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Brazilian footwear industry celebrates tax exemption on wages

Jan 5, 2022 Brazil
Brazilian footwear industry celebrates tax exemption on wages
The extension of the payroll exemption until the end of 2023 is good news for the footwear industry. The measure is seen as essential to maintain and create new jobs in the sector
“This is the best news of the year! With the exemption, we will be able to continue recovering jobs in the sector, which in 2021 increased by 12% over 2020, a resumption that would not exist with that obligation", commented Haroldo Ferreira, Executive President of the Brazilian Footwear Industries Association (Abicalçados), following the approval by the Brazilian Senate. Only in 2021, it were created 37 000 new jobs

Currently, the Brazilian footwear industry generates more than 282 thousand direct jobs, with economic significance in at least 10 Brazilian states. According to a survey from Abicalçados, if the payroll exemption had not been approved, from 2022 onwards, the sector would have an increase of more than 100 million US dollars in tax burden. This scenario would lead to a loss of 25 thousand jobs in an estimated period of two years. The measure will allow footwear companies to continue contributing with 1.5% of gross revenue, instead of 20% of their employees’ payroll.

The payroll exemption programme came about in 2011 to assist labour-intensive economic sectors in the generation of jobs. It benefits 17 activities, in which companies can replace the payment of 20% of the payroll for 1% to 4.5% of gross revenue, excluding exports.


Image Credits: Abicalçados





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