By Enrique Grimberg Kohane
The Social Security Contribution on Gross Revenue (CPRB) system was established by Law No. 12.546/2011 as a substitute for the employer’s social security contribution on employee wages. Its objective was to relieve the payroll tax burden for companies in certain sectors, promote job creation, and increase competitiveness through the “Plano Brasil Maior” program. This benefit was directed at 17 economic sectors and municipalities with up to 156,000 inhabitants.
Although the law that instituted the CPRB provided for its immediate reinstatement starting from December 31, 2014, the substitute regime remained in effect in Brazil beyond that date due to various legislative amendments that extended its validity.
At the end of 2023, in an effort to maintain the substitute regime, Law No. 14.784/2023 was enacted, extending the CPRB until December 31, 2027. Given the fiscal impact of this extension, the President of the Republic, after having his veto overturned by Congress, filed Direct Action of Unconstitutionality (ADI) No. 7.633 before the Supreme Federal Court (STF), seeking a ruling that the provisions extending the tax relief period were unconstitutional.
This led to a scenario of uncertainty and instability for taxpayers regarding the possibility of utilizing the tax relief in 2024. This concern was heightened when, on April 25, 2024, the rapporteur of the ADI, Minister Cristiano Zanin, issued a preliminary injunction suspending the effects of Law No. 14.782/2023, arguing that the legislation lacked the necessary estimate of its budgetary and financial impact.
Following negotiations between the Executive, Legislative, and Judicial branches, the issue was only resolved in September 2024, when Law No. 14.973/2024 came into effect. Among other measures, this law maintained the CPRB in full until December 31, 2024, while establishing a gradual reinstatement of payroll taxation for subsequent years.
This transition from the CPRB regime involves the progressive reinstatement of the employer’s social security contribution. Starting this year, companies will be subject to a hybrid system, incorporating both CPRB and traditional payroll taxation, with the latter gradually increasing over the transition period.
The legislation outlines the following transition proportions until full reinstatement of payroll taxation in 2028:
| Year | CPRB | Payroll Tax (CPP) |
|---|---|---|
| 2024 | 100% | 0% |
| 2025 | 80% | 25% |
| 2026 | 60% | 50% |
| 2027 | 40% | 75% |
| 2028 | 0% | 100% |
Two additional key points in this legislative change include:
- During the transition period (2025–2027), no social security contribution will be levied on employees’ 13th salary.
- Companies benefiting from the measure must sign a commitment agreement ensuring that, throughout each calendar year, they maintain an average number of employees equal to or greater than 75% of the workforce recorded in the previous year, until full payroll taxation is reinstated.
Given this scenario, the return of employer payroll taxation coincides with the ongoing implementation of tax reform, exacerbating the uncertainty and financial strain on taxpayers, particularly for businesses with a large workforce.
As the reinstatement of payroll taxation requires adjustments in the calculation and assessment of social security contributions, necessary modifications to business tax management systems are already affecting the competitiveness of labor-intensive sectors and impacting companies’ financial planning for the coming years. To navigate these changes, careful tax planning—guided by specialized professionals—is essential to mitigate the effects of reinstated payroll taxation.
In this context, companies must adopt a strategic approach to their business structure, analyze opportunities for tax credits and refunds on overpaid or improperly collected taxes, and conduct a detailed review of both the CPRB and traditional payroll tax bases.
An example of this complexity is the numerous legal disputes concerning the classification of employee compensation for payroll taxation purposes, as well as the definition of gross revenue for the substitute tax calculation. Notably, in Theme 1.186 of general repercussion, the STF will determine whether the CPRB should apply to PIS and Cofins contributions, which could lead to tax refunds for overpaid amounts, including retroactively.
In a constantly evolving tax landscape, proactive measures and continuous monitoring of regulatory changes are crucial for businesses to adapt and maintain their market competitiveness.
The Marins Bertoldi Advogados Tax Law Division remains attentive to the latest developments on this matter and is available to provide guidance and deeper insights tailored to each company’s specific situation.
