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Tax exemption for event companies: learn more about this change in the Law

- Last update 29/04/2022

The Brazilian events sector was certainly harmed by the pandemic, resulting in lower investment in Brazil. The cancellation of face-to-face events and fairs in the country generated a drop in revenue, unemployment and even bankruptcies.

Howhever, in order to mitigate the negative consequences, the federal government instituted the Emergency Program for the Resumption of the Events Sector (Law No. 14.148/2021), including recently the exemption of federal taxes for event companies.

The tax exemption, previously vetoed, was enacted on March 18 of this year, for the benefit of numerous companies in the segment. Therefore, to better understand the change in the Law, continue reading this article by Europartner, your tax accountant in Brazil.

Understand the change in Law No. 14.148/2021

Law n.º 14.148/2021 instituted the Emergency Program for the Resumption of the Events Sector – PERSE, an essential measure in the resumption of the events area, one of the most impacted by the coronavirus pandemic.

And, on March 18, the federal government published in an extra edition of the Official Federal Gazette (DOU), the enactment of the vetoed parts of Law n.º 14.148/2021.

Thus, one of the proposals now valid addresses the tax exemption for event companies, with exemption from the following taxes:

PIS/PASEP;
Cofins;
Social Contribution;
Taxes on Net Income (CSLL);
Corporate Income Tax (IRPJ).

In addition, the exemption is valid for a period of 60 months. The exemption from these taxes is also valid for companies promoting sports events.

But it is important to note that the exemption is only intended for revenue generated by the event activity.

In this way, the benefited companies must present the supporting documents in case of inspection.

Which companies can obtain tax exemption?

The determination of the beneficiaries of the tax exemption was based on the National Classification of Economic Activities (CNAE) codes of legal entities.

ME Ordinance no. 7.163/2021 considers both the main CNAE and the secondary CNAES, which are intended for events.

Is there a restriction for companies incorporated during or after the pandemic?

In principle, the Emergency Program for Resumption of the Events Sector does not determine an opening time for companies to be able to benefit from the exemption.

However, if new requirements emerge that allow access to the benefit, exempt companies will become more competitive compared to non-exempt companies. Which, in fact, can generate a wide discussion on the subject in the future.

Companies under Simplified Taxation System are not entitled to the exemption

Companies under Simplified Taxation System do not fall into the category capable of benefiting from PERSE. Firstly, because the Program is an “ordinary law”, while the issues related to Simplified Taxation System are guided by “complementary laws”.

In addition, companies under Simplified Taxation System already have other types of exemptions, for example, the exemption from the Employer Social Security Contribution (CPP).

Procedure to enjoy PERSE

Companies in the events sector wishing to obtain the envisaged tax exemption should consult a tax accountant in Brazil.

This professional has the necessary experience to evaluate each case. The tax accountant in Brazil, therefore, can prepare a reliable technical opinion.

In addition, it is necessary to pay attention to the specific pronouncement of the Federal Revenue Service of Brazil (RFB), in order to correctly formalize the non-payment of certain taxes, without causing future losses.