Companies open space for payroll reimbursement with hybrid billing

The 17 sectors of the economy covered by the payroll tax relief are trying to ensure that the benefit is maintained in 2024, despite the federal government’s displeasure. The benefited companies, however, accept that there will be a gradual reimbursement from 2025 to 2027.

In practice, the mechanism allows benefiting sectors to pay rates of 1% to 4.5% on gross revenue instead of 20% on payroll. It has operated this way since 2012, when the policy was instituted under the Presidency of Dilma Rousseff (PT).

The proposal defended by the 17 sectors establishes that a hybrid charge will come into force, so that the CPRB (Social Security Contribution on Gross Revenue) will no longer be instituted gradually and that taxation will now be made on the payroll.

O Power360 prepared an infographic that shows how the proposal works:

The proposal endorsed by the private sector does not extend the exemption to municipalities with up to 156.2 thousand inhabitants, contrary to what Congress approved in October 2023. The measure results in a reduced tax rate from 20% to 8% in relation to social security contributions.

The government’s economic team is considering suspending the charge on the 17 sectors for just 3 months. Afterwards, everything becomes taxed in full.

In practice, the injunction granted by STF minister Cristiano Zanin requires companies to collect taxes and pass them on to the Union.

Here are the 17 sectors reburdened by Zanin’s decision:

The Minister of Finance, Fernando Haddad, he said on Tuesday (May 7, 2024) which hopes to resolve the impasse involving the exemption from payroll in 17 sectors and municipalities this week. He signaled a meeting with the president of the Senate, Rodrigo Pacheco (PSD-MG), until Friday (May 10) to address the topic.

UNDERSTAND THE IMPACT

In the 1st quarter, the National Treasury stopped collecting R$ 4.2 billion with payroll tax relief. Therefore, the potential impact is R$ 11.6 billion from April to December 2024.

As federal government revenue is associated with the number of company employees, the amount may be lower if there is a wave of layoffs. The request made to the STF was from the AGU (Advocacia Geral da União), but led by Fernando Haddad.

He argues that the policy that was created to create jobs did not have the expected results. Furthermore, he said that, since the enactment of the Social Security reform, tax waivers have become unconstitutional. Sectors criticize the reimbursement, mainly due to the sudden return that frustrates companies’ financial planning.

COMINGS AND GOINGS

The Minister of Finance I had said in December 2023 that the issue was unconstitutional and that the government would take legal action. Read the chronological order of the facts to understand the exemption impasse:

• 13.jun.2023 – Senate Economic Affairs Committee approved the extension of the benefit to the 17 sectors. Haddad he said “not understanding the rush” in voting on the topic;
• Oct 25, 2023 – Congress approved the postponement of the tax waiver until 2027;
• Nov 23, 2023 – president Luiz Inácio Lula da Silva (PT) veto measure;
• Nov 24, 2023 – Haddad it says which would present a “solution” for payroll tax relief after December 12, 2023;
• 14.dec.2023 – Congress Take down Lula’s veto and exemption will be maintained until 2027;
• December 28, 2023 – Haddad proposes a gradual repayment of the payroll via MP (provisional measure) 1,202 of 2023with effect from April 1, 2024;
• 27.Feb.2024 – Squid withdraw exemption from the provisional measure sheet and send the PL (bill) 493 of 2024 with gradual re-encumbrance;
• 9.Feb.2024 – Chamber of Deputies approves constitutional urgency regime for re-encumbrance projects;
• April 10, 2024 – Without an agreement with Congress, the reimbursement bill had an urgency regime withdrawn.

EXEMPTION HISTORY

More than half (52.4%) of the waiver value from 2012 to 2023 was during the Dilma government. The former president granted the benefit to 56 sectors during her term, or 39 more than currently. The government Michel Temer (MDB) reduced the number of sectors benefiting from 56 to 17 since 2019. Read below what they were under Dilma’s government: