Provisional Presidential Decree 601/2012 is no longer in force, after Congress failed to approve it within 120 days. The president of the board of Congress has therefore issued Declaratory Act 36/2013, which sets forth that the decree expired on June 3 2013.
Provisional Decree 601/2012 had stipulated a number of rules, including:
- tax relief for the payrolls of those working in the construction, retail, maintenance and repair of vessels and manufacturers of certain products whose Mercosur Common Nomenclature tariff codes were listed in Annex I of the decree; and
- a reduction to 3.5% of the rate of the social security withholding on services rendered on the assignment of manpower for activities listed under Article 8 of Law 12.546/2011, including cabotage, ocean, offshore support and port support navigation.
With the expiration of Provisional Decree 601/2012, these rules no longer apply. As a practical consequence of this change, those working in the construction, retail, maintenance and repair of vessels would have reverted to the payroll taxation system.
However, on April 4 2013 Decree 612 was issued, which mitigated the expiration of Provisional Decree 601/2012 by including several sectors in the social security contribution on gross revenues - among them:
- chartered passenger road transportation;
- municipal and intermunicipal tourism in metropolitan areas;
- intermunicipal, interstate and international tourism;
- passenger railway transportation;
- passenger metrorail transportation;
- construction of infrastructure, engineering and architecture projects;
- maintenance, repair and installation of machinery and equipment;
- loading, unloading and storage of containers in organised ports;
- passenger and non-regular cargo transportation (air taxis);
- road and rail transportation of cargo;
- ship agency;
- sea crossing transportation;
- airport infrastructure services; and
- news, radio and sound and image broadcast.
Thus far, the 3.5% withholding rate on services rendered on the assignment of manpower set forth in Article 8 of Law 12.546/2011 has not been restored. As a consequence, unless a new legal provision restores this reduced percentage, such activities will revert to being subject to 11% withholding tax from June 2013 onwards, even if the contribution due is 1% on receipts, leading to a significant overpayment. There are sound legal arguments in relation to such excessive taxation with the purpose of voiding it.
The services set forth in Article 8 of Law 12.546/2011 include:
- the maintenance and repair of aircraft, engines, components and related equipment;
- cargo air transportation;
- regular passenger transportation by air;
- cargo transportation by sea in coastal navigation;
- passenger transportation by sea in coastal navigation;
- ocean freight of cargo;
- ocean passenger transportation;
- inland transportation of cargo;
- inland passenger transportation in regular lines;
- offshore and port support navigation;
- the maintenance and repair of vessels; and
- retail activities listed under Annex II.
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