27 / 10 / 2023

Bill extends payroll tax relief until 2027

The Federal Senate approved this Tuesday, 24th, Bill 334/2023, (“Bill”), which extends the period of the payroll tax exemption until the end of 2027, modifying Law 12,546, of 2011, which stated that the benefit would be valid only until the end of this year 2023. The approved Bill was forwarded for sanction by the President of the Republic.

Payroll relief taxation calculated as per this law replaces the employer’s social security contribution, of 20% on the payroll, with rates of 1% to 4.5% on gross revenue. This mechanism seeks to reduce labor costs in exempt sectors, encouraging the hiring of people.

The benefiting sectors are: footwear, call center, communication, clothing/clothing, civil construction, construction companies and infrastructure works, leather, vehicle and body manufacturing, machinery and equipment, animal protein, textiles, information technology (IT), communication technology (ICT), integrated circuit design, metro-rail passenger transport, public road transport and road freight transport.

Moreover, until December 2027, as an exception, there will be a reduction in the rate from 2% to 1% for collective road passenger transport companies, with fixed itinerary, municipal, intercity in metropolitan region, intercity, interstate and international regions.

The Bill also extends for an equal period the additional 1% on the Cofins-Importation rate, making taxation on gross revenue equitable, both in the domestic market and on imports.

One of the contributions made by the Senate in the text of Bill was the reduction, from 20% to 8%, of the INSS rate for municipalities with a low population.

Furthermore, in compliance with the noventena rule, in which no tax may be changed before 90 days of its publication into law, both the increase in Cofins-Importation and the decrease in INSS for municipalities (revenue waiver) will come into force on the first day of the fourth month following the month of publication of the future law.