Experiences from Simples National, the monotax regime for own-account workers, micro and small entrepreneurs in Brazil (2019)

This paper provides information on the monotax regime in Brazil. This regime, referred to as Simples National, was introduced with the aim to create jobs and reduce informality among enterprises and their workers. It provides a monotax as well as simplified procedures for own-account workers and micro and small enterprises (MSEs) on business registration, taxation, social security, financial inclusion and government procurement. It includes a special statute called ‘Individual Micro Entrepreneur’ (IME) and a simplified tax and social security regime for own-account workers and MSEs. The paper describes the nature, operation and modalities of the tax and social security components of the Simples National regime, outlines its evolution, describes formalisation trends, highlights its strengths and weaknesses, extracts lessons learned and identifies policy recommendations.