Brazil Proposes Raising MEI Revenue Limits and Hiring Capacity Amid Growth Concerns

The Brazilian federal government has put forward a proposal to increase the annual revenue limit for Microempreendedor Individual (MEI) enterprises from R$81,000 to R$110,000 in 2027 and further to R$140,000 in 2028. Alongside this, MEIs would be allowed to hire up to two employees, doubling the current limit of one. These changes come as a response to the significant increase in small businesses registering as MEIs, with over 1.59 million new MEIs registered during the first four months of 2024 — accounting for 78% of new businesses that year, according to a Sebrae report citing Receita Federal data.

Despite the proposed benefits, concerns have been raised about the challenges faced by microentrepreneurs transitioning from MEI to larger business structures. The revenue limit for MEIs has remained unchanged since 2018, and rising operational costs mean many are near the threshold without an easy path to transition to more complex enterprise categories. Fábio Saraiva, president of the Confederação Nacional de Jovens Empresários (CONAJE), highlighted that simply increasing earning caps doesn’t resolve difficulties such as increased tax and labor obligations that growing businesses encounter.

Saraiva emphasized the need for broader reforms extending beyond MEIs to include micro and small enterprises, aiming to prevent a problematic gap for businesses needing to evolve their status. He noted that Brazil has streamlined the process of CNPJ registration, facilitating business start-ups, but pointed out that additional measures are necessary. These include improved business management support, clearer tax guidance, access to responsible credit, and greater security in hiring workers to support business survival and growth.

The proposal for these MEI adjustments is currently under review by the Chamber of Deputies and the Senate and must be approved before implementation.