Brazil approves MEI debt relief and 40-hour workweek

The Brazilian Congress has approved a series of legislative measures under the ‘Prospera MEI’ package, aimed at supporting micro-entrepreneurs. Key provisions include the automatic forgiveness of approximately R$ 12.5 billion in federal debts for Micro-Entrepreneurs (MEIs) registered in the Union's active debt until October 13, 2026. To maintain this benefit, entrepreneurs must remain current with monthly contributions for six months following the law's implementation, expected in 2027.

The package also establishes a gradual increase in the annual revenue ceiling for MEIs, rising from R$ 81,000 to R$ 110,000 in 2027 and R$ 140,000 in 2028. Additionally, the number of employees an MEI can hire will increase from one to two. New rules will also grant MEIs priority in government procurement for contracts up to R$ 25,000.

Simultaneously, the Senate approved a constitutional amendment to reduce the maximum weekly workweek from 44 to 40 hours, effectively ending the 6x1 work schedule. This labor change has sparked debate; while labor unions view it as a victory, business entities like FecomercioSP warn of increased operational costs. They argue that the reduction, combined with ongoing tax reforms, may disproportionately pressure micro and small enterprises (MPEs) that have not seen their revenue limits updated since 2018.