Senate committee approves extension of payroll exemption

According to the 12,546 lei, from 2011, payroll exemptions for these sectors will end at the end of this year. However, the PL 334/2023, authored by Senator Efraim Filho (União-PB), extends the benefit for another 4 years. To compensate for the loss of government revenue, the project extends, for the same period, the 1% increase in the Cofins-Importation rate, whose term also ends in December.

The bill’s rapporteur, senator Angelo Coronel (PSD-BA), said that the extension of the exemption is necessary for the benefited sectors to maintain their jobs and be encouraged to expand job vacancies. “I think the productive sector is quite calm. It won’t be left with that apprehension of the past extension, which was left to happen on the last day. Now companies have six months to be able to plan to generate more jobs for Brazil. The purpose of the exemption is to make these segments generate more jobs”, he said.

Sectors benefited by the exemption

• Clothing and clothing
• shoes
• Construction
• Call center
• Communication
• Construction companies and infrastructure works
• Leather
• Manufacture of vehicles and bodywork
• Machines and equipment
• animal protein
• Textile
• Information Technology (IT)
• Communication Technology (ICT)
• Integrated circuit projects
• Passenger subway transport
• Collective road transport
• road freight transport

The exemption allows companies in these sectors to exchange the 20% contribution on the payroll for social security for the payment of a rate of 1% to 4.5% on gross revenue. Defenders of the mechanism argue that it is a way to reduce labor charges on activities and facilitate employment.

José Velloso, executive president of the Brazilian Machinery and Equipment Industry Association (Abimaq), says that the sector received “very well” the approval of the bill. He explains that the mechanism is responsible for maintaining 10% to 15% of employees.

“Since these are the sectors that employ the most in Brazil, when companies go into crisis and start selling less, the tax burden decreases and, with that, companies insure employees with a formal contract. When the company returns to earn more , she insures the employee and pays more taxes again. It is countercyclical, that is, it keeps a job during crises.”

Velloso explains that maintaining the exemption is even more important for the machinery and equipment sector, as it makes companies more competitive on the international scene.

“The machinery and equipment sector is one of the sectors of the manufacturing industry that exports the most, second only to food exports. As the sector exports around US$ 13 billion per year, it is smart to exempt exports, because Brazil it is one of the few countries in the world that taxes exports. In this case, the company that opts for 2.5% of revenues, excluding exports, ends up removing taxes, and starts not exporting taxes”, he says.

Counties

Rapporteur of the PL, senator Angelo Coronel, included an article in the text to extend the exemption to small municipalities. The idea is that cities with a population of less than 142,600 inhabitants have the social security contribution rate on payroll reduced from 20% to 8%.

The parliamentarian estimates that more than 3,000 city halls will be able to benefit from the measure. Together, these municipalities account for 40% of the Brazilian population. He believes that, although the Union fails to collect around R$ 9 billion per year, the amount will end up reinforcing the cash of the municipalities, which will be able to invest in better services.

“Evidently, it is already an accommodation of the federal pact, because the Union does not lose, the municipalities win and vice versa. They are all part of our federation. The purpose of the exemption is to make the city halls, which also had this social security reduction , have a greater collection and, with that, they can help more in the social part, health, sanitation, which are big problems, mainly in small municipalities”.