ARTICLE – ACSP

Simples Nacional in the ICU of Tax Reform

Approved on December 17, the bill regulating changes in the Tax Reform introduces tax exemptions and reductions for certain sectors. However, these changes harm small business owners, who will face a competitive disadvantage against large corporations.

The loss of competitiveness is a serious concern for small entrepreneurs, who will be forced out of Simples Nacional and subjected to a flat 28% tax rate — the highest in the world.

If in more than 170 countries, VAT (Value Added Tax) operates as a single, fair taxation system without harming businesses, why does Brazil insist on taxing small and large companies equally, making it harder for small businesses to generate tax credits?

The negative economic effects will appear much sooner than expected. The collapse of Simples Nacional, which represents 95% of all businesses in Brazil, is one of them. Out of the 24 million companies in the country, approximately 9 million are registered under Simples Nacional, while 14 million are individual micro-entrepreneurs (MEIs).

It is hard to believe that a system designed to empower small businesses, encourage growth, and reduce informality is now being dismantled, forcing them to pay a full tax rate that will cripple their working capital.

We already know the consequences for the economy: job losses and a rise in informal labor. It is inconceivable to expect productivity and economic growth under these conditions. Tax fairness is the only path forward.

Source: Eletrolar News Ed. 165