Government extends tax exemption to pastors amid campaign targeting evangelicals

The Federal Revenue decided to adopt an interpretation of the legislation that, in practice, expands the scope of the exemption from social security contributions on the remuneration of pastors, in a measure that directly favors allies of President Jair Bolsonaro (PL).

The act, signed by the special secretary of the Revenue, Julio Cesar Vieira Gomes, was published in the Official Gazette on August 1, two weeks before the start of the electoral campaign and at a time when Bolsonaro seeks to consolidate the support of evangelicals for his attempt. for re-election.

Gomes is close to Senator Flavio Bolsonaro (PL-RJ), the president’s son, and has direct dialogue with the Chief Executive. Bolsonaro declared this Tuesday (16th) that the measure meets a request made by pastors to end what they call the “persecution” of the Federal Revenue.

Sought, the tax authorities say that the act consolidates an “understanding already in force”, although it recognizes that the “diversity of documents” on the subject “end up, until then, to generate internal differences”.

“The consolidation of the understanding in a single normative made it possible to optimize advertising, both for tax auditors and for taxpayers, bringing gains in legal certainty, reduction of litigation and compliance”, says the body.

Technicians consulted privately by the Sheet assess that the measure signed by Gomes explicitly expands the cases of exemption and puts a stop to the inspection processes on the remuneration of pastors still in progress within the scope of the Revenue.

In the public list of debtors enrolled in the Active Debt of the Union, religious entities maintain a debt of R$ 1.02 billion, of which R$ 951 million are related to Social Security. The IRS, in turn, said it did not have a survey on inspections at the administrative level.

The focus of the controversy is the prebend, as the remuneration paid to the pastor or religious ministry leader for his services is called.

The law exempts the amount from the payment of social security contributions, as long as it is related to religious activity and does not depend on the nature or amount of work.

The IRS, however, detected in recent years that some churches used the prebend to circumvent inspection and distribute a kind of profit sharing to pastors who brought together the largest groups of believers (benefiting leaders of temples in large cities or neighborhoods, for example) or the largest tithing collections.

The tax authorities applied million-dollar fines and demanded the payment of a social security tax of 20% on the amounts paid to pastors, directors and religious leaders. The auditors’ understanding was that the exemption did not apply to variable compensation mechanisms.

From then on, the search for tax forgiveness and the flexibilization of the rules became a priority agenda of the evangelical bench in the National Congress.

In 2015, a first law stipulated that differentiated amounts, paid in cash or as allowance for housing, transportation and educational training, would also be exempt from taxation.

The tax authorities reacted by demanding receipts for these expenses and fined those who could not prove the nature of the expenses. The IRS also adopted the understanding that the new law was not retroactive, that is, the fines issued before its publication continued to be valid.

In 2020, Bolsonaro sanctioned a law that expressly provided for the retroactivity of the broader pension exemption on the prebend, approved five years earlier. The intention was to overturn the fines that still hung over allied pastors.

However, controversy within the scope of enforcement continued as, according to government sources, auditors saw no change in the scope of the exemptions.

In September 2021, for example, a query solution published by the General Taxation Coordination stated that, if the payment by the institution takes place with characteristics inherent to remuneration for services provided by the minister of religious confession, the amount received should be considered in the basis for calculating the social security contribution.

The same understanding would apply to amounts paid “in excess of what is necessary for the person’s subsistence purposes”.

The act of Gomes, in turn, says that the payment of differentiated amounts, in the amount or in the form, “does not characterize these amounts as remuneration subject to contribution”. In the text, “seniority in the institution, level of education, irreducibility of values, number of dependents, hierarchical position and place of domicile” are cited as differentiating factors.

The rule also says that only the portion paid in conditions “proven” related to the nature and quantity of the work performed will be considered taxable remuneration.

As it is signed by the special secretary, the document supersedes any solution of divergent consultation on the subject.

The insertion of the place of residence is pointed out by technicians critical of the measure as a key factor for pastors, since churches located in large cities or upscale neighborhoods tend to have better results in terms of faithful and revenue. The hierarchical position can also open gaps for more significant transfers to religious leaders, who will be exempt from taxation.

The IRS states in a note that “the receipt of the prebend, whether in fixed or variable installments, is not subject to the incidence of social security contribution”.

In 1st campaign act, Bolsonaro says exemption was not fulfilled for ‘persecution’

Bolsonaro cited the tax act during a meeting with religious leaders in Juiz de Fora (MG), in his first campaign act, which officially began on Tuesday (16). The meeting was closed, but the speech of the Chief Executive was broadcast on social networks.

The president began his speech responding to a request from Pastor Aloizio Penido, who would have asked for a solution to the IRS charges. “The claim has already been accepted, [o ato] is published in the Official Gazette of the Union”, said the president, adding that he would give a copy of the document to the pastor.

The chief executive also said that the change in the taxation of pastors should already be implemented, but it did not occur because of “persecution”. In 2019, he used the same term to complain that auditors were carrying out an investigation against his family.

“What he [pastor] claimed is very clear in our Constitution, but for reasons of, in my opinion, persecution, this was not fulfilled. And the IRS has now understood, after a project passed in Congress, that these exemptions are made across the entire spectrum”, said the representative in Juiz de Fora.

The Constitution gives churches tax immunity against the collection of taxes, but it does not cover contributions, a distinct type of tax that encompasses social security collections.

The president also stated that religious representatives should contact their government, if there is something that has not been included in the exemption by the IRS, so that an “alternative” can be sought.

According to an IPEC survey released on Monday (15), Bolsonaro remains in second place in polls 45 days before the elections, behind former president Luiz Inácio Lula da Silva (PT). The chief executive has 32%, against 44% for the PT.

Among evangelicals, however, Bolsonaro is at the forefront. The latest Datafolha poll, released in July, shows that the president was ahead of Lula by ten percentage points in this segment: 43% to 33%.

Tax exemptions are among the main expenditures of the federal government, despite having been the target of government reduction promises in the economic area.

The Union will spend this year R$ 367 billion on tax advantages granted to certain groups without proven counterparts for society. The assessment is from Unafisco (National Association of Tax Auditors of the Federal Revenue) and points to the highest value since the survey began to be carried out, in 2020.

The nominal increase of 16% is observed after ineffective moves by the government and Congress on the subject. The accounts include both benefits provided for by law, such as subsidies to the automobile industry, as well as omissions by the government in the taxation of items considered important by the entity, such as taxation of the wealth of the richest.