Provisional Measure – PM No. 932/2020 – 50% reduction on tax rates applicable for contributions due to Third Parties for 3 months (Covid-19 – “Sistema S”)
Provisional Measure – PM No. 932/2020 – 50% reduction on tax rates applicable for contributions due to Third Parties for 3 months (Covid-19 – “Sistema S”)
The legislation determines the levy of Social Security Contributions and Social Contributions due to Third Parties upon the total compensation paid to the employees.
In general, the contributions due to Third Parties represent the following burden on the monthly payroll: (i) 2.5 due as ‘education salary’ (FNDE); (ii) 0.2% due as INCRA; and approximately (iii) 3.1% due as contributions to “System S” (SEBRAE, SESI, SENAI or SEBRAE, SESC, SENAC), which is applicable to the industry sector the taxpayer falls into, in order to stimulate industrial, rural, commercial companies, etc.
On March 31, 2020 was enacted the Provisional Measure (PM) No. 932/2020, which determined a 50% reduction on the tax rates applicable to contributions due to “Sistema S”, during the period of April 01 to June 30, 2020, except for the SEBRAE contributions (0.6%), as summarized below:
| ENTITY (Sistema S) | PREVIOUS TAX RATE | REDUCED TAX RATE |
| SENAI | 1% | 0.5% |
| SESI | 1.5% | 0.75% |
| SENAC | 1% | 0.5% |
| SESC | 1.5% | 0.75% |
| SEST | 1.5% | 0.75% |
| SENAT | 1% | 0.5% |
| SESCOOP | 2.5% | 1.25% |
| SENAR (Agroindustry rural producer PJ)* | 1.8% upon payroll; and 0.25% upon gross revenue of rural prod. | 1.25% upon payroll; and 0.125% upon gross revenue of rural prod. |
| SENAR (Individual rural producer)* | 1.8% upon payroll; and 0.20% upon gross revenue of rural prod | 1.25% upon payroll; and 0.10% upon gross revenue of rural prod. |
*option for the collection of the social security upon gross revenue of rural production.
The Federal Government also announced that such reduction, for 3 (three) months, should represent a temporary relief of approximately R$ 2.2 billion in ‘cash flow’ for these companies.
Please let us know should you need any further clarification, as well as to explore the details of tax measures recently adopted by the Brazilian Government, including the possibility of filing a judicial measure to postpone the payment of federal taxes as a result of the COVID-19 pandemic and/or to declare the taxable basis of the third parties contributions as unconstitutional.This e-alert is a general review of the subjects discussed above and does not constitute a legal opinion or legal consult.
