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At the end of 2023, Congress approved Law 14,784/2023, which amended Law 12,546/2011 and extended the payroll tax reduced system until 12/2027 for 17 sectors (clothing and apparel; footwear; civil construction; call center; communication; construction companies and infrastructure works; leather; vehicle and body manufacturing; machinery and equipment; animal protein; textiles; information technology (IT); communication technology (ICT); integrated circuit design; metro-rail passenger transport; public road transport; and road freight transport). 

However, in April 2024, the Supreme Court (STF) granted a precautionary measure requested by the Federal Attorney's Office (AGU), in the proceedings of ADI 7.633, to suspend the aforementioned Law. However, the precautionary measure was subsequently suspended by the STF itself, until 11 September 2024, to await for the new law by the National Congress.

Consequently, on 16 September 2024, Law No. 14,973/2024 was published, which maintained the validity of the payroll tax reduced system until December 2024 and created the gradual re-taxation of payroll from 2025 to 2027, when companies will start to collect contributions in a hybrid manner, one part on the payroll and another on gross revenue, as follows:

2024

Social security contribution on payroll: none (payroll tax relief).
Contribution on revenue: 1% to 4.5% (100% of the rate provided for by law).

2025

Social security contribution on payroll: 5%.
Contribution on revenue: 0.8% to 3.6% (80% of the rate provided for by law).

2026

Social security contribution on payroll: 10%.
Contribution on revenue: 0.6% to 2.7% (60% of the rate provided for by law).

2027

Social security contribution on payroll: 15%.
Contribution on revenue: 0.4% to 1.5% (40% of the rate provided for by law).

2028

Social security contribution on payroll: 20%.
Contribution on billing: not applicable anymore.

These same proportions of gradual reduction of the rate above will also apply to the additional Cofins-Importation on goods listed in Law No. 12,546/2011.

In addition, we highlight a relevant provision of Art. 4 of the Law, which determines that, from 2025 to 2027, companies must maintain an average number of employees equal to or greater than 75% of the average of the previous calendar year, under the risk of losing the right to maintain the exemption in the calendar year following non-compliance. This provision will still be regulated by an act of the Executive Power, which will detail the procedures for adhering to and maintaining this commitment.

Finally, Law No. 14,973/2024 also included provisions to offset the government's loss of revenue due to the measure, including: (i) renegotiation of companies' debts with regulatory agencies ("Desenrola Agências Reguladoras"); (ii) repatriation of assets (RERCT); (iii) updating of assets in Income Tax; (iii) combating fraud in the granting of social security benefits; and (iv) taxation of international purchases.

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