Companies that benefit from payroll tax relief ask Pix to pay taxes

A proposal that has been debated in recent years to relieve the payroll of Brazilians has gained momentum in recent weeks. Representatives of sectors benefiting from payroll tax relief, which expires on December 31 of this year, are mobilizing to defend the creation of a pix that pays permanent taxes on financial transactions. 

The idea of Pix pays taxes is known as CFM (Financial Contribution on Movements), and provides for a rate of 0,11% including for Pix transactions. CFM would mean that all Brazilians would pay 0,11% for each financial transaction carried out. For example, transferring BRL 100 through Pix would mean paying BRL 0,11; transferring BRL 1.000 would be equivalent to paying BRL 1,10. The contribution would be deducted at source, in the same way as with the CPMF (Provisional Contribution on Financial Transactions). 

The expected result is to reduce the costs of companies with formal hiring and generate more jobs in the country – or prevent layoffs – as currently only 17 sectors are entitled to exemption. 

However, there is resistance to the CFM proposal in Congress and society. For this reason, deputies from the Entrepreneurship Parliamentary Front (FPE), members of the United Brazil Institute (IUB), representatives of the 17 exempted sectors and Brasscom (Association of Information and Communication Technology and Digital Technologies Companies) mobilized to defend the project. The group presented an alternative study to PEC 45/2019 (Tax Reform of the Chamber) in February this year with the proposal of the CMF.

Defenders argue that there is an urgent need to solve the payroll tax exemption problem for three main reasons: it burdens formal hiring; it is not egalitarian; and it is provisional, since every time it ends it has to be renewed in Congress with long debates and without a definitive solution. 

Even facing great resistance, the debate on the proposal for a permanent tax on financial transactions may gain strength in Congress in the coming months. It will be necessary to see if the advantages brought by the project are able to overcome the objections raised against it.

A proposal to create a tax on financial and digital transactions, called CMF or pix pays taxes has been debated by Congress. If approved, the tax would go into effect in February 2023 at a rate of 0,11%.

The proposed Pix pay taxes was presented by representatives of the Parliamentary Entrepreneurship Front (FPE), members of the United Brazil Institute (IUB), exempt sectors and Brasscom (Association of Information and Communication Technology and Digital Technologies Companies).

Despite resistance in society, deputies defend that the CMF be incorporated into the current tax reform, as it can contribute to the payroll exemption. However, the tax would be stamped for Social Security and would unify other taxes with a rate of 23,61%.

However, Simon Tebet – today Minister of Planning – said that there are restrictions in the Senate on this inclusion in the tax reform. She believes that to approve the reform it is necessary to remove points of divergence, such as the creation of this tax.

Therefore, the chances are low that this measure will be voted in Congress this year. However, the debate has gained momentum in recent weeks amid concerns about the future of tax relief, which ends on December 31 of this year.