Ordinance No. 1,287/2017, published in December by the Ministry of Labor, prohibits the granting of a "negative service fee" under the Worker's Food Program (PAT). This fee represents a discount granted by meal and food card operators as a way to become more competitive and attract customers. In practice, the purchasing company acquires a monthly credit to be distributed via cards to its employees, but disburses a smaller amount due to the discount granted.

Because it is a common practice, the promulgation of the ordinance caused great concern among companies that contract for this type of service, afraid that they will have their registrations with the PAT canceled. The consequences would be even alarming, since the cancellation of registration may result in assessments, fines, and collection of tax and social security payments, even retroactively.[1]

The issue gained new prominence in March of this year when the Ministry of Labor confirmed in Technical Note No. 45/2018 that the prohibition on the negative service fees also applied to contracts signed before the publication of Ordinance No. 1,287/2017. Consequently, a large number of lawsuits were filed by companies that contract for these services and subsequent injunctions were granted to suspend the effects of the technical note and the ordinance.

Pressed, the Ministry of Labor chose to revoke Technical Note No. 45/2018 in an opinion signed last August 28. However, the relief for businesses is only apparent.

Contrary to what one might imagine, the Ministry of Labor did not reconsider its understanding. On the contrary, despite acknowledging "the chaos created" and that the technical note was "inopportune", the body ratified its position by saying that the content of the note was "valid, legitimate, and effective" and concluded its opinion stating that it is the duty of the tax auditor, at the time of the audit, to “enforce" the application of the text of Ordinance No. 1,287/2018.

In this context, the possibility of assessment of companies that have contracts with the application of negative service fees has been strengthened. Given the high risks to which they are exposed, it is strongly recommended that companies in this situation review and consider taking some measures, including legal measures, to mitigate them.

[1]Registration in the PAT allows companies to deduct from their taxable income, for the purposes of Corporate Income Tax, expenses with employee food programs. In addition, it removes the salary nature from the benefit offered to employees and exempts from social security payments over the amounts granted.