Have you ever heard of payroll exemption? At first glance, hearing this expression may seem strange, but it's much simpler than it sounds. This change in the tax rules for companies allows them to replace the so-called Employer's Social Security Contribution (CPP), a tax levied on payroll, with the CPRB (Social Security Contribution on Gross Revenue).

In the first tax, the INSS (National Social Security Institute) collected an amount of 20% from each employee hired by a given company. Meanwhile, in this second tax, the entity collects an amount that varies between 1.5% and 4.5% on gross monthly turnover. This depends on the activity, the sector (CNAE) and the product manufactured (NCM) by the company.

In this way, the payroll tax exemption, implemented in 2011 through Provisional Measure 540, has become a government strategy to make it cheaper to hire employees and consequently reduce the national unemployment rate.

Do you want to know more about payroll exemption, its current situation and which companies are entitled to it? Then read on to find out more.

First of all: do you know what a payroll is?

At first, it is essential that you know what a payroll is. In this way, it will be easier to understand more clearly about this change in labor legislation.

Payroll, is a document that shows a list of information about the remuneration of each employee. In addition to the amount of the salary, it presents data ranging from the deductions made for tax purposes to those relating to co-participation in the benefits that the company offers to the member. These include

  • Transport vouchers: is a benefit guaranteed by law nº 7.418/85This ensures that the worker is able to get to their place of work. Depending on the route and the cost, the company can deduct up to 6% from the amount;
  • Food vouchers: This benefit, on the other hand, is optional and there is no minimum amount to be deducted. The only rule is that it must not exceed 20% of the employee's salary;
  • Social security deduction: This monthly contribution goes to Social Security, which administers each contributor's pension;
  • Life insurance: is a non-mandatory feature, but some companies charge a monthly fee directly on the payroll from the month the employee is hired;
  • Union dues: became optional in 2017, when the Labor Reform took place.

It's worth noting that these are just some of the deductions that appear on the payroll and they can change according to each company's internal policies.

How did this legislation come about?

As mentioned earlier, this change in legislation made it possible to choose between the conventional contribution (CPP) or the CPRB, on gross revenue.


So, this measure is subject to further changes over the years to better suit the government's objectives as a social manager.

Who can adopt the payroll exemption?

One question that comes up quite often when we talk about the payroll tax exemption is which companies are eligible for this type of contribution. That's why we've compiled a list of eligible taxpayers:

  • Those that fall under CNAEs (National Classification of Economic Activities) determined in accordance with the law;
  • They obtained gross revenue by working exclusively with activities listed in the updated law 13.161/2015;
  • They had gross revenues obtained by working in specific activities according to the updated law 13.161/2015.

On the other hand, even if a particular company meets the above requirements, she remains free to decide which of these types of taxation is the most advantageous for her business.

How does the payroll tax exemption work?

As we mentioned, the payroll tax exemption is calculated based on the activity carried out by the company and varies between a rate of 1.5% and 4.5%. Below, we'll show you the relationship between the percentage taxed and the area of activity:

Rate of 1.5%

  • Newspaper printing;
  • Printing books, magazines and other periodicals;
  • Book publishing;
  • Newspaper editing;
  • Magazine publishing;
  • Publishing integrated with newspaper printing;
  • Publishing integrated with magazine printing;
  • Radio activities;
  • Open television activities;
  • Portals, content providers and other information services on the Internet.

Rate of 2%

  • collective road passenger transportation with a fixed itinerary, municipal, intercity, interstate and international, falling under classes 4921-3 and 4922-1 of CNAE 2.0;
  • rail passenger transport falling under subclasses 4912-4/01 and 4912-4/02 of CNAE 2.0;
  • subclass 4912-4/03 of CNAE 2.0.

Rate of 4.5%

  • the construction sector falling under groups 412, 432, 433 and 439 of CNAE 2.0;
  • construction of infrastructure works falling under groups 421, 422, 429 and 431 of CNAE 2.0.

However, with the changes brought about by Law no. 13.670/2018The sectors benefiting from the payroll tax exemption have changed, as have the rates. Check out the updated information below:

  • information technology - IT and communication - ICT - 4.5%;
  • call center - 3%;
  • intercity, interstate, international and metropolitan region road passenger transport - 2%;
  • rail transport of people - 2%;
  • metro-rail transport of people - 2%;
  • road freight transport - 1.5%;
  • construction - 4.5%;
  • construction of infrastructure works - 4.5%;
  • journalistic and sound and image broadcasting companies - 1.5%;
  • other industries included in the Industrialized Products Tax Table - TIPI - 1.5%.

Is the payroll tax exemption still valid for 2021?

Now that you know what the payroll tax exemption is, how it came about and, above all, how to calculate it according to the activity carried out by the company, it is also essential to know if this tax resource is still in force.

In July 2020, through Provisional Measure 936, an attempt was made to extend this tax until 2021. At first, this proposal was vetoed, however, in November 2020, the benefit has been extended until December 2021.

So, for the time being, you can still choose to contribute through gross monthly income if this is the best alternative for your business.

Conclusion

Choosing to waive payroll taxes instead of contributing per employee is a decision that requires a lot of analysis. Here's why, it is essential that you understand which of these paths makes the most sense for your company and then select the most suitable solution.

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