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Simples Nacional: defaulting companies will not be excluded in 2020

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Good news for micro and small business owners in Brazil. The Federal Revenue informed last month that it will not exclude defaulting companies from Simples Nacional in 2020. The decision comes as a way to help small businesses affected by the pandemic of the new coronavirus, after a request from the Brazilian Micro and Small Business Support Service (Sebrae).

Simples Nacional is a regime that aims to make life easier for small entrepreneurs, unifying the collection of federal, state and municipal taxes in a single payment slip. It is applied to micro and small businesses with gross annual sales of up to R$ 4.8 million.

How exclusion works

A company can be excluded from Simples Nacional for several reasons, such as registration errors or lack of documentation, billing above the allowed, tax debts, carrying out activities not allowed by the regime, open installments and others.

When a problem occurs, the company is notified about the exclusion and is given a deadline to settle the pending issue. If the company does not regularize within the period stipulated by the Tax Authorities, its exclusion from Simples Nacional is determined for the next year.

More than 730 thousand companies were notified of exclusion from Simples due to tax debts in 2019. Of the total, only 224 thousand paid their debts, and another 506 thousand companies ended up being excluded from the regime.

For Sebrae, this action represents an important impetus for the recovery of smaller businesses, which suffered losses with the interruption of activities.