Starting in January, companies in Brazil that previously benefited from payroll tax exemptions must reassess their payroll tax calculation options. Beginning in 2025, the phased reintroduction of payroll will take effect, gradually increasing the percentage of INSS contributions paid by employers, as outlined in Law 14.973/2024.  

Changes on the contributions for payroll 

This law establishes a transition framework for payroll exemption. The traditional Social Security Contribution from Brazil has been replaced by the Social Security Contribution on Gross Revenue (CPRB), as specified in articles 7 and 8 of Law 12,546/2011, with a validity until December 2027.

Under this new regulations, the government is shifting the payroll tax burden from revenue-based taxation to the CPRB system.

  • 2024: employers paid no payroll tax, but contributed 1% to 4,5% of their revenue, based on industry classification.
  • 2025: a 5% CPRB rate is introduced, while revenue-based contributions are reduced to 0.8% to 3.6% (80% of the legally established rate).

Perspectives on the future 

From next year, the CRPB in Brazil will continue increasing until 2028, with a gradual development of 5% per year. Therefore, their forecast is to be applied on the next way:  

  • 2026: CPRB at 10%, with revenue-based contributions between 0.6% to 2.7% (60% of the rate established by law).
  • 2027: CPRB at 15%, with revenue-based contributions between0 4% to 1.5% (40% of the rate established by law).
  • 2028: CPRB at 20% and nonpayment for invoicing 

It is important to pay attention to Article 4 of the Law. This one stipulates that, from 2025 until 2027, companies must maintain an average number of employees equal to or greater than 75% of the average for the previous calendar year. As the companies that do not obey will lose the right to remain in the exemption in the calendar year following non-compliance.  

Last months have been introduced many reforms about taxes applied on payroll processes. Therefore, if you wish having a complete payroll management in Brazil, do not hesitate to contact us! 

Can Auxadi help?

Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.

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All information contained in this publication is up to date on 2024. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.