Brazil Boosts Formal Domestic Work Allowing Tax Deduction

In comments about the provisional measure (Medida Provisória, MP) that establishes incentives for the formalization of domestic work, Brazilian Minister Nilcéa Freire, special secretary of Policies for Women, said that the government is attempting to reduce informality in this area.

Domestic work is one of the sectors with the largest contingent of female workers in Brazil and in which employment is the least secure. Brazil has 6.5 million domestic workers, 4.8 million of whom belong to the informal economy.

According to the Minister, by allowing taxpayers to discount the annual sum they contribute to Social Security on behalf of their employees – equivalent to 12% of employees’ salaries -, the government is telling society that it is willing to share this burden, which represents the cost of citizenship and social justice.

The discount, which for each taxpayer will be limited to the contribution for a single domestic worker who earns the minimum wage, will not be lumped together with other deductions, such as educational and medical expenses and allowances for dependents. Instead, it will be subtracted at the end from the amount of tax owed.

According to the secretary of Social Security, Helmut Schwarzer, with this measure the federal government initially expects to remove 1.12 million domestic workers from the informal economy.

ABr

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