The virtual plenary session of the Federal Supreme Court begins judging this Friday (17) the extension of the payroll tax exemption for the 17 sectors of the economy that employ more than nine million people. The action was filed by President Lula against Congress’ decision, alleging that the extension of the benefit violates the rules of the fiscal framework, since no compensation was presented for the exemption.
The process is dealt with in an action presented by the Attorney General’s Office (AGU), which questions the validity of provisions of the law approved in 2023. In addition to the extension of the exemption for the sectors in question, the social security contribution rate on municipal payrolls was reduced to 8%.
The exemption was even suspended by the minister of the Federal Supreme Court (STF), Cristiano Zanin. At the time, he gave a deadline of 60 days for the powers to reach an agreement on compensation measures.
Releasing a sector means that it will have a reduction or exemption from taxes. In practice, it makes hiring and maintaining employees cheaper in companies. The process allows companies to replace the 20% social security contribution on employees’ salaries with a rate on the company’s gross revenue. The action will be judged until October 24th in a virtual plenary session.
