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MP 1202 Will Increase Costs, Risks and Harm the Competitiveness of Agricultural, Commercial, Industrial and Transport Companies. Will Increase Prudence and Impact the Use of Tax Credits.
The re-levy of payroll is a measure that has significantly impacted employment costs in Brazil. This harms the competitiveness of Brazilian products and services, both in the domestic market and in international trade. Business entities from agriculture, commerce, industry, services, and transport express dissatisfaction with MP 1202/2023 and warn of the negative consequences of this re-levy.
With the re-levy of payroll, there is a clear increase in labor charges, resulting in an additional tax burden for companies. This directly impacts competitiveness and investment capacity in the country. Representative entities of the private sector are attentive to the developments of this measure and continue to seek alternatives to minimize the negative impact on the Brazilian economy.
Re-Levy of Payroll: Discontent with MP 1202
In a joint statement, the Confederation of Agriculture and Livestock of Brazil (CNA), National Confederation of Commerce of Goods, Services and Tourism (CNC), National Confederation of Industry (CNI), and National Confederation of Transport (CNT) express their dissatisfaction with the Provisional Measure 1202, which directly impacts the re-levy of payroll. This measure affects 17 sectors of the economy, limiting the use of tax credits resulting from definitive judicial decisions for the payment of federal taxes and revising the Emergency Program for the Resumption of the Events Sector (Perse).
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The Impacts of the Re-Levy of Payroll
Ricardo Alban, president of CNI, highlights that the provisional measure will result in increased caution among employers. ‘When any sector of the economy starts facing 20% more in its charges, what will it do? The first step is to stop investing and then cut back until understanding the impact that this new and unexpected cost will have on its performance, because the sector will lose competitiveness’, says the businessman.
The confederations warn that MP 1202 further harms the competitiveness of industry and commerce, which already face unequal competition with imports, especially with international e-commerce, which does not pay the same taxes as the national productive sector. This measure is considered misguided, increasing the tax burden on the productive sector, the main generator of wealth and jobs that lead to sustainable economic and social development.
Positioning Against MP 1202/2023
The productive sector, represented by business entities from agriculture, commerce, industry, services, and transport, expresses surprise and discontent with the announced and implemented tax increases by MP 1202, without prior dialogue and in opposition to positions recently taken by the National Congress.
In addition to being considered misguided from an economic perspective, MP 1202 nullifies recent decisions by the National Congress, which, twice in 2023, decided to maintain the exemption from payroll taxes, following the override of the veto by the Presidency of the Republic, demonstrating the political will.
The re-levy of payroll increases the cost of employment in Brazil, further harming the competitiveness of industry and commerce, which already face unequal competition with imports, especially with international e-commerce, which does not pay the same taxes as the national productive sector. As a result, judicial challenges are highlighted as necessary to reverse this situation in favor of increasing federal revenue and tax justice between national production and imports.
The productive sector expects the government to reconsider sending MP 1202 and, if this is not the understanding, that the president of the National Congress may return the MP, recognizing that dialogue is the only way for public policies to achieve their objectives. All entities representing the productive sector are committed to Brazil’s economic and social development.
Source: Portal da Indústria
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