Bolsonaro sanctions extension of payroll exemption for another two years

President Jair Bolsonaro (PL) sanctioned this Friday (31) the law that extends for two years the exemption from the payroll of 17 sectors.

The text was published in an extra edition of the Diário Oficial da União (DOU), a few hours before the end of the year. The policy would expire on January 1, 2022, but the publication of the law ensures its extension.

The payroll tax exemption would end at the end of this year, but businessmen from benefited sectors pressed, and Congress extended the measure until the end of 2023. The new deadline was ratified by the president.

Payroll exemption is a mechanism that allows companies in the benefited sectors to pay rates of 1% to 4.5% on gross revenue, instead of 20% on payroll.

The permit was created ten years ago as a way to reduce costs on hiring labor for some sectors. Since then, the policy has gone through a process of expansion and, more recently, a reduction in its scope. Currently, 17 sectors are still benefited.

The sectors reached by the measure are footwear, call center, communication, apparel and clothing, civil construction, construction companies and infrastructure works, leather, manufacturing of vehicles and bodies, machinery and equipment, animal protein, textile, information technology , communication technology, integrated circuit design, subway-railway passenger transport, collective road transport and road freight transport.

The policy generates a waiver of revenues of around R$9 billion per year.

The bill extending the measure was approved by Congress in early December.

The initial proposal provided for an extension until the end of 2026. However, during the proceedings in the Chamber, deputies decided to reduce this period to the end of 2023.

This date is in line with that defended by Bolsonaro, who even announced the extension of the exemption for another two years.

The measure also initially faced resistance from the economic team, as it affects the collection of federal taxes. Afterwards, the project was supported by the government.

When Congress concluded the approval of the proposal, the Parliamentary Entrepreneurship Front stated that it is an “indispensable step to give companies the necessary conditions to go through this difficult moment, not only preserving jobs, but also with the capacity to generate more jobs” . The text was signed by the general coordinator of the front, deputy Marco Bertaiolli (PSD-SP).