Companies in 17 sectors of the economy and municipalities with fewer than 156,000 inhabitants may have to pay social security taxes on their payroll again starting next year. The proposal that provides for the gradual re-taxation of payroll taxes was approved by the Senate last Tuesday (20), but will still have to be analyzed by the Chamber of Deputies and approved by the president before it can take effect. 
The tax relief policy was created in 2011 as a way to charge less tax to companies in specific sectors. Instead of paying 20% of INSS for employees with formal employment contracts, the benefited companies can choose to pay social contributions on gross revenue, with rates ranging from 1% to 4.5%.
The bill approved by the Senate maintains the payroll tax exemption for these sectors in full in 2024 and provides for a gradual re-taxation between 2025 and 2027. During this period, there will also be a gradual reduction in the collection of tax on corporate revenue.
According to the project, from 2025 onwards, payroll taxes will be 5%. In 2026, taxes will be 10% and in 2027, taxes will be 20%, when the tax exemption will end. During the entire transition, the thirteenth salary payroll will remain fully exempt.
Last year, Congress had approved the maintenance of the payroll tax exemption until 2027, but President Luiz Inácio Lula da Silva vetoed parts of Law 14,784, of 2023. Congress overturned the veto and government appealed to the Supreme Court Federal Court, which gave Congress and the Executive until September 11 to reach an agreement on the tax exemption.
Jobs
The initial idea behind the payroll tax relief policy was to reduce labor costs and encourage the hiring of employees by these sectors, which are considered the largest employers.
Businessmen claim that the end of the tax exemption could imply a reduction in jobs. But the Finance Minister, Fernando Haddadconsiders the total exemption from payroll taxes for some sectors as a “privilege” and states that the measure, which would be temporary, did not achieve the objective of increasing job vacancies.
An article from the Institute of Applied Economic Research (Ipea) shows that the sectors benefiting from the measure are not those that employ the most in the country, nor are they among the champions in creating jobs with formal contracts in the last 10 years.
The sectors benefiting are: footwear, call centercommunication, manufacturing/clothing, civil construction, construction companies and infrastructure works, leather, vehicle and body manufacturing, machinery and equipment, animal protein, textile, information technology, communication technology, integrated circuit design, metro-rail passenger transport, collective road transport and road freight transport.
Compensation
The text approved by the Senate also provides for eight measures to compensate for the loss of revenue for the Union due to the tax exemption. According to the Ministry of Finance, the impact of the payroll tax exemption on 17 sectors of the economy and small municipalities will be R$18 billion in 2024.
The measures were incorporated into the project after an agreement between the government and Congress.
Among the proposed temporary solutions are the capture of deposits forgotten in judicial accounts for more than five years, the opening of a new period for the repatriation of resources abroad with lower rates, the possibility of regularizing the Income Tax declaration, with a discount on the charge and a discount program for companies that have overdue fines with regulatory agencies.
