Companies in sectors covered by payroll exemption may choose to abandon the regime before the deadline, scheduled for 2028. The gradual re-innovation, which begins in 2025 and extends until 2027, is making the regime less advantageous for many sectors, according to Pedro Ackel, Legal and Tax Director of the Brazilian Association of Administrative Support Service Providers (Abrapsa).
“The law approved this year proposes a transition process that, year after year, will make the exemption regime less attractive for many companies”, says Ackel. The main advantage of the exemption regime has been the replacement of the social security contribution of 20% on the payroll by a contribution calculated on the gross revenue of companies, called Social Security Contribution on Gross Revenue (CPRB), with aliquots ranging from 1% to 4.5%. This modality has been particularly beneficial for companies with large payrolls, such as the construction and other sectors of technology 1.
However, from 2025, companies will face a hybrid taxation system, in which the rate on gross revenue will be reduced progressively, while the contribution on the payroll will be gradually reintroduced. In 2025, for example, the rate of CPRB will be reduced to 80% of the current value, and companies will have to pay a contribution of 5% on the payroll. In 2026, the contribution on the sheet will rise to 10% regime, and in 2027, it reaches the 151T in the possibility of the workday that continues to the work in the same as the CPR3T, the same as the transition of the work in the same as the time as the work in the same as the sectors.
Financial impact on affected companies and sectors
“The proposed hybrid taxation system can make companies that already have high payrolls in relation to billing see their costs increase from 2025”, explains Pedro Ackel.He notes that the projection of wage costs and billing will have a decisive weight in the choice of companies between remaining or abandoning the exemption regime. “For those companies whose sheet represents a significant portion of revenue, the new regime may prove financially unfeasible, encouraging the exit of the program before 2028 and the return to the conventional contribution regime on the sheet.”
Some sectors, such as technology and construction, are especially affected by this transition, since in them, wages represent a large proportion of gross revenues.Many companies in these sectors may choose to abandon the exemption as early as 2025, due to the increased tax burden that the new rule brings.
Possible return of pejotization
A possible development of this re-innovation is the return of pejotization practice. Pejotization consists of hiring professionals as legal entities (PJs), which allows companies to avoid labor charges, such as FGTS, 13th salary and vacation. With the new scenario of progressive encumbrance, it is possible for companies to start developing pejotization projects for high-wage functions, seeking to minimize the costs that will be caused by re-ineration.
Pejotization, which has lost strength in recent years due to contrary decisions of jurisprudence, may again gain ground if the exemption of the sheet becomes financially unfeasible for large companies.“Professionals of strategic positions and high salaries will be the most affected, since pejotization is an alternative to reduce labor costs on these functions”, adds Ackel. He also signals that before making any decision in this regard it is advisable to analyze labor and tax risks.
The future of tax relief and payroll tax reform
The payroll tax reform, scheduled for 2025, could directly impact the future of the exemption regime.“There are ongoing discussions for a broader reform of sheet taxation, which may make the exemption of the sheet unnecessary even before 2027”, he says. He points out that the reform under study aims to create a more efficient and less costly tax system for companies, which may accelerate the end of the current exemption regime.
Still, Pedro points out that, although it is early to say with certainty the impact of this reform, it will bring significant changes in the Brazilian tax landscape, and companies need to be aware of possible changes in the contribution regime.“The early end of the exemption may be a reality, if the reform brings more advantageous or simplified alternatives to tax on the”, he concludes.
With the gradual re-innovation planned between 2025 and 2027, the payroll tax regime, which currently benefits labor-intensive sectors, may become less attractive. Companies in sectors such as technology and construction already consider the possibility of abandoning the regime, opting for the return to the traditional model of contribution on the sheet. In addition, the pejotization of key professionals emerges as an alternative to reduce labor costs. The reform of sheet taxation, planned for 2025, may define the future of this regime and the viability of its continuity.
