Entities in the IT and ICT sector condemn social security repayment

Manifest states that the change in the exemption law shows
government's disregard for the segment

 

The sanction of Law nº 13.161/2015 on August 31st, after processing, modification and approval in the Federal Senate and in the Chamber of Deputies of the project originally proposed by the Federal Executive, is an eloquent demonstration that the Brazilian Government, which does not value the IT and ICT sector. The new law increases the rate of the employer's social security contribution, CPP, levied on gross revenue, from the current 2% to 4.5%, representing an increase in the tax burden by 125%. Additionally, the text allows each company to choose to collect on gross revenue according to the model introduced in 2011, or on payroll at the rate of 20%. 

 

The approval by the Federal Senate of the amended text and approved by the Chamber of Deputies, whose bases were presented and supported by the Executive, is a serious blow to IT and ICT service providers and software development companies in Brazil. By eliminating the mandatory payment on gross revenue, the new law will boost informality at work, due to the unreasonable increase in the tax burden, aggravated by the slowdown in the national economy. The new measures have the potential to significantly disorganize the sector, leading to a reduction of 81 thousand jobs in the next two years, which represents 92% of the 88 thousand jobs generated by the sector from 2010 to 2014. 

 

The IT and ICT services sector pioneered the substitution of the CPP incidence for gross revenue, introduced in 2011, and became known as payroll tax relief. The mechanism, explicitly provided for in the Federal Constitution, constitutes a structuring public policy for the sector, addressing important factors that inhibit its development, such as: lack of domestic and international competitiveness due to the overhead on labor costs; employment of specialized professionals with remuneration well above the national average; and creativity in labor relations to face the high cost of labor. The system has been leveraging important differentials in Brazil in the sector, namely: (i) professionals oriented to customer needs; (ii) ability to develop highly complex software and systems; (iii) provision of specialized technical services for the operation, maintenance and support of networks and datacenters; and (iv) customization, maintenance and support of systems and software. Such national vocations underpin the sector's potential for continued growth at home.  

 

The IT and ICT services sector responded brilliantly to the stimuli of the Brasil Maior Plan. In the period from 2010 to 2014, revenue grew by 14.6% pa reaching R$ 52.9 billion. 88,000 jobs were created in the period, accompanied by a real increase in income, with total remuneration growing 16.4% per year, above, therefore, the growth in revenue. The average income of the sector worker is about 2.2 times the national average. The collection, considering the sum of CPP, IRPF and FGTS, grew by R$ 524 million compared to 2011, the year in which the exemption was introduced, reaching a total of R$ 7.0 billion. The social security tax increases the cost of Brazil and encourages the replacement of Brazilian professionals by competitors in other countries, causing loss of intellectual capital and incalculable losses for innovation and national development. 

 

Despite all the efforts made by the sector, culminating in the great business mobilization that defended a republican tax rate increase for all sectors – with a linear increase of 50% in the rates and mandatory collection on gross revenue – and the support that this proposal received from important national leaders, what was seen was the approval of a text that was not isonomic and unreasonably burdensome for many productive sectors. It is deeply regretted the increase in the rate to 4.5% and the non-maintenance of the mandatory payment on gross revenue. By turning its back on the IT and ICT sector, in view of its role as an inducer of productivity, efficiency, agility and innovation for the State, public services, companies, and for the citizen, the government turns its back to the very future of Brazil as a modern country fully inserted in the knowledge economy. This strategic myopia will regrettably harm the advancement and growth of Brazil, resulting in unwanted results that are already harshly reflected in the daily lives of the Brazilian people. 

 

The entities that subscribe to this manifesto will continue to hold the banner of technological development, to be conquered by the responsible and dynamic performance of companies in the sector and by the talent, commitment and competence of its hundreds of thousands of professionals, with a spirit of collaboration with all governmental spheres. and under the aegis of the best for Brazil and its citizens.