What is PIS/PASEP in Brazil?

Both PIS and PASEP are social contributions paid by the private sector and the public sector. Both have the objective of better distributing income among workers who receive lower wages.

As “Programa de Integração Social/PIS” (Social Integration Program), employees in the private sector have access to benefits determined by law and also contribute to the development of companies in the sector. Through Complementary Law No. 7/1970, the “Programa de Integração Social/PIS” (Social Integration Program) was created. The acronym PASEP stands for “Programa de Formação do Patrimônio do Servidor Público” (Civil Servant Asset Formation Program). The purpose of this program is the same as the PIS, but those responsible for the deposit are public agencies and companies. The PASEP is managed by “Banco do Brasil” (Bank of Brazil).

Read too: Brazilian CPOM: What Your Business Needs to Know

What is it for?

The objectives of the PIS and PASEP are: to integrate the employee into the life and development of companies; ensure that employees and public servants enjoy progressive individual assets; encourage savings and correct distortions in income distribution.

Read too: Learn About Simples Nacional’s Monthly and Annual Obligations

Who gets it?

Only workers who are enrolled in the Social Integration Program receive PIS through Caixa Econômica (Caixa Federal Bank). The payment of PIS is only made to workers with a formal contract, who performed their duties in that period and who have not yet withdrawn the money. Federal, state and municipal civil servants and employees of public companies and government-controlled companies are enrolled in PASEP, regardless of the legal regime to which the employment relationship is subordinated (single legal regime, employment agreement or governed by specific legislation).

Read too: Open Company In Brazil: How to Start

Who needs to have PIS/PASEP?

Workers registered with the PIS/PASEP for 5 years or more are entitled to receive the allowance, who have been correctly declared in the Annual Social Information List (RAIS), received an average of up to 2 minimum wages in the payment reference year and worked at least 30 days in the year 2020.

Read too: Accounting Firm for Multinationals in Brazil: Why Outsource This Service?

If you want to rely on experienced accounting advice, capable of providing the best strategies for your company to improve financial performance, get to know CLM Controller’s solutions now.