This chapter describes and assesses the legal framework underlying small- and medium-sized enterprise (SME) and entrepreneurship policy in Brazil, the main institutional stakeholders involved in SME and entrepreneurship policy, and existing policy co‑ordination arrangements. Preferential treatment for micro and small businesses is enshrined in the 1988 Federal Constitution of Brazil, which provides the legal ground for the main law overseeing the activity of SMEs, i.e. Lei Complementar 123/2006. With the formation of a new government in January 2019, the new Ministry of Economy has become the main institutional player in SME and entrepreneurship policy. However, programme implementation mostly happens in collaboration with organisations in the so-called Sistema S, which are not formally part of the government but work in close consultation with it in sectors and activities of public interest. Policy co‑ordination is strong both at the institutional and operational levels, as shown by many SME programmes being the result of collaborations between different government ministries, agencies and private sector organisations.
SME and Entrepreneurship Policy in Brazil 2020
Chapter 4. The governance of SME and entrepreneurship policy in Brazil
Abstract
The SME policy legal framework
Preferential regimes for micro and small companies
The Brazilian Constitution grants preferential treatment to micro and small enterprises
Small business policy in Brazil is enshrined in the 1988 Federal Constitution, which granted a “favoured, differentiated and simplified treatment” (henceforth, preferential treatment) to micro and small companies, to be defined based on annual gross revenues, in different policy areas such as taxation, regulations, pension contributions, labour law, access to credit and business development (Article 170 and Article 179).
The first Brazilian laws that dealt more specifically with the rights and obligations of micro and small enterprises (micro e pequenas empresas, MPEs) were:
Law 7256/1984, which integrated different past laws into the new Micro and Small Enterprise Statute and set out the type of preferential treatment to be granted to MPEs.
Law 9317/1996, which created the special tax regime for MPEs, i.e. the Integrated System of Tax and Contribution Payment for Micro and Small Enterprises, more commonly known as Simples Nacional (initially called Simples Federal).
Initially, the states of the Federation (and the Federal District) were not obliged to enforce these two laws. However, this changed with Lei Complementar 123/2006, also known as the Simples Law, which consolidated the legal framework and applied the principle of preferential treatment for MPEs to all three tiers of government (federal, state and municipal). Article 1 of this law requires, in fact, that every new obligation of the public administration that has an impact on micro and small enterprises should point out how these companies will be treated in “a favoured, differentiated and simplified” way compared to other (larger) companies.
Simples Nacional has introduced a simplified tax and regulatory regime for micro and small businesses nationwide
The main provision of Lei Complementar 123/2006 refers to the implementation of a preferential tax and regulatory regime for MPEs, i.e. Simples Nacional (see also Chapter 3). This regime had already been established by Law 9317/1996 with the name of Simples Federal, but it was only through Lei Complementar 123/2006 that it was applied nationwide, including at the state and municipal levels.
Today, Simples Nacional is Brazil’s main policy for micro and small enterprises, covering 65% of the total stock of companies and accounting for 25.63% of total tax exemptions, more than any other fiscal policy (RFB, 2018). SEBRAE (Support Service for Micro and Small Enterprises) finds that the number of companies in Brazil increased from 2.5 million at the time of the introduction of the law to 11.6 million in 2017, suggesting that Simples Nacional has encouraged business creation and, above all, business formalisation (SEBRAE, 2017).
The two main eligibility criteria for a company to opt for Simples Nacional are to be a corporation, limited partnership or individual limited partnership (legal nature) and not to exceed annual gross revenues of BRL 4.8 million. The main advantage of Simples Nacional is the unification of eight taxes into one,1 with the payment of a single tax rate that varies depending on industry and annual revenues of the company.
The Individual Micro-Entrepreneur policy has complemented Simples Nacional with the aim to strengthen business formalisation
Still in compliance with the principle of preferential treatment for micro and small businesses, the federal government integrated Simples Nacional with the Micro Empreendedor Individual (MEI) policy in 2008 (Law 128/2008). The main objective of this policy is to encourage the formalisation of mostly own-account workers through a further simplification (compared to Simples Nacional) of the tax and regulatory regime and through giving preferential access to credit, training and technical assistance opportunities (see also Chapter 3).
MEI’s eligibility criteria include that the micro-entrepreneur cannot exceed BRL 81 000 in annual revenues, cannot employ more than one person, cannot be a partner, administrator or owner of another business, and must operate in a sector covered by the regime (mostly personal services). More than 400 activities are allowed under MEI, as specified in Annex III of Lei Complementar 123/2006.
MEI features the following preferential conditions: i) social security contributions are set at 5% of the minimum salary; ii) a fixed amount is paid monthly online to cover a state tax and a municipal tax, i.e. ICMS and ISS;2 iii) if the business has an employee, the micro-entrepreneur pays 3% of his/her remuneration to the social security system, while 8% is deducted from the salary to converge into the Guarantee Fund of Work Time (Fundo de Garantia do Tempo de Serviço, FGTS); iv) micro-entrepreneurs are exempt from income taxation and other federal taxes.
The whole MEI registration process is conducted online at a web portal, Portal do Empreendedor, where micro-entrepreneurs can update registration data, submit income declarations, pay taxes and generate certificates. Since 2018, MEI is also integrated with REDESIM (a national regulation harmonisation policy), making the process of business registration and business formalisation easier.
Overall, MEI has been a popular policy: in 2018, of the 12.8 million enterprises registered with Simples Nacional, 7.7 million were MEIs and 5 million were MPEs. MEI has also been considered successful in propelling business formalisation, although there have also been concerns about possible abuses, notably through the so-called practice of pejotização (see Chapter 3 for more details).
REDESIM has gone a long way in the simplification of business registration and business licenses
The National Network for the Simplification of Business Registration and Business Formalisation (Rede Nacional para a Simplificação do Registro e da Legalização de Empresas e Negócios, REDESIM) was introduced by Law 123/2006 and Law 11.598/2007 with the aim, as the name suggests, to simplify the business registration process nationwide. Until the creation of REDESIM, each state Trade Board (Junta Comercial) followed different business registration rules, although these had to comply with federal guidelines. REDESIM’s main role has been to harmonise business registration and business licensing rules across the states and municipalities of Brazil.
The Department of Business Registration and Integration (Departamento Nacional de Registro Empresarial e Integração, DREI) is the federal government unit in charge of regulating the business registration process, although the actual business registration act takes place at local Trade Boards. Until 2018, DREI was under the Special Secretariat for Micro and Small Businesses of former MDIC, but since 2019 it has been moved to the Special Secretariat for De-bureaucratisation, Management and Digital Government (Secretaria Especial de Desburocratização, Gestão e Governo Digital). As such, REDESIM has been included in the overall e-government agenda promoting public services online.
In 2010 the government launched a single web portal of REDESIM to merge business registration procedures and act as a single-entry point for business-related information. Since 2018, the web portal has been revamped to broaden the offer of services through the integration of most agencies (84% of the total) dealing with business registration. This process has been the result of a partnership between DREI, the Special Secretariat for Federal Revenues and SEBRAE, which has also involved other entities and agencies at the national and subnational levels. The new portal has simplified the language, improved and standardised the experience of opening a business or changing its legal status and, more generally, brought more transparency into the whole business registration process.
Despite these improvements there are still some challenges with respect to: i) supporting those municipalities that have not yet joined REDESIM (45.4% of the total, usually the most remote in the country); ii) developing technical capabilities and investment in information and communication technology (ICT) infrastructure at all levels of government; iii) harmonising rules among different types of agencies, including tax, environmental and health-related agencies.3
Figure 4.1 shows the number of entities and agencies that are part of REDESIM, whereas Figure 4.2 shows the steps needed to open a business in Brazil. Box 4.1 provides further detailed information about the business registration process in Brazil.
Figure 4.1. Federal and local entities integrated into REDESIM
Source: Special Secretariat for Federal Revenues.
Figure 4.2. Business registration steps in REDESIM
Source: Department of Business Registration and Integration – DREI.
Box 4.1. REDESIM’s business registration steps (in detail)
The first step in business registration in Brazil is the so-called Consulta Previa. Through an online questionnaire, the government checks whether the business can be opened at the chosen address and whether there are other enterprises registered with the same name.
The second step concerns data collection, in which the new business owner is asked to submit the data and information necessary for business registration. The fact that data collection has been unified through REDESIM prevents the submission of the same document twice. However, once all data have been collected, applicants still need to submit forms in a paper format at one of the accredited registration agencies. Once documents are analysed, the business can be registered and receive a business registration number (Número de Identificação do Registro de Empresas, NIRE) from the state-level Trade Board, the CNPJ number (Cadastro Nacional da Pessoa Jurídica – National Registry of Legal Entities) from the Special Secretariat for Federal Revenues, and state and municipal tax enrolments.
The third and last step concerns business licenses. The REDESIM web portal integrates all processes from agencies and entities in charge of licenses, utilising a single entry point for all data and documents. The main stakeholders involved in the licensing process are the National Health Surveillance Agency, the Ministry of Environment and the Fire Department, with their respective counterparts at the state and municipal levels. Every licensing agency defines the risk classification of each economic activity, which represents the level of potential danger to human health, the environment or society. An activity that is classified as low-risk does not need an inspection before it can start operations, although entrepreneurs are not exempted from inspections in the future. Thus, in this case, the licensing process is fully completed online. On the other hand, activities that are considered high-risk are treated as exceptions and require a compulsory inspection before they can start operations.
Main stakeholders in SME and entrepreneurship policy
This section describes the main ministries and organisations involved in SME and entrepreneurship policy in Brazil at the federal and state levels. The focus is on the organisations that have an overarching role, whereas further information on specific organisations involved in export promotion and the innovative start-up ecosystems are respectively presented in Chapters 6 and 7 of the report.
Federal government
The Ministry of Economy is the main ministry responsible for SME and entrepreneurship policy in Brazil
The Ministry of Economy is the main ministry responsible for SME and entrepreneurship policy in Brazil. The Ministry of Economy was established in January 2019 and merged four ministries from the previous government: the Ministry of Finance, the Ministry of Industry, Foreign Trade and Services (MDIC), most of the Ministry of Labour, and the Ministry of Planning, Development and Management (MPOG). Seven special secretariats operate in the new Ministry of Economy, each with specific competencies as outlined in Box 4.2.
Box 4.2. Main competencies of Special Secretariats at the Ministry of Economy
Special Secretariat for Productivity, Employment and Competitiveness
Development policy for industry, trade and services.
Intellectual property and technology transfer.
Industry standards.
Policy to support micro and small businesses and handicrafts (i.e. under Lei Complementar 123/2006).
Employment creation policies.
Vocational education and training.
Special Secretariat for Federal Revenues
Tax and customs policy (administration, enforcement and collection).
General prices and public and managed tariffs.
Special Secretariat for Simplification, Management and Digital Government
Co‑ordination and management of federal plans and federal budgets.
Management of civil servants.
Modernisation of public administration.
Co‑ordination of business registry.
Supervision of the bodies and entities involved in REDESIM.
Special Secretariat for Foreign Trade and International Affairs
Foreign trade policy.
Inspection and control of foreign trade.
Regulation and implementation of foreign trade programmes and activities.
Special Secretariat for Public Finances
Credit policy and ruling of financial institutions.
Public financial management and accounting.
Economic and financial negotiations with other governments and multilateral organisations.
Management of complementary pension schemes.
National strategic planning and design of long-term development subsidies.
Impact assessment of policies and programmes as well as of the multiannual investment plan and annual budgets.
Special Secretariat for Social Security and Employment
Social security.
Labour relations.
Labour taxation.
Wage policy.
Safety and health at work.
Regulation of professions.
Special Secretariat for Privatisation
Formulation of guidelines, co‑ordination and definition of corporate governance criteria of state-owned companies.
Management of state-owned assets.
Most competencies related to SME and entrepreneurship policy fall within the responsibility of the Special Secretariat for Productivity, Employment and Competitiveness (Secretaria Especial de Produtividade, Emprego e Competitividade, SEPEC), notably the Secretariat for Industry Development, Trade, Services and Innovation (Secretaria de Desenvolvimento da Indústria, Comércio, Serviços e Inovação), which follows the design and implementation of many programmes aimed at MPEs,4 and the Secretariat for Public Employment Policies, which is responsible for workforce skills policies. Outside SEPEC, the Special Secretariat for Simplification, Management and Digital Government manages REDESIM; the Special Secretariat for Federal Revenues monitors the implementation of Simples Nacional; and the Special Secretariat for Foreign Trade and International Affairs follows policies related to business internationalisation, including by SMEs.
The Ministry of Foreign Affairs and the Ministry of Science, Technology, Innovation and Communication are also relevant players
The Ministry of Foreign Affairs (Ministério das Relações Exteriores, MRE) and the Ministry of Science, Technology, Innovation and Communication (Ministério da Ciência, Tecnologia, Inovações e Comunicações, MCTIC) are also relevant federal players, notably within the specific areas of SME internationalisation and start-up support.
The MRE supports SMEs that wish to export through the Secretariat of Foreign Trade and Economic Policy (Secretaria de Política Externa Comercial e Econômica, SPCOM) and through the network of commercial secretariats hosted at Brazilian embassies (Secretarias Comerciais, SECOM). Both offer training and capacity-building opportunities, matchmaking events and market analysis to help SMEs export. Some of the activities specifically aimed at MPEs are organised in collaboration with SEBRAE. MCTIC is the main ministry in charge with the support of technology-based SMEs and start-ups, notably through the national innovation agency FINEP (Financiadora de Estudos e Projetos), which implements many of the MCTIC’s programmes (see Chapter 7).
Subnational governments
State and local governments are actively involved in SME and entrepreneurship policy5
In a federal country of the size of Brazil, states and municipalities also naturally play an active role in SME and entrepreneurship support. The 26 states of Brazil, plus the Federal District, have economic development departments (Secretarias de Desenvolvimento Econômico, SEDE) or economic development agencies which, among other things, operate business support programmes. States are also actively involved in the design and implementation of business cluster policies (arranjos produtivos locais), which the federal government has supported since 2004. Brazilian states also manage the local Trade Boards (Juntas Comerciais), where entrepreneurs submit the necessary documents to register their business.
The main role of municipalities in SME and entrepreneurship policy is through the issuance of business licenses and permits, including in the framework of the REDESIM initiative. In addition, a project called Município Amigo do Empreendedor encourages the creation of a business-friendly environment at the municipal level.
The special role of Sistema S
Sistema S plays a key role in policy implementation
Sistema S includes a group of organisations that is formally outside of the government but that works in close consultation with it in the implementation of socioeconomic policies. The creation of Sistema S dates back to the 1940s when the federal government and the business sector came together to upgrade the skills of the labour force at a time of rapid industrialisation and social transformation. Training continues to be even today the main area of work of organisations in Sistema S.
Organisations in Sistema S are considered parastatal organisations: i.e. they are not formally part of the government but work together with it in sectors, activities and services that are considered of public interest. The relationship between Sistema S and the government typically takes place through technical co‑operation contracts. From an administrative point of view, Sistema S is funded by wage levies ranging from 0.2% to 2.5% of wage costs (on average 1%), depending on the sector.
The first entities established under Sistema S were, respectively, the National Service for Vocational Training in Industry (Serviço Nacional de Aprendizagem Industrial, SENAI) and the National Service for Vocational Training in Trade (Serviço de Aprendizagem Comercial, SENAC). They both have a strong focus on workforce training and have worked closely with the federal government in vocation education and training (VET) policies such as PRONATEC (see Chapter 3 for more details). After the Federal Constitution of 1988, which granted the federal government exclusive responsibility on social contributions and to intervene in the interest of professional categories, other entities were created to cater to other economic sectors (e.g. rural, transport and co‑operatives).
In addition to SENAI and SENAC, the organisations that interact the most with SMEs are the Brazilian Support Service to Micro and Small Businesses (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas, SEBRAE), which acts as the de-facto national small business agency; the Brazilian Agency for Export and Investment Promotion (Agência Brasileira de Promoção de Exportações e Investimentos, Apex-Brasil); and the Brazilian Industrial Development Agency (Agência Brasileira de Desenvolvimento Industrial, ABDI). The work of some of these organisations is further detailed in Chapters 6 and 7 of the report, each of which starts by providing an overview of the main stakeholders involved respectively in export and start-up support.
Given the volume of financial resources managed by Sistema S, estimated at BRL 32 billion in 2017 and the extension of its network of local offices (229 units),6 the Federal Government has recently strengthened its dialogue with these organisations to improve synergies and to strengthen the monitoring and evaluation of their activities.
SEBRAE specifically caters to micro and small companies
As noted earlier, the activity of SEBRAE specifically focuses on SMEs, notably on micro and small businesses as defined by Lei Complementar 123/2006 (micro e pequenas empresas, MPEs), i.e. companies with annual gross revenues below BRL 4.8 million. The work of SEBRAE is set out by a Deliberative Council that consists of 15 members from national confederations (agriculture, trade and industry), federal government departments and agencies (e.g. the Under-Secretariat for Micro and Small Businesses, FINEP), business representative organisations, and public development banks (e.g. Banco do Brasil and BNDES).
SEBRAE was originally established in 1972 under what used to be the Ministry of Planning, Development and Management and was later transferred to Sistema S in 1990. Contrary to other organisations in Sistema S, SEBRAE does not work on the basis of a technical co‑operation contract, but its act of incorporation establishes that its work should be consistent with the policy priorities of the Ministry of Industry, Foreign Trade and Services (MDIC), which was merged into the Ministry of Economy in 2019. As a result, SEBRAE participates in all committees established by Lei Complementar 123/2006 and specifically caters to the development of MPEs.
SEBRAE acts in a decentralised way through a network of local offices in each Brazilian state (plus the Federal District). Each office receives resources proportional to the number of companies it serves and to the resources collected at the local level through wage levies. In addition, SEBRAE’s national office can set up special programmes and transfer resources to the states for implementation at the local level. State-level offices have flexibility in developing projects that meet local demands, although they always have to comply with guidelines set by the national office.
SEBRAE’s activities include, among others, awareness-raising, training, counselling, education and business matchmaking. For example, SEBRAE operates entrepreneurship education courses, which are available both on-site and online and is actively involved in the implementation of main tax and regulatory policies such as Simples Nacional, MEI and REDESIM.
Policy co‑ordination mechanisms
The Permanent Forum on Micro and Small Businesses is the main policy co‑ordinating body at the institutional level
SME and entrepreneurship policy cuts across different policy areas, calling for strong co‑ordination among different actors and institutions to make policy effective. Co‑ordination in SME and entrepreneurship policy is generally strong in Brazil both at the institutional and operational levels. At the institutional level, there are fora and committees whose role is to co‑ordinate national SME policies. At the operational level, co‑ordination can be observed in many programmes being designed and implemented jointly by different ministries and organisations.
The Permanent Forum on Micro and Small Businesses (Fórum Permanente das Micro Empresas e Empresas de Pequeno Porte, FPMPE) is the official co‑ordinating body responsible to advise, monitor and evaluate policies for micro and small businesses, as defined by Lei Complementar 123/2006 (MPEs). The FPMPE was established by the same law and has always been chaired by the Under-Secretariat for Micro and Small Businesses.
The FPMPE met regularly between 2007 and 2013, but thereafter it was not convened for three years. In May 2017, the forum was resumed, under the leadership of the then Special Secretariat for Micro and Small Businesses at former MDIC, with the appointment of 80 members from the government (all three layers), organisations from Sistema S, financial institutions, small business associations and civil society organisations. The FPMPE works through six thematic committees, each of which focuses on a key policy area and is jointly co‑ordinated by a public and private stakeholder (Table 4.1).
Table 4.1. Thematic committees at the Permanent Forum on Micro and Small Businesses
Source: Forum Permanente (n.d.), Homepage, www.forumpermanente.gov.br, accessed on 10 February 2020.
In June 2019, the FPMPE launched the National Policy in support of Micro and Small Enterprises (Política Nacional de Apoio e Desenvolvimento das Microempresas e Empresas de Pequeno Porte, PNADEMPE). This Strategic document gathers information on ongoing initiatives for MPEs, sets out future policy directions, and outlines main policy evaluation criteria (FPMPE, 2019). In mid-2019, the FPMPE was also discussing the creation of a national credit guarantee system (Sistema Nacional de Garantia de Crédito, SNGC) in collaboration with the Brazilian Management Agency of Guarantee Funds (Agência Brasileira Gestora de Fundo Garantidores e Garantias, ABGF), which would be an important development given the limited presence of loan guarantees in Brazil (see Chapter 5 for more details).
In addition to the national FPMPE, each of the 26 states of Brazil (plus the Federal District) is also expected to run a regional forum to discuss micro and small business development issues at the local level. As of 2019, 13 states had a functioning regional forum.
Steering committees supervise the implementation of major initiatives
The federal government also operates a series of technical steering committees that supervise the implementation of major policies such as Simples Nacional and REDESIM. The Steering Committee of Simples Nacional (Comitê Gestor do Simples Nacional, CGSN) consists of eight members, four from the Special Secretariat for Federal Revenues representing the federal level, two members representing the state (and Federal District) level, and two members representing municipalities. The CGSN legislates through resolutions, which are normative in nature and bind all three levels of government. Since 2013 (Decree 8019/2013), there is also an Inter-ministerial Evaluation Commission of Simples Nacional, which monitors and evaluates this policy.
The Steering Committee of REDESIM (Comitê para Gestão da REDESIM, CGSIM) follows the implementation of the federal initiative that aims to harmonise state and municipal business regulations nationwide. CGSIM is chaired by the Special Secretariat for Simplification, Management and Digital Government at the Ministry of Economy and includes 11 representatives from different secretariats at the Ministry of Economy, the National Social Security Institute, a representative of state-level Trade Boards, finance departments at the state and municipal levels, municipalities and the FPMPE. The main purpose of REDESIM is to govern, in compliance with the existing law, everything that has to do with opening, closing or changing the legal nature of business enterprises in Brazil.
Conclusions and policy recommendations
This chapter has looked at the governance of SME and entrepreneurship policy in Brazil. It has started by highlighting that the Federal Constitution of 1988 grants micro and small businesses a right to preferential treatment. The major SME policy of Brazil, Simples Nacional, hinges on this principle by establishing a preferential tax and regulatory regime for micro and small enterprises. So does the MEI policy, which has encouraged the formalisation of micro-entrepreneurs. However, the strong focus of Brazilian SME policies on micro and small businesses also means that mid-sized firms are largely missing in the national policy debate.
Following federal elections in October 2018 and the swearing-in of a new government in January 2019, the Ministry of Economy, which has merged four previous ministries, has become the main ministry involved in SME and entrepreneurship policy, notably through the Special Secretariat for Productivity, Employment and Competitiveness, the Special Secretariat for Simplification, Management and Digital Government, and the Special Secretariat for Fiscal Revenues. However, within their respective areas of work, the MRE (internationalisation) and MCTIC (innovation) are also relevant ministries. Sistema S – a group of parastatal organisations – plays a key role in policy implementation, mostly through the stipulation of management contracts with the federal government. In line with the federal nature of Brazil, state governments also play an active role in SME support, while municipalities are mostly involved through the delivery of business licenses and business permits.
Finally, there is a good level of co‑ordination in SME and entrepreneurship policy in Brazil, both at the institutional and operational levels. At the institutional level, the Permanent Forum on Micro and Small Businesses (FPMPE) is the official place monitoring the implementation of policies and programmes for this business segment. Inactive between 2014 and 2017, it was revamped in 2017 under the leadership of the then Special Secretariat for Micro and Small Businesses at former MDIC and has since then steered the institutional debate on policies for MPEs.
Policy recommendations on the governance of SME and entrepreneurship policy
Prepare an SME Strategy and Action Plan that outlines the main policy objectives, targets and support measures and that defines roles and responsibilities of implementing ministries and agencies.
Undertake a more regular evaluation of main SME and entrepreneurship programmes to better understand impacts and build the evidence base for future policies.
Convene regularly the Permanent Forum on Micro and Small Enterprises to encourage institutional dialogue on SME policy and further promote state-level fora to foster policy dialogue also at the local level.
References
FPMPE (2019), Política Nacional de Apoio e Desenvolvimento das Microempresas e Empresas de Pequeno Porte, Fórum Permanente das Micro Empresas e Empresas de Pequeno Porte, Brasília.
RFB (2018), Demonstrativo dos Gastos Tributários Bases Efetivas – 2015 Série 2013 a 2018, Receita Federal do Brasil, Brasília
SEBRAE (2017), Panorama dos Pequenos Negócios, Brasília, https://m.sebrae.com.br/Sebrae/Portal%20Sebrae/UFs/SP/Pesquisas/Panorama%20dos%20Pequenos%20Negocios%202017.pdf.
Notes
← 1. The federal taxes are the IRPJ (corporate income tax), PIS/PASEP (federal social contributions for low-income workers), CSLL (contribution on net profit), COFINS (federal tax financing the social security system), IPI (value-added tax on industrial products), and employer social security contributions. The two local taxes are ICMS (state-level tax applied to the movement of goods and services across states) and ISS (municipal services tax).
← 2. ICMS is the state-level tax applied to the movement of goods and services across states and ISS is the municipal services tax.
← 3. Further information on remaining challenges in REDESIM are available in the following presentation by former MDIC: http://legis.senado.leg.br/sdleg-getter/documento/download/814ca7dd-5489-44e3-a898-cecb23c2d545.
← 4. The Under-Secretariat for Micro and Small Businesses and Handicraft is, in fact, part of the Secretariat for Industry Development, Trade, Services and Innovation.
← 5. Chapter 8 analyses in further details the local dimension of SME and entrepreneurship policy in Brazil.
← 6. Estimates from the Brazilian Court of Auditors (Tribunal de Contas da União).