“Regardless of those who agree or not (…), the exemption will be valid”, says the president of the Senate
The President of the Senate, Rodrigo Pacheco (PSD-MG), stated this Friday (January 19, 2024) that the MP (provisional measure) that deals with the reimbursement of the payroll will be reissued by the federal government. According to Pacheco, the agreement was reached in conversations with the Minister of Finance, Fernando Haddadand with the president Luiz Inácio Lula da Silva (PT).
“It was agreed that the payroll tax exemption – regardless of those who agree or not with this institute, but having been a decision of the National Congress […]–, the exemption will be valid”stated the president of the Senate during his participation in Lide Brazil event, in Zurich (Switzerland). “And there is a commitment from the federal government to reissue the provisional measure”, he added.
On Monday (January 15), Pacheco met Haddad to discuss the topic. For considering the return of a provisional measure “something exceptional” and because the text presented by the Executive includes other issues, a political solution was agreed.
“If the MP were only related to the payroll tax exemption, in which there was a robust and resounding statement from the National Congress to extend the payroll tax exemption in Brazil, it would be unconstitutional and would be returned“, he said. He also stated that payroll tax relief can still be discussed by bill.
At the same event, Pacheco also criticized the text sent by the Executive. In the senator’s assessment, “The best way to increase revenue is not necessarily by expanding the calculation base or increasing the tax rate“, but yes “creating tax generating facts from a conception of economic development”.
“We obviously have an objective of fiscal balance, of seeking a zero deficit target, but we also have a constant search for industrial development, a new form of economic development, generation of more jobs, so that we are not just in a discussion of fiscal balance and, necessarily, just an increase in revenue”, he stated.
MP for exemption
At the end of 2023, Congress overturned the presidential veto on the project that would end the tax benefit for 17 sectors of the economy on December 31st. In this way, the exemption would be extended until 2027. At the end of the same month, however, the Minister of Finance, Fernando Haddadpublished the provisional measure 1,202 of 2023which deals with the re-encumbrance of sectors from April 2024.
- MP 1,202 2023 – deals with the re-encumbrance of 17 sectors of the economy, limits the compensation of tax credits obtained by companies through a court decision and extinguishes until 2025 the tax benefits granted to event promotion companies via Perse. It was published on December 29, 2023. It expires on April 1, 2024. Read the complete of the text (PDF – 100 kB).
The government negotiates with Congress alternatives to increase tax collection. On Monday (January 16), Haddad stated that the fiscal impact of the exemption could reach R$32 billion
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