*In Brazil, a Provisional Measure is an “act” issued by the president, with the authority of law until later approved by Congress. The Provisional Measure is effective as from its date of publication for 60 days, and may be extended for an additional 60-day period (for a total of 120 days).
MP No. 582/2012 established an exemption for employer contributions with respect to social security for companies in certain industries—including companies with operations relating to rail and subway passengers, airport infrastructure, hospital services, air transport of passengers and cargo, and newspaper companies and radio broadcasting.
The intent of the measure is to reduce labor costs and create new jobs.
Basically, the standard employer contribution of 20% on the payroll of employees is replaced by a fixed percentage that is levied on the gross revenue of the company. Under the original measure (MP No. 582/2012), the calculation and payment of the contribution and the filing requirements were amended.
Companies, however, may elect to retrain the former rules for making the 20% employer contribution to social security.
Under the new approach, depending on the economic reality of each entity, the change in calculation of social security contributions may actually increase an employer’s tax burden—for example, in industries that use high value-added technologies, but have a low need for manpower.
Therefore, companies that would not benefit from the new rules may want to consider applying the earlier system of social security contributions.
Read a March 2013 report (Portuguese) prepared by the KPMG member firm in Brazil: Desoneração da folha de pagamentos poderá ser opcional