This change directly impacts the 17 sectors that benefit from the payroll tax exemption. In order to avoid overburdening these sectors, the government is proposing a partial tax reduction for payments up to the minimum wage. One of the rules established to benefit from lower taxation requires companies to commit to maintaining or increasing the number of employees compared to the number recorded on January 1 of each year.
One point to be observed is the case of payments that exceed the minimum wage, in which the payroll tax rate returns to the 20% level. If the tax collection is not reestablished, the Treasury estimates a financial impact of R$9.4 billion per year.
Another aspect of the tax relief removed by the provisional cyprus mobile database measure concerns municipalities. Congress had decided that municipalities with fewer than 156,000 inhabitants would have their payroll tax rate reduced from 20% to 8%. However, according to the Treasury, this benefit should only be applied to municipalities that are legally comparable to companies, which invalidates the justification for continuing this reduction.
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Approval, veto and criticism
The tax exemption, instituted at the end of 2011 and scheduled to end in 2023, underwent an extension process by Congress, followed by a veto by the federal government.
On December 27, lawmakers completely reversed the veto, restoring the tax exemption through Law 14,784/23. In response to this decision, President Lula issued the Provisional Measure that revoked the aforementioned law, two days after the Congressional deliberation.
The New Party then appealed to the Federal Supreme Court (STF) requesting a Direct Action of Unconstitutionality (ADI), claiming that the MP does not meet the urgency requirement and violates the principle of separation of powers , as it goes against the decision of Congress.