Brazil Moves to Maintain 20% Payroll Tax

On December 28, Congress enacted into law a bill extending through 2027 the elimination of a 20% social security payroll tax for 17 labor intensive business sectors. Starting in 2011, the payroll tax was replaced by a fee set at between 1% and 4.5% of gross revenues for the affected sectors, which are Brazil’s largest employers and combined have nine million employees.

The tax break was scheduled to end on December 31, but Congress voted to extend it until the end of 2027. That extension, though, was vetoed by Brazil’s President Luis Inácio Lula da Silva, and his veto was ...