Mini and small enterprises are responsible for the majority of jobs created in Brazil, accounting 67% of the labour force and representing 20% of the GDP according to IBGE.
In the past small entrepreneurs spent lots of time and resources calculating and filling tons of tax payment forms. This scenario started to change towards the end of the 90's, when the government started to implement tax systems in different regions to merged several taxes into one. By July 2007 these regional systems were united and Simples Nacional started to take effect.
What is Simples Nacional?
Simples Nacional is a simplified taxation system designed for mini or small Brazilian business. According to the government definition, mini enterprises (microempresas or ME) are business that in a calendar year had a gross income equal or lower than BRL 240.000,00. Small companies, called Empresas de pequeno porte or EPP in Portuguese are business that earn a gross income over BRL 240.000,00, but equal or lower than BRL 2.400.000,00.
Simples Nacional will allow your business to pay several taxes using a single payment form. The main characteristics of this system are:
- Allows you to calculate and pay 6 different federal taxes, one state tax and one municipal tax in a single tax payment form called PGDAS
- It is optional, but once you choose this taxation system you cannot opt out during the calendar year
- Calculation can be easily done on the Internet
- Unique taxation system for the whole country
- Lower taxes
There are however business that will not be able to opt in to this taxation system, and these are described on the Simples Nacional portal, under section 2.2.