Brazil has established new transition rules to determined companies which were exempted of Social Security tax over payroll, as they will begin to pay it from 2025. Originally, this exemption was planned to be finished in 2027, but in April a judge suspended the decree where it was certified. This measure included a payment over gross entity revenue (between 1% and 4,5%), instead of 20% in salary-based payroll contributions.
This idea benefits 17 sectors, such as IT services, call centers, transport, construction, industry and journalism. Moreover, current president, Lula da Silva, tried last December to remove it, but the Parliament denied it. Therefore, government intentions are to return to a 20% tax rate over payroll thanks to a gradual process, which it will finish in 2028. In 2025, the payroll tax rate begins at 5%. In 2026, it will be 10%; in 2027 it will be 15%; and, finally, 20% in 2028 (same tax rate as 2014).
During this transition period, it will be mandatory for companies to maintain at least 75% of personnel than the previous year. If the entity breaches this requirement, it will have to pay 20%. In a certain way, Brazilian government wants to avoid a mass layoff due to increase on fiscal charge.
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