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Industry Entities Fear That MP 1202 Will Harm Product and Industry Competitiveness in International Trade. It Will Increase Costs and Risks.
MP 1202, in effect since 2023, directly impacts the costs of hiring in Brazil, compromising the competitiveness of Brazilian products and services, both in international trade and in the domestic market. Business entities from agriculture, commerce, industry, services, and transport express their dissatisfaction with the provisional measure, which significantly affects formal and private employment in the country.
The provisional measure 1202/2023, known for impacting hiring costs in Brazil, has also generated criticism from business entities in agriculture, commerce, industry, services, and transport due to its influence on the re-taxation of payroll. These organizations represent the majority of formal and private employment in the country and are directly affected by MP 1202.
Business Owners Express Dissatisfaction 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) emphasize their frustration with the publication of MP 1202. The provisional measure increases costs for 17 sectors of the economy by re-taxing payroll, in addition to limiting the use of tax credits resulting from final judicial decisions to settle federal taxes and revising the Emergency Program for the Recovery of the Events Sector (Perse).
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Impact of MP 1202 on the Competitiveness of the Productive Sector
Ricardo Alban, president of CNI, emphasizes that the re-taxation of payroll will lead to increased costs for hiring. As any sector of the economy begins to incur 20% more in charges, the trend is to reduce investments and assess the impact of this additional cost on the competitiveness of the productive sector.
The president further highlights that MP 1202 harms the competitiveness of the industry and commerce, which already face unequal competition with imports, especially from international e-commerce, exempt from the taxes paid by the national productive sector. This makes the measure misguided, as it increases the tax burden on the productive sector, the main generator of wealth and jobs that drive sustainable economic and social development.
Note Against MP 1202/2023
The Productive Sector Criticizes MP 1202 for Increasing Costs and Harming Competitiveness
The representatives of business entities from agriculture, commerce, industry, services, and transport express surprise and indignation at the tax measures announced and implemented through MP 1202. These measures, which include the re-taxation of payroll for 17 sectors of the economy, the limitation on the use of tax credits, and the revision of the Emergency Program for the Recovery of the Events Sector (Perse), increase the tax burden on the productive sector, which is primarily responsible for generating wealth and jobs that foster sustainable economic and social development.
Furthermore, MP 1202 nullifies recent decisions of the National Congress, which had opted to maintain the exemption of payroll taxes on two occasions in 2023. The re-taxation of payroll raises hiring costs in Brazil and further undermines the competitiveness of industry and commerce, which already face unequal competition with imports, especially from international e-commerce, exempt from the taxes paid by the national productive sector.
The productive sector acknowledges the need for public account adjustments to promote sustainable economic growth, but emphasizes the importance of balancing public spending cuts with revenue increases. Additionally, it highlights the importance of dialogue so that public policies achieve their objectives and contribute to economic growth and Brazil’s fiscal balance.
Source: Industry Portal
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