On December 3rd, 2015, Brazilian Tax Authority Rule No. 1,597/2015 (“IN 1,597/2015”) was published regulating the choice that taxpayers should make between Social Contribution levied on Gross Revenues or Social Contributions levied on Payroll, as established by Law No. 13,161/2015.

In accordance with IN 1,597/2015, companies that develop the activities or produce the goods contemplated by Annexes I and II to Brazilian Tax Authority Rule No. 1,436/2013 will have to pay Social Contribution levied on Gross Revenues until November 30th, 2015. From December 1st, 2015 onwards, companies will be able to choose between Social Contribution levied on Gross Revenues or Social Contributions levied on Payroll.

In this sense, the option for December/2015 should be made upon payment of Social Contribution levied on Gross Revenues in such month. From 2016 onwards, the choice will be made upon payment of Social Contribution levied on Gross Revenues relating to January of each year or the first month in which there are accrued gross revenues. This option will be irreversible for the whole calendar year.

The withholding of 3.5% of the total amount of an invoice provided through the assignment of labor will be compulsory for the cases in which the provider of services has chosen Social Contribution on Gross Revenues. If the provider of services has chosen Social Contributions levied on Payroll, the withholding will be due at the rate of 11%.