Zona de Azar Brasil – Brazil: Senate Requests Deadline Until End of August

Brazil.- July 19, 2024 www.zonadeazar.com At the beginning of the plenary session this Tuesday (16), the president of the Senate, Rodrigo Pacheco, announced that the federal government and the Senate have joined the Federal Supreme Court (STF) with a request to extend the deadline until August 30 to define a solution for financial compensation for the payroll tax exemption. The petition was made by the Attorney General’s Office (AGU) in conjunction with the Senate Attorney’s Office.

With this, Pacheco announced the postponement of the analysis of PL 1,847/2024 from this Tuesday to Wednesday (17). However, the expectation, as the president of the Senate added, is that given the agreement between the Executive and Legislative, STF minister Cristiano Zanin will grant the requested deadline, which would lead to the project not being included on this Wednesday’s agenda.

In May, Minister Zanin had determined that within 60 days the government and Congress would reach an agreement regarding the benefit granted to the 17 sectors of the economy that were exempted. The deadline is this Thursday (18) and there is still no consensus on the sources of compensation. Pacheco highlighted that all sides agreed to maintain the payroll tax relief in 2024 and to the gradual tax reduction until 2027.

— We would have 3 weeks [after the recess] to mature the tax relief project, so that we can have a political decision that guarantees the tax relief in 2024 and the gradual tax reduction until 2027, giving preference to sources of compensation that do not represent an increase in Tax Burden. I hope this can be postponed until August 30th — said the president of the Senate.

Pacheco and other senators presented “a menu of measures” to compensate for the exemption, including updating property values ​​in the Income Tax declaration; the opening of a new period for repatriation of resources abroad and Refis for companies with overdue fines and fees charged by regulatory agencies.

The proposal’s rapporteur and government leader in the Senate, Jaques Wagner (PT-BA), signed the agreement for the postponement. He pointed out that the suggestions presented by senators to compensate for payroll tax relief are still difficult to calculate and is betting on the project maturing by the end of August.

— This House has worked in favor of the country, seeking consensus between government and opposition and between different positions. One side estimates that it will cover [the necessary compensation]. Another estimates that it will not cover. We will only know the value when we carry out the programs — he assessed.

Gradual reinstatement

With the exemption, benefiting companies can replace the payment of 20% of the contribution on the payroll with rates of 1% up to 4.5% on gross revenue. The text provides for a gradual reinstatement:

• 2024: total exemption;
• 2025: 5% tax rate on payroll;
• 2026: 10% tax rate on payroll;
• 2027: 15% tax rate on payroll;
• 2028: 20% rate on payroll and end of tax relief.
• Agência Senado (Reproduction authorized upon citation from Agência Senado)

Source: Senado Agency