Contribuição Previdenciária Patronal (CPP)
In this article we explained what is CPP, a tax burden to be paid by employers. You will check here the rates and the different collection forms of this contribution.
In a few words, Contribuição Previdenciária Patronal (Employer’s Security Contribution), known as CPP, is an amount paid by the companies to the government, related to social security contributions. This value is calculated over a percentage of each employee’s payroll. As it’s a company’s “tax” it’s only destined for legal entities.
In Brazil, employees registered under the CLT system or independent contractor have a determined amount of their salaries discounted to contribute with the Social Security (INSS). Another part must be legally paid by the company and that’s what we call of Contribuição Previdenciária Patronal.
Currently, the CPP contribution is in a very uncertain moment, because of several changes in taxation laws introduced by the government. There´s a countrywide effort to save some national industries that are being affected with the global crises. This is one of the Plano Brasil Maior goals. One of the delineated objectives was to relieve taxes on production, export and import activities in Brazil.
However the changes are only for SOME sectors of the economy. For all others, CPP’s collection is still based on employees’ payroll and it is charged at a rate of 20%.
Some changes: CPP collected from annual gross income
As we have just seen, until the beginning of this year, all companies had to collect a rate of 20% over employees’ payroll in the form of CPP. However, just like what’s in discussion with other Brazilian tax burdens, the government is developing more modern taxation laws to decrease the businesses’ tax obligations. These initiatives are part of the Plano Brasil Maior, a national plan for development, implemented in 2011.
Now, some companies can replace the old system of collection for a system in which the calculation basis is the annual gross income not the payroll. Those are the sectors that most suffer with the economic global crisis. However this “relief” has a date to expire, as it was introduced some interim measures to implement them. Let’s see whish companies can use this new form of collecting CPP.
Which companies can adopt the new system?
Companies providing information technology services (IT), information technology and communications companies, call centers and companies in the hotel industry. Through this new system, these companies will collect a 2% rate over their annual gross income and destine it to CPP contribution.
Companies that manufacture hydraulic brake fluids, plastics, apparel and clothing accessories, furs, leathers, silks, wool, carpets and other floor coverings, hats and artifacts of use similarly, machinery, pressure reducing valves, among others. Through this new system, these companies will collect a 1% rate over their annual gross income and destine it to CPP contribution.
In cases of companies that develop activities that are both subject and not subject to replacement, they shall perform the calculation of the replacement value without notice (rate of 20% on the payroll) applying the percentage reduction found between gross activities unrelated and between the total gross revenue.
And from January 2013:
- Companies that provide services for maintenance and repair of aircrafts, passengers and cargo transportation (air, sea and by inland), supporting maritime navigation and port support. Through the new system, these companies will collect a 1% rate over their annual gross income and destine it to CPP contribution.
Also, companies that manufacture toys, marbles, ceramics, stones, animals and offal; glands and other animal products used in the preparation of pharmaceutical products, corn, soybeans, cereals and flour, pastries, meals and pellets of meat, offal and fish, unfit for human consumption; human blood, animal blood prepared for therapeutic, prophylactic or diagnostic, vaccines, drugs, among others. Through the new system, these companies will collect a 1% rate over their annual gross income and destine it to CPP contribution.