Guilherme Martins and João Pedro Riccioppo Cerqueira Gimenes*

The Federal Government, in yet another attempt to increase revenue, published Provisional Measure (“MP”) No. 1,202/2023, which considerably increases the taxation borne by taxpayers by reimposing payroll taxes, revoking the benefits of the Emergency Program for the Resumption of the Events Sector (“Perse”) and limiting the offsetting of credits arising from final and binding court decisions.

This is each specific point, in summary:

THE payroll re-taxation comes after the Executive Branch's veto was overturned on the bill that extended the total payroll tax exemption until December 31, 2027, through which the Legislative Branch intended to reallocate federal taxation to apply to companies' gross revenue, with the option of collecting the “CPRB”, a benefit guaranteed to taxpayers in 17 economic sectors.

Now, with the new MP in force, the option to pay the CPRB was revoked, but the rates applicable to the payroll were reduced from 20% to percentages ranging from 10% to 18.75%.

The discount depends on i.) the main activity carried out by the company and ii.) the year, ranging from 2024 to 2027. To enjoy the benefit throughout the period, taxpayers must maintain, year after year, the same or a greater number of employees on the payroll.

Such rates will be applied up to a ceiling of 1 (one) minimum wage, while the excess amount will be taxed at the normal rate of 20%.

THE revocation of Perse benefits, Emergency Program that guaranteed companies in the events sector non-payment of IRPJ, CSLL, PIS and COFINS and that would last until 2026, has now been extinguished for Contributions (CSLL, PIS and COFINS) from 2024 and, for IRPJ, from 2025.

The new limitation on the offsetting of tax credits recognized in final court decisions determines that the right to offset will be limited by an act published by the Minister of Finance (not yet published or made available to the public). Previously, taxpayers could offset all of these credits at once.

However, the MP defines that the monthly limit cannot be less than 1/60 (one sixtieth) of the total value of the credit to be offset, in addition to the limitation only being able to reach credits greater than R$ 10,000,000.00 (ten million reais).

Furthermore, the new MP establishes that the first compensation declaration (“DCOMP”) must be submitted within a period of up to five years, counting from the date the decision becomes final or the date the withdrawal of the execution of the judicial title is approved.

The Provisional Measure comes into force immediately, but must be converted into Law within a maximum of 120 days.

Our team will closely monitor the development of the topic and is available to provide any clarification on the topic.

(with the collaboration of Pedro Antônio GM Buzas)