Companies in sectors covered by the payroll tax exemption can choose to leave the regime before the final deadline for validity, scheduled for 2028. The gradual re-taxation, that begins in 2025 and extends until 2027, is making the regime less advantageous for many sectors, according to the evaluation of Pedro Ackel, Legal and Tax Director ofBrazilian 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 payroll tax exemption regime has been the replacement of the 20% social security contribution on the payroll with a contribution calculated on the gross revenue of companies, call for Social Security Contribution on Gross Revenue (CPRB), with rates ranging from 1% to 4,5%. This modality has been particularly beneficial for companies with large payrolls, like technology, civil construction and 17 other sectors of the economy
However, starting from 2025, companies will face a hybrid taxation system, in which the rate on gross revenue will be progressively reduced, while the contribution on the payroll will be gradually reintroduced. In 2025, for example, the rate of the 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 payroll rises to 10%, and in 2027, reaches 15%, while the rate of the CPRB continues to fall. This transition model has raised concerns in labor-intensive sectors, that already consider the possibility of leaving the regime before 2028
Financial impact on affected companies and sectors
"The proposed hybrid taxation system may cause companies that already have high payrolls relative to their revenue to see their costs increase starting in 2025", explain Pedro Ackel. He notes that the projection of labor costs and revenue will have a decisive weight in the companies' choice between remaining in or abandoning the exemption regime. "For those companies whose payroll represents a significant portion of revenue", the new regime may prove financially unfeasible, encouraging the exit from the program before 2028 and the return to the conventional contribution regime on payroll.”
Some sectors, how technology and civil construction, are especially affected by this transition, since, in them, salaries represent a large proportion of gross revenue. Many companies in these sectors may choose to abandon the tax relief as early as 2025, due to the increase in the tax burden that the new rule brings
Possible return of pejotization
A possible outcome of this reoneração is the return of the practice of pejotização. Pejotization consists of hiring professionals as legal entities (PJs), what allows companies to avoid labor charges, like FGTS, 13th salary and vacation. With the new scenario of progressive burden, it is possible that companies start to develop pejotização projects for high-salary positions, seeking to minimize the costs that will be caused by the re-taxation
The pejotization, that has lost strength in recent years due to contrary decisions of the jurisprudence, it can regain ground if the reduction of payroll taxes becomes financially unfeasible for large companies. "Professionals in strategic positions and high salaries will be the most affected", since pejotização is an alternative to reduce labor costs on these functions, adds Ackel. He still indicates that before making any decision regarding this, it is advisable to analyze the labor and tax risks
The future of tax relief and payroll tax reform
The reform of payroll taxation, scheduled for 2025, may directly impact the future of the exemption regime. There are ongoing discussions for a broader reform of payroll taxation, that could make the exemption from payroll unnecessary even before 2027, affirms. He emphasizes that the reform under consideration aims to create a more efficient and less burdensome tax system for companies, what can accelerate the end of the current tax exemption regime
Even so, Pedro emphasizes that, although it is early to assert with certainty the impact of this reform, it will bring significant changes to the Brazilian tax landscape, and companies need to be aware of possible changes in the contribution regime. "The anticipated end of the tax exemption may be a reality", if the reform brings more advantageous or simplified alternatives for payroll taxation, concludes
With the gradual reoneração planned between 2025 and 2027, the payroll tax exemption regime, that currently benefits labor-intensive sectors, it can become less attractive. Companies in sectors such as technology and construction are already considering the possibility of abandoning the regime, opting for a return to the traditional model of contribution on the payroll. Furthermore, the pejotization of key professionals emerges as an alternative to reduce labor costs. The reform of payroll taxation, scheduled for 2025, it could define the future of this regime and the viability of its continuity
