (i) eSocial information reported to tax authorities, (Digital Tax Bookkeeping and therefore to find opportunities for VALIDATING CONTENT Records Kept by improving the assessment of taxes. Our tool is also able to crosscheck Employers to Submit Tax, content. VALIDATING THE LAYOUT Social Security and Labor The electronic tool validates all rules Our tool can be customized to meet Information about their and conditions set forth on the last the needs of our clients. Employees to Government version of the manual. Authorities), (ii) EFD-Reinf (Digital Tax Bookkeeping for Withholdings and Other Tax Information), (iii) ECD (Digital Accounting Bookkeeping), (iv) ECF (Tax Accounting Bookkeeping), Making a diagnosis. Reviewing “AS Implementing (v) among others, in order Identifying gaps and IS” and “TO BE” procedures to allow tax authorities to opportunities procedures - crosscheck the information reported to them in further detail. Considering the current rhythm of business practices, it is of utmost importance that companies can rely on an advisory firm whose services are focused on those issues to support Monitoring Contracts with Third Parties them in assessing and managing the risks arising (Third-Party Management) from labor relationships and the need for Continuous monitoring. We have the Among the several benefits and compliance with the KTAX tool, which includes a MCT distinguishing features, we can several laws in effect. module that allows clients to receive mention (i) a decrease in legal liabilities, and submit documents, reports, (ii) compliance with EFD-Reinf Bearing that in mind, analyses, among other information. This requirements, (iii) risk assessment KPMG has a highly gives them more speed and security and planning, (iv) low impact of the specialized team of legal in managing third parties and allows implementation of the procedures on counselors, accountants, them to carry out work in a customized the company, (v) encouragement to managers, economists and safe virtual environment remotely. the effective enforcement of contracts. – focused on ensuring compliance of labor (i), (ii) social security and (iii) tax procedures with legal requirements to help Designing and redesigning clients find the best Making a diagnosis procedure answer for their business practice. Check some of the services we offer: Reviewing contracts Among others Defense in administrative Construction work proceedings that discuss the FAP (Percentage Applied to Monitor monthly compliance – CEI (Specific Social Security Register) / CNO Prevent Occupational Accidents) (National Construction Work Register) The idea behind the work is to:

Correct entries made into the CEI/CNO

Reduce the occurrence of events that have an impact on the calculation of the FAP (frequency, seriousness and cost) Check internal controls and procedures

Cut costs

Reduce the number of leaves in terms of number of events and periods Assistance to expatriates

Prepare supporting documentation for any inspections Provide planning, labor and social security advisory services

Correction of accessory obligations. Formulate expatriate policies Study the benefits granted to employees and their legal outcomes. The following examples can be mentioned: Apply international treaties

SEFIP (System for the Payment and Collection of Information about the FGTS and Social Security Contributions)/GFIP (Form for the Payment and Collection of Information about the FGTS and Social Security Contributions)

Termination agreements

Among others Labor Law Reform Opportunities

The purpose of engagements of this nature is to offer the possibility of reducing the high social security charges imposed on companies

Diagnosis of the labor procedures followed by the Company, in accordance with Law No. 13,047/2017 (Labor Law Reform)

Determine social security credits

Prepare HR and benefit policies, in accordance with current labor law Cut payroll costs

Provide support for the company to negotiate collective labor agreements and collective Review social security classification bargaining agreements

Evaluate the profit sharing scheme Calculate the RAT (Occupational Accident Risk) and FAP indices

Assess ICMS (State VAT) on CPRB (Social Security Contribution on Assess benefits and the metrics for Gross Revenue) mitigating labor risks

Assess ISS (Service Tax) on CPRB Redesign labor procedures – “AS IS” and “TO (Social Security Contribution on BE” Gross Revenue)

Analyze benefits and prepare a memorandum for assurance purposes Management and monitoring of employees on leave

Provide specific advisory services. Payroll Benefits

Study the benefits granted to employees and their legal outcomes. The following Taxation examples can be mentioned:

Procedures and review Stock Plans (Stock Options, RSU, ESPP, among others)

Quality Assurance Vehicles

Evaluate the CBO (Brazilian Classification of Jobs) Medical and Dental Care

Calculate provisions for labor and social security expenses and Education allowance assess their accounting impacts

Review the amounts provided for Compensation policies for labor proceedings Calculate and withdraw court Among others deposits for ongoing labor proceedings

The purpose of these services is to decrease the accruals made in trial balance sheets and ensure a better compliance and view of accounting and legal practices. About KPMG

KPMG is a global network of professional services firms KPMG in Brazil has offices located in São Paulo (head providing Audit, Tax and Advisory services. We operate office), Belém, Belo Horizonte, Brasília, Campinas, in 154 countries and territories and have 200,000 people Cuiabá, Curitiba, Florianópolis, Fortaleza, Goiânia, working in member firms around the world. Joinville, Londrina, Manaus, Osasco, Porto Alegre, Recife, Ribeirão Preto, Rio de Janeiro, Salvador, São In Brazil, approximately 4,000 professionals work in Carlos, São José dos Campos and Uberlândia. 22 cities located in 13 States and the Federal District.

Valter Shimidu Alexandre Haruno Juliana Brochado Partner Senior Manager Manager [email protected] [email protected] [email protected] Phone: + 55 (11) 3940-3269 Phone: + 55 (11) 3940-4371 Phone: + 55 (11) 3940-4702

www.kpmg.com.br

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© 2018 KPMG Assessores Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Brazil. The KPMG name and logo are registered trademarks or trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.