New Guidelines of Provisional Measure 1.202/23 On December 29, 2023, Provisional Measure (MP) No. 1.202/2023 was enacted, bringing significant reforms to tax policies related to the limitation on tax compensation, the re-taxation of payroll, and changes in the Emergency Program for the Recovery of the Event Sector (Perse). This MP, which comes into force on the date of publication, has effects starting from April 1, 2024.
Limitation of Judicial Credit Compensation: The MP modifies Law No. 9.430/96, establishing new rules for the compensation of tax credits originating from definitive judicial decisions. The monthly limit for compensation will be determined by the Minister of State for Finance and must follow a progressive scale, based on the total credit value. It’s important to highlight that credits below R$ 10 million will not be subject to this limit.
Changes in the Emergency Program for the Recovery of the Event Sector (PERSE): The MP gradually revokes the fiscal benefits associated with PERSE. Starting in April 2024, the benefits applicable to CSLL, PIS, and COFINS will be revoked, while the extinction of benefits related to IRPJ is expected in January 2025. This change ends the tax facilities granted by Article 4 of Law No. 14.148/2021 to companies in the event sector, which have enjoyed tax reductions since the pandemic.
Re-taxation of Payroll: MP No. 1.202/2023 revokes the provisions of Law No. 14.784/2023 on payroll tax relief, replacing them with a new tax regime. Reduced rates will be implemented, applicable only to the salary contribution up to a minimum wage. The activities listed in Annex I (such as transportation, software development, among others) and Annex II (including footwear manufacturing, urbanization works, etc.) of the MP will have variable rates of 10% to 18.65% from 2024 to 2027.
Conditions for Applying the New Rates: Companies must consider only the CNAE of the main activity to determine the applicable rate. In addition, a formal commitment is required to maintain or increase the number of employees, compared to the total verified on January 1 of each calendar year.
Conclusion:
Provisional Measure No. 1.202/2023 brings challenges and potential losses for taxpayers. The implementation of limits on the compensation of tax credits from judicial decisions may result in a more restricted cash flow for companies, especially those that depend on these credits to maintain their operational liquidity. For credits above R$ 10 million, the prolonged wait for full compensation can affect the financial health of these organizations.
The revocation of the fiscal benefits of PERSE, which were fundamental in sustaining event sector companies during the pandemic crisis, may lead to a sudden increase in the tax burden. This increase, coinciding with a period of still fragile economic recovery, could impose additional financial difficulties on affected companies, potentially delaying their growth or even threatening their viability.
Moreover, the re-taxation of payroll, even if partial, increases labor costs for companies. Although the measure aims to maintain or increase the number of employees, the staggered rates that increase annually until 2027 can strain the finances of companies, especially those operating with tighter profit margins. This increase in costs may lead to a pass-through to the prices of products and services, indirectly affecting consumers.
The requirement that companies consider only the CNAE of the main activity for the application of the new rates may also bring complications, especially for organizations with multiple activities that may not clearly fit into a single classification.
In summary, while MP No. 1.202/2023 seeks necessary fiscal adjustment, taxpayers will face imminent challenges. Companies will need to adapt to a more rigorous tax environment, which may affect their operation and financial health. The reduction of fiscal benefits and the increase in tax obligations may limit the capacity for investment and expansion of companies, with potentially negative repercussions for the economy as a whole.