Ricardo Tosto Discusses the Law of Micro-Business Taxation in Brazil


Brazilian law has not always been very business-friendly, and in the view of many people, this lack of encouragement has been detrimental to the country’s development. However, things are slowly changing, and the government has introduced a new taxation system for very small businesses, also known as micro-businesses click here.

A micro-business is a one-person or two-person business. This definition includes freelancers, although lawyers are other service professionals are excluded from the definition in Brazil. Registering as a has a number of tax benefits, but is only possible if the business’s gross profits do not exceed 60,000 reais per year.

Individuals and partners who register as a micro-business pay a monthly pension contribution. Although they must file a federal tax return, they need only pay income tax if their net profit exceeds a certain percentage threshold over gross profits, which is 32% for most services, but lower for other businesses. Taxes are only owed on profits above that threshold, and personal deductions also apply to the taxable income.

These new small business registration schemes allow entrepreneurs to start small and build their business. As their profits grow, they may opt to incorporate their business or simply move up to other forms of small business organization.

Ricardo Tosto is a Brazilian attorney and expert in business law. His firm, Ricardo Tosto & Associates, was one of the first Brazilian law offices to offer large-scale dispute resolution solutions to corporations.

Ricardo Tosto earned his LLB and practiced as an in-house counsel before starting his firm. A well-regarded member of the Sao Paulo Bar, Ricardo Tosto is a frequent speaker at events, and strongly believes that the academic side of the law enhances its practice. In addition, Ricardo Tosto is known for his track record of legal publications and works on Brazilian legal history.