The Brazilian federal government is preparing a proposal to raise the annual revenue ceiling for Microempreendedor Individual (MEI) and expand hiring limits [1, 2].
This legislative move aims to modernize the MEI regime by adjusting for inflation and allowing micro-entrepreneurs to grow their workforce [3, 5]. The changes would provide a legal pathway for small business owners to scale their operations without prematurely transitioning to more complex and costly tax categories.
Currently, the annual revenue limit for the MEI category stands at R$ 81,000 [4]. Under the new proposal, this ceiling would increase significantly. While some reports suggest a range between R$ 130,000 and R$ 140,000 [1], Deputy Jorge Goetten (Republicanos-SC) said the new limit should be at least R$ 140,000 per year [2].
Beyond the revenue cap, the proposal includes a change to labor rules. The current system limits MEI owners to one employee, but the new plan would allow them to hire up to two employees [1].
The government is also studying a mechanism to prevent the ceiling from becoming obsolete again. One proposed method involves a gradual adjustment linked to inflation [3]. This would ensure that the revenue limit remains aligned with the actual purchasing power and economic conditions of the Brazilian market.
The proposal will be sent to the National Congress in Brasília for deliberation [1, 2]. However, the move has faced some scrutiny from specialists. Critics said that raising the ceiling could increase the phenomenon of "pejotização" — where employees are hired as service providers to avoid labor laws — and potentially increase the social security deficit [5].
“The Brazilian federal government is preparing a proposal to raise the annual revenue ceiling for Microempreendedor Individual.”
By raising the revenue cap and allowing a second employee, Brazil is attempting to reduce the 'growth trap' where micro-entrepreneurs avoid expanding to keep their simplified tax status. However, the tension between economic growth and social security stability remains a focal point, as a higher volume of simplified tax registrations may reduce the overall payroll tax contributions entering the state pension system.
