ABES (Brazilian Association of Software Companies) regrets the full veto of Bill No. 334/2023, which ensures the continuity, until December 31, 2027, of the payroll tax exemption for the 17 segments of the economy that employ the most in the country. For the association, not only the technology sector, but the country's economy as a whole, will lose out. In 2011, when the benefit was created for the Information Technology sector, it was possible to encourage formal hiring of workers via CLT and combat the so-called “pejotization” of the sector, which causes the government to lose revenue.
Without the exemption, ABES estimates that there will be a double impact. On the one hand, costs should increase, on average, by around 15%, a bill to be paid by the end customer. This means increased IT costs for the digital transformation of industry, agribusiness, retail and many other sectors that will be impacted.
On the other hand, the entity assesses that most companies in the sector will have difficulty passing on the increases. This will also trigger a significant layoff of employees to accommodate the increased load. We will have a reduction in formal jobs and a great incentive for “pejotização”.
In the war for the digital economy waged between countries, Brazil will become increasingly distant. According to the Brazilian Software Market Study – Panorama and Trends 2023, with data from IDC that were analyzed by ABES, Brazil was already losing competitiveness, as the growth of the technology market, at a global level, was 7.4% in 2022, and Brazil showed growth of 3%, that is, below expectations of growth of up to double digits previously projected. According to the research, there was a drop of 4% in investments across Latin America (compared to 40% in the previous survey), another drop of two positions in the global investment ranking, with Brazil now appearing in twelfth position, with US45.2 billions invested.
The veto to the extension of the payroll tax exemption will certainly tend, according to ABES, to further destabilize this scenario, with unfavorable consequences for the Brazilian economy and society, with loss of competitiveness, elimination of jobs and increasing digital inequality.
We are confident that Congress will have the sensitivity to recognize the importance of the Payroll Exemption for these 17 Sectors that employ the most in the Country, and in particular for the Technology Sector that has transversal penetration in the Economy, and will overturn the Presidential veto.
ABES represents around 2,000 companies, 77% of which are micro and small companies, which total approximately 85% of revenue in the software and services sector in Brazil, distributed across 24 States and the Federal District, responsible for generating more than 232 thousand direct jobs and one annual revenue of around R＄ 92 billion in 2022. The association's purpose is 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 everyone. In this sense, its objective is to ensure a business environment conducive to innovation, ethical, dynamic, sustainable and globally competitive, always aligned with its mission of connecting, guiding, protecting and developing the Brazilian information technology market.
ABES - Press contacts:
Weber Shandwick Brasil – abes@webershandwick.com
Paula Boracini – +55 (11) 98415-0314
Carol Herling – +55 (11) 99553-7756
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