Juliana Mello

Juliana Mello


The Brazil Business

Updated

Company Classification in Brazil

Juliana Mello

Juliana Mello


The Brazil Business

Updated

The classification of enterprises in Brazil doesn't follow a common pattern in the country, but some criteria are most used than others. In this article, you will get information about the parameters that serve as national reference to define the companies' size.

In Brazil, there isn't a unique concept to classify companies. The institutions and the municipal, state and federal administrations adopt their own criteria for framing and classifying the companies. The parameters vary greatly from one region to others or from institution to institution. Also, there’s no federal legal statement that classifies companies uniformly throughout the country.

However, some criteria are more used than others and serve as a reference to the institutions. They are: BNDES's, IBGE's and Estatuto da Micro e Pequena Empresa's criteria. The criteria for classifying companies according to their size are basically the number of employees and the annual gross operating revenue.

Classification of companies according to size

The company’s size is defined by the word porte, in Portuguese. The most important parameter to define a company’s size is, of course, its annual gross income. For annual gross income should be considered the annual amount billed by the headquarters and its subsidiaries, if there is any. In case the company has branches, even if its turnover is less than the matrix, it must be considered the global income, that is, the matrix’s income plus the affiliates’ income.

The classification criteria regarding size aims to encourage the growth and strengthening of smaller companies. Benefits and incentives provided for in the legislation at the federal and state governments seek to protect and stimulate the segment of market fluctuations and disadvantages over the competition with larger groups.

According to BNDES (National Bank for Economic and Social Development), the values for the classification of companies regarding their size are as follows:

Microempresa (Micro enterprise): Less than or equal to 2.4 million

Empresa de Pequeno Porte (Small company): More than BRL 2.4 million and less or equal to BRL 16 million

Empresa de Médio Porte (Medium-sized company): More than BRL 16 million and less or equal to BRL 90 million

Média Grande Empresa (Medium-large company): More than BRL 90 million and less or equal to BRL 300 million

Grande Empresa (Large company): More than 300 million

The BNDES criteria are one of the most important among others, because it is considered when the company is applying to obtain a credit line with a financial institution.

Classification of companies according to the number of employees

Below, you can check the IBGE classification of companies regarding their number of employees:

Micro enterprise: - In industry, up to 19 employees. In trade and services, up to 9 employees.

Small company: - In industry and construction, 20 to 99 employees. In trade and services, from 10 to 49 employees.

Medium companies: - In industry and construction, from 100 to 499 employees. In trade and services, from 50 to 99 employees.

Large companies: - In industry and construction, from 500 employees. In trade and services, from 100 employees.

Considerations about small companies classification

The criteria to classify the size of a company is an important factor supporting micro and small businesses, allowing establishments within the limits imposed to enjoy the benefits and incentives provided for in the legislation.

Currently, these criteria are adopted in various credit programs of the federal government in support of the small and medium companies. In the Statute of Small Enterprises from 1999, the criterion used to conceptualize small businesses is the gross annual revenue, whose values are currently as follows:

Micro enterprise: annual gross income equal to or less than BRL 433.755.14

Small Businesses: annual gross income exceeding BRL 433.755.14 and equal to or less than BRL 2.133.222.00

However, when it comes to classification for the companies to enjoy the simplified taxation scheme (Simples Nacional), it is adopted a different criterion, according to the Federal Revenue Service. The values are as follows:

Micro enterprise: annual gross income is equal to BRL 240 thousand to BRL 360 thousand

Small Businesses: gross annual rises of BRL 2.4 million to BRL 3.6 million

Individual Entrepreneur: rises from BRL 36.000 to BRL 60.000

It is also important to consider that each Brazilian state has a variety of criteria to classify micro and small enterprises, according to its own fiscal and economic situation. However, several municipalities lack of laws in this regard, very few of them contemplate the segment with its own laws of development.