Fachin rules out urgency in Novo action against payroll tax exemption

The vice president of STF (Supreme Federal Court), Minister Edson Fachin, decided this Friday (12.Jan.2024) that he will not analyze the action filed by the New party against the MP (provisional measure) issued by the federal government on the exemption from payroll in 17 productive sectors.

Fachin understood that there is no urgency in judging the case because the MP, published at the end of 2023, will only come into force in April this year. With the understanding, the action will be sent to the case's rapporteur, minister Cristiano Zanin, from February 1st, when the magistrates' work will resume at the Court.

“With regard to judicial action, the urgency raised in the demand presented during the recess of this court, in this case, goes against, at least for now, at this moment, what flows, for the hypothesis of any and all provisional tax measures, from the constitutional principle of nineagesimal tax precedence”said Fachin.

MP 1,202 of 2023 deals with the reburdening 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 (Emergency Program for the Resumption of Events Sector). It was published on December 29, 2023. It expires on April 1, 2024. Read the complete of the text (PDF – 100 kB).

In the action filed with the Supreme Court, Novo asked for the measure to be suspended because it understands that the text attempts to annul the final decision of Congress that overturned the president's veto. Luiz Inácio Lula da Silva (PT) to the bill that extended the exemption of sectors until 2027.

On December 28, Congress enacted the law that extends the payroll tax exemption for 17 sectors of the economy. The benefited sectors stop paying around 20% of workers' payroll to Social Security and contribute at a rate between 1% and 4.5%.

With information from Brazil Agency