Simples Nacional: what it is, who can opt in, and how it works
Understand the Simples Nacional: Brazil's unified tax regime for ME and EPP, Annex I to V rates, how to opt in, pros and cons, and how to check enrolled companies.
The Simples Nacional is the tax regime most widely used by small and medium businesses in Brazil. Created by Supplementary Law 123/2006, it consolidates up to 8 federal, state, and municipal taxes into a single monthly payment form (DAS). In this guide, we explain how it works, who can opt in, what the rates are, and how to check whether a company is enrolled.
What is the Simples Nacional?
The Simples Nacional is a differentiated, simplified tax regime for micro-enterprises (ME) and small businesses (EPP). Its main benefit is bundling the following taxes into a single payment:
- IRPJ — corporate income tax
- CSLL — social contribution on net profit
- PIS/Pasep — social integration program contribution
- Cofins — social security financing contribution
- IPI — tax on industrialized products
- ICMS — state tax on the circulation of goods and services
- ISS — municipal service tax
- CPP — employer social security contribution
Instead of calculating and paying each tax separately, a company enrolled in the Simples pays everything through a single collection form (DAS), with a rate calculated on gross revenue.
Who can opt into the Simples Nacional?
To opt into the Simples Nacional, a company must meet all of these requirements:
- Annual gross revenue of up to R$ 4.8 million: this is the cap for small businesses (EPP). Micro-enterprises (ME) have a cap of R$ 360 thousand/year
- Be an ME or EPP: the company must be classified as a micro-enterprise or small business
- Not engage in a prohibited activity: some economic activities are not allowed in the Simples (see the next section)
- Be in good standing: no outstanding tax debts with the federal government, states, or municipalities
- Suitable ownership structure: no corporate shareholders, not a branch of a foreign company, and no partner holding more than 10% of another company outside the Simples whose combined revenue exceeds the cap
Who can NOT opt into the Simples Nacional?
The law expressly excludes several categories:
- Companies with revenue above R$ 4.8 million/year
- Financial institutions (banks, credit unions, insurers)
- Factoring companies
- Companies with partners domiciled abroad
- Cooperatives (except consumer cooperatives)
- Companies resulting from a spin-off or any other form of corporate split
- Joint-stock companies (S.A.)
- Companies with unresolved tax debts
In addition, some specific activities (CNAEs) are prohibited, such as electricity generation and distribution, fuel imports, and vehicle manufacturing. Check the company's CNAE to verify whether the activity is allowed.
Rate tables: Annexes I to V
The Simples Nacional has 5 annexes (anexos), each with progressive rate brackets based on the revenue accumulated over the last 12 months. The company's economic activity determines which annex applies.
| Annex | Activities | Starting rate | Top rate |
|---|---|---|---|
| I | Trade | 4.0% | 19.0% |
| II | Industry | 4.5% | 30.0% |
| III | Services (rentals, gyms, accounting firms, etc.) | 6.0% | 33.0% |
| IV | Services (law, medicine, engineering, etc.) | 4.5% | 33.0% |
| V | Services (IT, advertising, auditing, journalism, etc.) | 15.5% | 30.5% |
Fator R:companies in Annex V whose payroll equals or exceeds 28% of revenue can be taxed under Annex III, with significantly lower rates. This rule, known as the "Fator R" (R factor), especially benefits service companies with large headcounts.
Advantages and disadvantages
Advantages
- Simplification: a single form (DAS) replaces up to 8 separate payments
- Lower rates for lower revenue levels
- Less red tape: exemption from some ancillary filing obligations
- Preferential treatment in public procurement
- Easier tax management (the system itself calculates the tax)
Disadvantages
- Revenue cap of R$ 4.8 million/year
- ICMS and IPI tax credits cannot be used in all situations
- For some activities (Annex V), rates can be higher than under the Lucro Presumido regime
- The R$ 3.6 million state sub-limit for ICMS/ISS can trigger additional taxation
- Restrictions on activities and ownership structure
How to opt into the Simples Nacional
Enrollment in the Simples Nacional is done exclusively through the Portal do Simples Nacional:
- New companies: can opt in within 30 days of obtaining their state or municipal tax registration (whichever comes last), as long as no more than 60 days have passed since the CNPJ was opened
- Existing companies: can only opt in during January of each year, effective January 1. The deadline is the last business day of January
To be accepted, the company cannot have outstanding tax issues. If there are debts, they must be settled before requesting enrollment.
How to check whether a company is enrolled
On Inddex, Simples Nacional information is displayed directly on each company's profile. When you look up a CNPJ, you will see whether the company is enrolled in the Simples Nacional and the enrollment date; if it is a MEI, that information is shown as well.
This lookup is especially useful for suppliers and customers who need to know a company's tax regime for tax withholding and invoicing purposes.
MEI and the Simples Nacional
The MEI (Microempreendedor Individual, the individual micro-entrepreneur) is part of the Simples Nacional but follows its own rules. A MEI pays a fixed monthly amount (DAS-MEI) that does not vary with revenue, as long as it stays within the R$ 81 thousand/year cap. Learn more about the types of companies in Brazil.
Exclusion from the Simples Nacional
A company can be excluded from the Simples Nacional in the following cases:
- By choice: the company can request voluntary exclusion at any time, effective from the following month or from January of the next year, depending on the date
- By exceeding the revenue cap: if revenue exceeds R$ 4.8 million in the year, exclusion is mandatory from the following month (or from the next year, if the excess is below 20%)
- By tax debt:the Receita Federal (Brazil's federal tax authority), states, and municipalities can exclude companies with unresolved debts
- By prohibited activity: if the company starts engaging in an activity not allowed in the Simples
After exclusion, the company must opt for the Lucro Presumido or Lucro Real regime (presumed or actual profit taxation). It can only opt back into the Simples in January of the following year, provided all pending issues have been resolved.
Frequently asked questions
What is the difference between the Simples Nacional and the MEI?
The MEI is a category within the Simples Nacional, with simplified rules and a fixed monthly payment. The "regular" Simples Nacional has progressive rates calculated on revenue and allows up to R$ 4.8 million/year in revenue, while the MEI is capped at R$ 81 thousand/year.
Is the Simples Nacional worth it?
It depends on the activity, revenue, and cost structure. For trade and service companies with revenue up to R$ 1 million/year, the Simples is usually advantageous. For Annex V service companies without a significant payroll, the Lucro Presumido may be a better fit. The analysis should be done with an accountant.
Can a Simples company issue invoices?
Yes. Companies enrolled in the Simples Nacional issue invoices normally. Since September 2023, issuing the NFS-e (electronic service invoice) through the national portal has been mandatory for MEI service providers. For ME and EPP companies, the NF-e (goods) and NFS-e (services) follow state and municipal rules. The difference is that a Simples invoice does not itemize each tax individually, as invoices from Lucro Presumido or Lucro Real companies do.
How do I know if my activity is allowed in the Simples?
Check the CNAE of your activity and verify whether it appears on the list of prohibited activities (article 17 of LC 123/2006). On Inddex, you can search for companies in the same line of business and check whether they are enrolled in the Simples — that gives you a good practical indication: