Taxation Regime Simples Nacional
Tax and bureaucracy are a huge burden for any Brazilian company, but it impacts small sized businesses even more. To address this issue the Brazilian government created Simples Nacional, a taxation regime designed to simplify the collection of taxes for companies categorized as micro or small size.
Simples Nacional is an optional taxation regime that allows the unified collection of municipal, state and federal taxes. In addition to unifying all taxes, the rates are lower compared to the payment of all them separately and progressively, always calculated based on the monthly gross revenue of the company.
The payment of the Simples Nacional is due via a single collection form of DARF, called in this case DARF-Simples.
Companies that can opt for Simples Nacional
This taxation regime benefits companies that are considered to be micro or small size. The definitions that are used in Brazil to categorize these types of companies are:
- Micro sized companies, known as Microempresa or ME in Portuguese, are those that have an annual gross income equal to or lower than BRL 120 000
- Small sized companies, known as Empresa de Pequeno Porte or EPP in Portuguese, are those that register an annual gross income higher than BRL 120 000, but equal to or lower than BRL 1 200 000
Other advantages provided by Simples Nacional
In addition to having lower rates for several taxes, Simples Nacional will also benefit from:
- Exemption of payment of contributions to social services such as Sesc, Sesi, Senai, Senac, Sebrae and other related social services
- Exemption of payment of the Contribuição Sindical Patronal, which is the Employer’s Syndicate Contribution
- Legal entities do not need to withhold federal taxes and contributions at the source
- Exemption of taxes withheld at the source or at the Annual Income Tax Return for the amounts paid to the partner of the company which are not related to salary, rent or rendered services
Restrictions for Simples Nacional
Not all companies qualify for the benefits of Simples Nacional. Some examples of company profiles that cannot opt for Simples Nacional, even if they comply with all definitions stated above are those that:
- Have other companies as shareholders
- Are a branch, agency or representation office, in Brazil, of a foreign company
- Have an individual shareholder that own shares in another company that already benefits from Simples Nacional, when the combined gross revenue is above BRL 3.6 million
- Have a partner or representative that own more than 10% of the shares in another company that has not opted for Simples Nacional, when the combined gross revenue is above BRL 3.6 million
- Have a partner, representative or administrator that have ownership in another company with the combined gross revenue that surpasses BRL 3.6 million
- Are a cooperative
- Are a shareholder in another company
- Perform determined activities within sectors such as finance, insurance, transport and others
- Result from the division from other companies or are a spin-off which occurred over the last 5 years
- Corporations
Taxes included in Simples Nacional
The taxes that are unified by Simples Nacional are:
- IRPJ, which is the Corporate Income Tax, also known as Imposto de Renda sobre Pessoa Jurídica
- CSLL, Social Contribution on Net Profits, known as Contribuição Social sobre o Lucro Líquido
- PIS/Pasep, which are Social Contributions paid by companies
- COFINS, which stands for Contribuição para o Financiamento da Seguridade Social and is the Contribution for Social Security Financing
- IPI, the Tax on Industrialized Products
- ICMS, which is the Tax on the Circulation of Goods and Interstate Transportation Services
- ISS, which is the Tax on Services or Imposto sobre Serviços de Qualquer Natureza
- CPP, short for Contribuição Previdenciária Patronal, or Employer’s Social Security Contribution
Taxes other than those listed above, are not part of Simples Nacional and therefore are due and must be calculated and paid separately.
Calculating the tax due on DARF-Simples
As mentioned previously the rates applied are progressive and may differ according to the activity of the company and if they contribute to IPI. The table below summarizes the rates for companies that opt for Simples Nacional.
Rates for micro companies known in Portuguese as Microempresas
Rates for Microempresas that do not contribute to IPI
| Accumulated Gross Revenue in BRL | Rates |
| Up to 60 000 | 3% |
| From 60 000.01 to 90 000 | 4% |
| From 90 000.01 to 120 000 | 5% |
Rates for Microempresas that contribute to IPI
| Accumulated Gross Revenue in BRL | Rates |
| Up to 60 000 | 3.5% |
| From 60 000.01 to 90 000 | 4.5% |
| From 90 000.01 to 120 000 | 5.5% |
Rates for small companies known in Portuguese as Empresa de Pequeno Porte
Rates for Empresas de Pequeno Porte that do not contribute to IPI
| Accumulated Gross Revenue in BRL | Rates |
| Up to 240 000 | 5.4% |
| From 240 000.01 to 360 000 | 5.8% |
| From 360 000.01 to 480 000 | 6.2% |
| From 480 000.01 to 600 000 | 6.6% |
| From 600 000.01 to 720 000 | 7% |
| From 720 000.01 to 840 000 | 7.4% |
| From 840 000.01 to 960 000 | 7.8% |
| From 960 000.01 to 1 080 000 | 8.2% |
| From 1 080 000.01 to 1 2000 000 | 8.6% |
| Above 1 200 000 | 10.32% |
Rates for Empresas de Pequeno Porte that contribute to IPI
| Accumulated Gross Revenue in BRL | Rates |
| Up to 240 000 | 5.9% |
| From 240 000.01 to 360 000 | 6.3% |
| From 360 000.01 to 480 000 | 6.7% |
| From 480 000.01 to 600 000 | 7.1% |
| From 600 000.01 to 720 000 | 7.5% |
| From 720 000.01 to 840 000 | 7.9% |
| From 840 000.01 to 960 000 | 8.3% |
| From 960 000.01 to 1 080 000 | 8.7% |
| From 1 080 000.01 to 1 2000 000 | 9.1% |
| Above 1 200 000 | 10.92% |
Note that these rates differ for some companies that perform specific activities like those related to primary education, driving schools, etc,