Shortage of experts in the technology sector, international harassment for talent and rising payroll costs make it impossible for a Brazilian company to retain talent and compete on the international stage. Due to the horizontal performance of the technology sector, the changes will have a negative cascade effect in all sectors of the Brazilian economy
With the purpose of contributing to the construction of a more digital and less unequal Brazil, in which information technology plays a fundamental role in the democratization of knowledge and the creation of new opportunities for all, in addition to ensuring a business environment conducive to innovation, ethical, dynamic and globally competitive, ABES – Brazilian Association of Software Companies continues to defend the exemption from the payroll and the maintenance of 8 million jobs, defending for its extension until the end of 2026.
Currently, the payroll exemption benefits 17 strategic sectors of the Brazilian economy that are in great need of labor – among them, information technology. Many companies use this benefit and, in the current scenario of economic recovery, the extinction of this measure can be an obstacle to the maintenance and generation of new jobs. “Formal employment, in Brazil, entails a very high tax burden. Payroll exemption not only guarantees millions of jobs, but also enables Brazilian companies to retain talent. Today, many professionals are being harassed by foreign companies with salaries in dollars, due to the very high labor charges, Brazilian companies are unable to compete. The migration of these talents will directly impact the competitiveness of Brazilian companies, as well as Brazil itself in the next 5 to 10 years. A high-tech company would hardly survive the Brazilian market”, highlights Rodolfo Fücher, president of ABES.
The importance of the technology sector for competitiveness is highlighted in several studies, such as The AI Frontier: Modeling The Impact Of AI In The World Economy prepared by McKinsey, artificial intelligence is expected to generate a turnover in excess of US$ 13 trillion in the world until 2030. The same study points out that leading AI companies should have a competitive gain in the order of 25% referring to market opportunities in the same period. On the other hand, companies that are not yet investing in AI may significantly lose competitiveness and, consequently, market. The study also points out that the same competitiveness gap should occur between countries. In this sense, a similar study by PWC points out that, in 2030, practically 45% of AI opportunities should be with China, 25% with the United States and 30% with the rest of the world. In the case of Latin America, the participation should remain at 3%.
In practice, the exemption allows companies in the benefited sectors to opt for the Social Security Contribution on Gross Revenue (CPRB), at rates ranging from 1% to 4.5%, instead of paying the Social Security Contribution on the payroll, which rate is 20%.
Given the accelerated digital transformation in recent months, due to the Covid-19 pandemic, the importance of digital services has become more evident, both for companies and government entities, as well as for citizens. “This is not the right time to burden the IT sector. A greater tax burden may hinder the maintenance of investments for digital transformation and national competitiveness, so we have the commitment of the rapporteur Deputy Marcelo Freitas (PSL-MG) and the President of the Constitution, Justice and Citizenship Committee, Deputy Bia Kicis (PSL/DF), to enable their voting in the CCJC, since eight million jobs depend on it”, explains Fücher.
A manifesto released in October alerted parliamentarians who deal with the issue
The coalition formed by entities representing the 17 economic sectors that employ the most in Brazil – among them, ABES – published, on October 1st, a manifesto that expresses concern with the possible end of the payroll tax exemption policy. The document was intended for parliamentarians who are part of the Committee on Constitution, Justice and Citizenship (CCJ) of the Chamber of Deputies, where the Bill dealing with the agenda is being processed.
According to the group, at least one million of these jobs could be closed if the Social Security Contribution on Gross Revenue (CPRB), known as "payroll tax relief", scheduled to end at the end of 2021, is not extended. In the manifesto, the sectorial entities highlighted the importance of maintaining the tax relief policy so that these jobs are also preserved. They are, the document pointed out, “essential opportunities for inclusion and income distribution for workers from different socioeconomic strata, especially those in situations of greater vulnerability”.
About ABES
ABES (Brazilian Association of Software Companies) aims to contribute to the construction of a more digital and less unequal Brazil, in which information technology plays a fundamental role in the democratization of knowledge and the creation of new opportunities for all. In this sense, it aims to ensure a business environment conducive to innovation, ethical, dynamic, sustainable and globally competitive, always in line with its mission to connect, guide, protect and develop the Brazilian information technology market.
Currently, ABES represents approximately 2 thousand companies, which total about 85% of the software and services segment's revenue in Brazil, distributed in 24 Brazilian States and the Federal District, responsible for the generation of more than 210 thousand direct jobs and annual revenue of the order of R$ 80 billion in 2020.
In line with its purpose, ABES launched the “Mobilization for the Reduction of Inequality” in partnership with ReUrbi and the Third Sector Observatory, and with the support of Weber Shandwick, whose objective is to support social inclusion projects that promote training in the area. digital, through the resources obtained by recycling IT equipment discarded by companies. This initiative is in line with recent discussions at the climate summit, and in line with the 8 Sustainable Development Goals (SDGs) of the Global Compact of the United Nations (UN), and the best ESG (Environment, Social, Governance) practices . This initiative is in line with recent discussions at the climate summit, and in line with the 8 Sustainable Development Goals (SDGs) of the Global Compact of the United Nations (UN), and the best ESG (Environment, Social, Governance) practices .
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