08/10/2024
On September 16, 2024, Law No. 14,973/2024 was published, which guarantees the alternative regime of payroll tax exemption for companies in 17 sectors until the end of 2024. Starting in 2025, a gradual re-increase will be implemented, extending until 2027.
As is well-known, the payroll tax exemption regime, available to specific sectors, replaces the Employer’s Social Security Contribution (CPP) of 20% on payroll with the Gross Revenue Social Security Contribution (CPRB) at rates ranging from 1% to 4.5% on gross revenue.
Recently there’s been a dispute between the Executive and Legislative branches regarding the payroll tax exemption, Which was intensified after the Federal Supreme Court suspended the effectiveness of Law No. 14,784/2023, which had extended the payroll tax exemption regime until December 2027.
With the suspension of this regime, taxpayers who opted for it faced the threat of being charged the employer’s contribution on payroll starting in April 2024.
The legal uncertainty prompted the Executive and Legislative branches to work together to find a solution that would not adversely affect taxpayers or public finances. In light of this collaboration, the Federal Supreme Court suspended the effectiveness of its decision in ADI No. 763, reinstating the previously applied system.
Subsequently, through the agreement between the Executive and Legislative branches, Law No. 14,973/2024 was enacted, which maintains the tax exemption in 2024, allowing companies to continue paying the CPRB instead of the employer’s social security contribution.
Starting in 2025, there will be a Transition Regime (from 2025 to 2027), during which CPRB rates will be reduced while employer’s social security contribution rates will increase:
| Year | CPRB Rate (%) | Employer’s Contribution Rate (%) |
| 2025 | 80% | 25% |
| 2026 | 60% | 50% |
| 2027 | 40% | 75% |
| 2028 | 0% | 100% |
It is important to note that during the Transition Regime, companies opting for the payroll tax exemption must sign a term committing to maintain an average number of employees equal to or greater than 75% of the average number from the previous calendar year.
Co-authored by: Thais Ribeiro Bernardes Casado and Maria Eduarda Moreira Lima Novaes
