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São Paulo, April 2017.

Exclusion of Several Activities from Payroll Tax Exemption

Provisional Executive Act No. 744 was published in the Extra Issue of the Federal Register (DOU) of March 30, 2017, relative to the social security contribution on gross revenue, having dismissed the so-called "payroll tax exemption" for approximately fifty (50) previously eligible activities – as was the case of technology service providers.

As a result, companies that are no longer eligible for the exemption will once again pay the social security contribution of twenty percent (20%) on the total payroll. The current rate ranges from 1% to 4.5% on gross revenue.

The aforesaid Provisional Executive Act will come into force on the publication date, producing effects as from July 1, 2017.

Below are the fields of activities that are still eligible for the payroll tax exemption:

      • Collective road passenger transport;

      • Passenger subway and railway transport;

      • Civil construction and infrastructure works; and

      • Communications.

Partially canceling the payroll tax exemption is among the government's attempts to increase tax collection – said measure alone will translate into additional revenue of circa BRL 4.8 B.

Please feel free to contact us should you need further clarification.

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