House moves closer to extending payroll exemptions until 2026

The House Oversight and Control Committee approved a bill extending payroll exemptions until 2026 for 17 economic sectors. If party leaders are in agreement, the proposal may now go straight to a floor vote.

The bill’s rapporteur, congressman Jerônimo Goergen is now seeking to sit down with the government’s economic team, which remains uncomfortable with the idea of extending the benefit. Since 2011, 17 economic sectors have enjoyed significant social security tax breaks on their payroll, with companies paying between 1 and 4.5 percent of their gross revenues as opposed to 20 percent of their total payroll.

However, this benefit is slated to end in the coming weeks, and the House proposal would extend exemptions for another five years. Combined, companies from the 17 sectors employ 6 million people.

If approved, the proposal would represent an additional cost of BRL 5.8 billion (USD 1.1 billion) for the government next year. The federal budget, however, only allocates BRL 3.2 billion for such policies.

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