Authors:
Rodrigo Petry Terra – rpterra@almeidalaw.com.br
Homero dos Santos – hsantos@almeidalaw.com.br
Abstract: Published on May 30, 2018, and valid as of September 2018, Law No. 13.670/18 foresees the end of the payroll exemption for several sectors. In addition, the law in question makes it impossible to offset IRPJ and CSLL tax debt which directly affects companies that opt for the taxable income.
* * *
In response to the deficit recovery announced by the Federal Government resulting from the concessions made to put an end to the truckers’ strike, the bill that foresaw the end of the payroll exemption for various sectors of the Brazilian economy was approved by the National Congress and recently sanctioned by the President of the Republic (Law No. 13.670/18).In response to the deficit recovery announced by the Federal Government resulting from the concessions made to put an end to the truckers’ strike, the bill that foresaw the end of the payroll exemption for various sectors of the Brazilian economy was approved by the National Congress and recently sanctioned by the President of the Republic (Law No. 13.670/18).
The aforementioned law, however, also made it impossible to offset debts of IRPJ and CSLL estimates and is thus a controversial measure which will certainly be the subject of much discussion.
Below, we present brief comments on the relevant novelties introduced by Law 13.670/18.
Payroll Reonering
The law in question determines in general terms that important sectors of the Brazilian economy should collect the social security contribution on the payroll as of September 2018 (there being no possibility of collecting the social security contribution on gross revenue – CPRB).
On the other hand, other sectors remain exempt until 2020. They may choose to pay social security contributions on the payroll or on gross revenue (as in the case of information technology companies, civil construction, or road transport of loads among others).
The good news for the affected sectors is there are relevant arguments for postponing payroll exemption to 2019.
This is because as a general rule, companies must chose the method they will use for paying social security contributions (payroll or gross revenue) in January of each year. The decision is irreversible for the entire year.
With this in mind a thesis arises: if the option is irreversible for the taxpayer, then it must also be irreversible for the Government.
In other words, the Federal Government could not change the rules for collecting social security contributions in the middle of the calendar year (for those taxpayers who opted for the CPRB in January 2018). Otherwise it would put several companies in a situation of extreme legal unpredictability and insecurity.
It should be noted that this thesis was already taken to the judiciary in 2017 and the taxpayers’ arguments were very well received by the courts.
For this reason it is believed the chances of judicially postponing the remuneration of 2019 are good.
Impossibility to offset IRPJ and CSLL estimate debts
In addition to the payroll tax, the law in question also provides that companies taxed by the annual taxable income will no longer be able to compensate monthly tax debts of IRPJ and CSLL. This restriction is effective immediately.
Therefore, as a result of this prohibition, these companies must from now on make the payment of IRPJ and CSLL estimates in cash.
This controversial measure appears to be an extreme attempt by the Federal Government to increase tax revenue in the face of a clear political and economic instability, ensuring cash flow throughout the year.
From a different point of view, this restriction places taxpayers in a worrying situation mainly due to the need to redo all financial-fiscal planning carried out at the beginning of the year.
For these and other reasons, we understand that there are good arguments for challenging Law No. 13.670/18.
Almeida Advogados has a team specializing in tax law who will make itself available to resolve any issues related to the topics discussed in this article.