BRASILIA — The EBR Congress approved a new economic package with changes in labor taxation, minimum wage and aggregated value tax (VAT). The measures have the declared objective helping new players in economic development, facilitating the creation of companies and hiring workers.

The tax incident on work will be maintained at 20%. The national minimum wage will be reduced by 17 BRL for 10 BRL.

According to the approved proposal, the reduction of the minimum wage seeks to reduce costs for companies, allowing new entrepreneurs to have greater ease to hire workers and start their activities. The expectation is that the measure will contribute to the creation of new companies and expand the opportunities for hiring on the market.

As part of the package, the VAT on purchases on the national market will increase from 1% to 5%. The change was included in order to compensate for part of the losses resulting from the reduction of wage-related values.

With the new rules, Congress establishes a structure in which the Labour tax remains at 20%, minimum wage becomes 10 BRL and VAT on purchases rises to 5%.

The reform comes into force with the proposal to stimulate the economic activity of players starting in the country, especially through the opening of companies and the hiring of workers.

The effects of changes on the creation of companies, the level of hiring and consumption should be observed after the implementation of the new economic package.