Brazil’s lower house of Congress has approved the main text for a project that extends a payroll tax exemption for 17 economic sectors till 2027.
The base text was approved by 430 votes against 17. Although, the bill can still be amended.
Reuters reported that the exemption, which was to expire December 31, 2023 covers many of the most labor-intensive sectors, such as civil construction, textile and footwear producers, transportation and communications firms, reducing their labor costs in order to retain jobs.
The payroll tax relief replaces the employer’s social security contribution of 20% of payroll with rates ranging from 1% to 4.5% of gross revenue.
The proposal now returns for Senate consideration due to modifications introduced reducing municipalities’ pension contributions to 8% to 18% of each city’s Gross Domestic Product from 20%.
The Senate’s version had put forward an 8% rate, applicable solely to smaller cities, a change that the Finance Ministry had reportedly opposed.
