On Tuesday, August 20, 2024, the Federal Senate approved the extension of payroll tax relief for 17 strategic sectors of the economy until 2027. The measure, which had been under discussion for nearly a year, was approved without the inclusion of a potential fiscal compensation via an increase in the Interest on Equity (JCP) rate from 15% to 20%, as had been proposed by the Ministry of Finance.
Despite government pressure to include compensatory measures such as the JCP rate increase, the Senate upheld the decision to maintain the benefit without additional tax burdens. Instead, an agreement was reached on a package of eight measures proposed by the President of Congress, which includes everything from asset regularization to the use of unclaimed judicial deposits, aimed at balancing public accounts without further burdening companies.
With the approved extension, the current payroll tax relief system will remain in effect until December 31, 2024, after which a gradual process of re-taxation will begin, extending until the end of 2027. The benefited companies will continue to pay rates based on gross revenue, representing a significant savings compared to the traditional payroll tax model.
The continuation of this tax benefit ensures a more favorable tax environment for the affected sectors in the coming years, promoting the maintenance and creation of jobs even in a challenging economic scenario.