Brazil implements tax reforms for MEI and Simples Nacional

Brazil is undergoing significant regulatory changes affecting small businesses and microentrepreneurs. The federal government has proposed increasing the annual revenue limit for Microentrepreneurs (MEI) from R$ 81,000 to R$ 110,000 in 2027 and R$ 140,000 in 2028, while also allowing for the hiring of up to two employees.

Regarding the Simples Nacional regime, the Management Committee (CGSN) has approved changes to align with the Consumption Tax Reform. A major shift involves the extinction of the cash basis (regime de caixa) for monthly tax calculations. Starting in 2027, companies must use the accrual basis, meaning taxes will be calculated based on the moment of invoicing rather than when payment is actually received. Additionally, the deadline for opting into the Simples Nacional for the 2027 calendar year will move to September 2026.

Other fiscal developments include new tax transaction notices from the Federal Revenue Service, allowing taxpayers to negotiate debts with discounts on interest and fines. Meanwhile, a recent court injunction from the TRF-4 has addressed the monthly withholding of income tax on dividends exceeding R$ 50,000, aiming to align monthly retention with projected annual taxation.