Keywords: payroll tax relief, NCM codes, amendments

The Federal Government has passed the conversion of Provisional Measure No. 563/2012 into Law No. 12,715/2012. The Law was published in the Federal Official Gazette, and it provides payroll tax relief for certain economic sectors by reducing payroll tax contributions.

Law No. 12,715/2012 reduces the payroll tax rate for social security contributions of affected companies from 20 percent to 1 or 2 percent of the gross income of these companies related to products for which NCM codes are listed in the Annex of the Law, excluding canceled sales and unconditional discounts granted.

Major amendments introduced by Law No. 12,715/2012 include the following:

Road passenger transportation companies shall collect the social security contribution at a tax rate of 2 percent on gross income, instead of the social security contribution due on the payroll provided for by sections I and III of Article 22 of Law No. 8,212/1991; An extension of the economic sectors that shall collect social security contributions at a tax rate of 1 percent on gross income, instead of social security contribution levied on the payroll. The additional sectors include companies that perform cargo and passenger transportation activities (maritime or air transport) and toys manufacturers (dolls, tricycles, electric trains and musical equipment); The entities that hire services of technology of information and communication, call centers, design houses, hotel and hospitality and passenger road transport, through assignment of manpower, shall withhold the social security contribution at a tax rate of 3.5 percent on the gross value of the invoice related to the services provided.

The changes introduced by Law No. 12,715/2012 will be fully in force on January 1, 2013, nevertheless, such rules shall be regulated in order to be effective.

Originally published October 10, 2012

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2012. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.