Brazil’s Deputy Finance Minister Dario Durigan said on Monday the government is evaluating stricter controls on worker misclassification, known as pejotização, and a broader review of corporate taxation as part of potential policies in a second term under President Luiz Inácio Lula da Silva.
Speaking to Agência Estado at the Palácio do Planalto, Durigan emphasized the need to address the country’s social security deficit, citing cases where up to 80% of a company’s workforce operates under corporate contracts. He suggested mandatory social security contributions for such workers to ensure better protection and reduce the fiscal imbalance. "A company with 80% of its workforce classified as pejotizados may face obligations to contribute to social security to level the playing field and provide those workers with more secure future benefits," he stated.
Durigan also reiterated the administration’s commitment to combating privileges in public spending, pointing to the military pension system as an example. Earlier proposals to adjust military pensions were rejected by Congress, underscoring the political challenges ahead.
On corporate taxation, Durigan outlined plans to review payroll taxes (tributação da folha de pagamento) and Interest on Equity (Juros sobre o Capital Próprio – JCP), advocating for mechanisms that prioritize a company’s effective tax burden over nominal rates. "Regardless of the regime, the effective contribution is typically far lower than the nominal rate stipulated by law, and the system must be optimized and rationalized," he said.
The remarks come ahead of the October presidential election, in which Lula is seeking re-election. Analysts note that tax and labor reforms remain contentious issues, with potential implications for business operations and fiscal sustainability.
