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The Partido Novo filed a lawsuit with the STF against a provisional measure issued by President Lula which, among other points, deals with the reimbursement of the payroll of several productive sectors.

 

MP 1,202/23 was published at the end of 2023 with the aim of balancing public accounts. In addition to the gradual resumption of the tax burden on 17 economic activities, the text provides for the limitation of tax compensations resulting from court decisions and the return of taxation on the events sector.

 

According to Novo, the provisional measure does not meet the urgency requirement and offends the principle of separation of Powers, as it contradicts the law approved by the National Congress that extends the exemption until 2027.

 

The action was distributed to minister Cristiano Zanin.

 

Understand

 

On December 27th, Congress overturned President Lula's veto and enacted law 14,784/23, extending the benefit of tax relief to 17 sectors of the economy until 2027. Two days later, on December 29th, the Federal government published MP 1,202 , with three main measures: reimbursing company payrolls; the review of Perse - Emergency Program for the Resumption of the Events Sector; and the limitation of offsets of tax credits obtained by companies in court.

 

The MP is immediately valid, but provides that some points should only come into force in 90 days, in April of next year, in compliance with tax legislation rules.

 

Novo challenged the MP in the STF. (Image: Fellipe Sampaio/SCO/STF)

Payroll reimbursement

 

One of the MP's most controversial proposals concerns a gradual repayment of the payroll. The measure replaces a law approved in Congress that exempted the payroll of 17 sectors of the economy. Excerpts of the law were vetoed by Lula, but the veto was overturned by parliamentarians.

 

The MP provides that, instead of the exemption, there must be a gradual reinstatement of the employer's payroll contribution over the next four years. According to the Treasury's calculations, the objective is to recover R$6 billion in revenue this year.

 

The government did not completely eliminate the exemption, but established that it should only apply to the first minimum wage received by employees. The employer's contribution quota to Social Security, however, is reestablished for payments above this amount.

 

Another change is that, instead of benefiting entire sectors, the measure establishes groups broken down by economic activity: one composed of transport, radio and television and information technology activities; another with activities linked to the textile and footwear industry, infrastructure works and the publishing market.

 

The first group must return to paying 10% employer contribution on payroll in 2024, a rate that rises to 12.5% in 2025, 15% in 2026 and 17.5% in 2027. The second group will be reburdened in 15 % in 2024, 16.25% in 2025, 17.5% in 2026 and 18.75% in 2027.

 

It is worth remembering that these percentages only apply to the first minimum wage received by each worker. Above this, the rates provided for by the legislation that governs each sector of the economy are reestablished. In any case, the reinstatement should only come into force on April 1, 2024.

 

Persian

 

Another measure provides for a review of the Events Sector Emergency Resumption Program, which was created in 2021 to help the sector with a total tax exemption amid the shutdown caused by the covid-19 pandemic. The measure was initially expected to last two years, but this year it was extended to five years by Congress.

 

According to the published MP, the program must be discontinued for the next two years. In 2024, social contributions should be charged again on company revenues. In 2025, income tax will be charged again.

 

As it involves the return of tax collection, the reinstatement of the events sector should also only take effect from April 1st.

 

Tax compensations

 

The government's MP also establishes rules so that companies can compensate tax credits eventually obtained in court against the public administration with the Federal Revenue.

 

Previously, companies could offset 100% of these credits at once, sometimes completely eliminating tax payments in a given year. According to a partial estimate from the Treasury, this year alone there were R$65 billion in unexpected loss of revenue from these compensations alone.

 

Now, such compensations are limited and tax credits can only be deducted from taxes payable in stages, month by month. The limitation on compensation applies to credits above R$10 million, and the monthly limits must still be established