Church, party and union will have relief on the payroll – 09/09/2023 – Market

The Tax Reform may end the collection of PIS/Pasep on the payroll of a certain group of taxpayers. Among them, churches, non-profit entities, political parties, unions and residential or commercial property condominiums.

Also on the list are social services, professional councils, public and private foundations, and cooperative organizations.

The payroll tax rate is 1% in these cases. In general, other taxpayers pay PIS on revenue at rates of 0.65% in the cumulative system or 1.65% for those entitled to credit.

The Tax Reform ends five taxes. Among them, the PIS, whose revenue is destined to the FAT (Worker Support Fund), to cover unemployment insurance and salary bonuses and to finance BNDES (National Bank for Economic and Social Development) programs.

This federal tax will be transformed, with Cofins, into CBS (Contribution on Goods and Services), which will have part of the resources allocated to FAT and will be charged on sales of goods and provision of services. The extinction of PIS is scheduled for 2027.

Daniel de Paula, tax specialist at IOB, says that such entities will no longer contribute the 1% on the payroll, according to the text of PEC 45 approved in the Chamber and which is now under analysis in the Senate.

“It is necessary to wait to assess whether this issue will now be addressed by the Senate. If there is no exception, the understanding is that such entities will no longer contribute 1% to the payroll”, he states.

The expert highlights that, due to court decisions, some certified social assistance charities no longer collect payroll taxes.

According to the IOB, the reform does not foresee the end of the 1% Pasep on government revenues from legal entities governed by public law. These include the Union, states, municipalities, local authorities and public associations.

Extinction was part of another reform proposal, PEC 110, but was not incorporated into the text of PEC 45.

“This 1% contribution on the payroll, not on revenue, is owed by entities that, due to their own actions, do not even have revenue”, says lawyer Maria Carolina Bachur, partner at the firm Lobo de Rizzo.

She says that some of these entities also have immunity from employer contributions on the payroll and that the PIS on the payroll works as a single contribution to cover these two issues.

According to the tax expert, the text approved by the Chamber does not expressly deal with this charge, therefore, it would fall with the extinction of the PIS.

“It’s an almost residual contribution, compared to the broader PIS/Pasep collection on revenue. I don’t think it will be a very significant loss of revenue.”

In the document in which it estimated that the rate of new taxes could reach 27%, the Special Secretariat for Tax Reform of the Ministry of Finance does not mention the impact of this relief on the calculations.

It states, however, that there are a series of residual changes that would be offset by a lower estimate of revenue from the Selective Tax.

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Who are the PIS/Pasep taxpayers on payroll?

• Temples of any cult
• Political parties
• Non-profit education and social assistance institutions*
• Institutions of a philanthropic, recreational, cultural, scientific nature and non-profit associations*
• Unions, federations and confederations
• Autonomous social services
• Supervisory boards for regulated professions
• Private law foundations
• Public foundations established or maintained by the government
• Condominiums owned by residential or commercial properties
• OCB (Organization of Brazilian Cooperatives) and State Organizations of Cooperatives**

What is the basis for calculating PIS/Pasep on the payroll?

Total remuneration, including bonuses, commissions, additional work, prior notice worked, vacation additional, five-year period, night additional, overtime, 13th salary, paid weekly rest, and the total daily paid, when exceeding fifty percent of the monthly pay

What is the tax rate?

1% tax rate

Sources: IOB and Federal Revenue. *That meet the requirements of law no. 9,532/1997 **provided for in law no. 5,764/1971

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