Emergency program for the events sector was instituted in 2021 to alleviate losses due to the pandemic
Established in 2021 due to the pandemic, the Persian (Emergency Program for the Resumption of the Events Sector) has as its main objective to alleviate losses in the sector, which was at a standstill during the Covid pandemic, when gatherings were prohibited. Since the end of 2023, however, discussion about a possible end of the program has caused an impasse between the government and sector entities that demand its maintenance.
In December last year, the Minister of Finance, Fernando Haddadproposed the gradual end of Perse by 2025. The changes were established in the MP (provisional measure) 1,202 of 2023.
WHAT IS PERSE?
The events and tourism sectors were some of the most affected by the covid pandemic in Brazil. A law 14,148 of 2021 established Perse. The text established “emergency and temporary actions” with the aim of “create conditions so that the events sector can mitigate losses arising from the state of public calamity”.
Legal entities, including non-profit entities, were covered by Perse. Some activities included in the benefit were:
- holding congresses, fairs and social and sporting events;
- holding shows, parties and festivals;
- organization of buffets social and children's;
- nightclubs and concert halls;
- hospitality in general;
- cinema theater management; It is
- provision of tourist services.
Perse sought to help companies through 3 central aspects:
- debt renegotiation – legal entities covered by Perse and with debts registered until October 31, 2022 could join a special debt negotiation, making it possible to obtain installments with different terms, depending on the payment capacity of each company. In this benefit, discounts of up to 100% of the value of interest, fines and legal charges could be granted. Furthermore, the remainder of the debt could be paid in up to 145 monthly installments. For social security debts, the maximum amount of installments is 60 months.
- tax exemptions – the text zeroed the rates of the following taxes for 60 months:
- PIS/Pasep (Contribution to Social Integration and Public Servant Asset Formation Programs);
- Cofins (Contribution to the Financing of Social Security);
- CSLL (Social Contribution on Net Profit); It is
- IRPJ (Corporate Income Tax).
- compensation – the law authorized compensation, in an amount equivalent to the expense of paying employees during the pandemic for companies with a reduction of more than 50% in revenue between 2019 and 2020.
WHAT THE MP SAYS
In the government's provisional measure for the gradual end of Perse (MP 1,202 2023), the following guidelines are described:
- from April 2024 – the relief (tax exemption or reduction) on the taxes below ends:
- CSLL (Social Contribution on Net Income);
- PIS/Pasep (Contribution to Social Integration and Public Servant Asset Formation Programs); It is
- Cofins (Contribution to Social Security Financing).
- from January 2025 – the end of the benefit for Corporate Income Tax.
The MP also deals with reimbursing the payroll of 17 sectors of the economy and lowers other rules to increase tax collection. The measure was published on December 29, 2023 and expires on April 1, 2024. Read the complete of the text (PDF – 100 kB).
WHAT THE GOVERNMENT WANTS
The government's proposal, presented by the Minister of Finance, aims to increase revenue. Haddad argues that Perse did not bring benefits to the economy.
According to the government, the program cost R$17 billion in tax exemptions in 2023. The Ministry of Finance's initial estimate was a waiver of around R$4 billion.
The surplus of R$13 billion has been used by the economic team as an argument to end the program.
Haddad's initiative displeases deputies and senators. The President of the Chamber, Arthur Lira (PP-AL), is a defender of Perse. It is yet another obstacle between the government and the National Congress.
Entities representing the sector are also in favor of the program.
After all the discussions, the Federal Revenue opened investigations to investigate the possibility that Perse was used irregularly by companies. Tax authorities' suspicions include practices such as money laundering. The government says that the tax authorities' investigations began after an anonymous tip.
The premise is that companies linked to the events sector used the benefit to avoid paying taxes with laundered money. There is also talk of the possibility of companies outside the segment registering fraudulently to receive program incentives.
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