Brazil has at least 19 million workers who fit the nanoentrepreneur category created by the country's tax reform, according to a study commissioned by Natura, the cosmetics company, and conducted by economist Fernando Blumenschein, reported by Folha de S.Paulo on Monday. Of that total, 15.5 million are self-employed without a CNPJ, Brazil's company registration number, a group equal to about 60% of the country's informal workers. The other 3.5 million hold the registration.
The category covers small-scale economic activity, often to supplement household income: seamstresses, manicurists, hairdressers, electricians, street vendors and cosmetics resellers. To qualify, gross annual revenue must be below R$ 40,500, half the ceiling of the MEI, Brazil's simplified self-employment registration, and the worker must not be enrolled in that regime. App drivers and delivery workers get a higher ceiling of R$ 162,000 a year, double the MEI limit.
No CNPJ and no new taxes
The difference from the MEI is formalization. A nanoentrepreneur does not need to register a company or issue invoices and, under the reform, pays neither IBS nor CBS, the two new consumption taxes that start being charged in 2027. The paperwork waiver was formalized in a decision by the Receita Federal, the federal tax authority, and the IBS management committee formed by states and municipalities, published in late August. When the study was done, the waiver was not yet formal, according to Folha.
Low income, little schooling
Among nanoentrepreneurs without a CNPJ, 81.5% live on up to two minimum wages and 31.5% did not finish elementary school, according to the study, reported by Money Report. Informality runs highest in the North region, where 93% of nanoentrepreneurs have no CNPJ, and the Northeast, with 89.8%. Sao Paulo state holds the largest absolute count: about 3.9 million workers in the category, 2.8 million of them informal.
The category was designed to cover small-scale activity that would be overwhelmed by the paperwork required of larger companies, Folha reports. In practice, many of these workers already escape the current consumption taxes; the reform lets them stay in the same position. The study argues that their lower income and schooling reinforces the need to keep red tape low for this group.
For sellers, the design preserves the status quo: no new tax and no registration or invoicing below the ceilings. For consumers, the effect becomes visible from 2027, when a manicurist, an electrician or an app driver in the category will not pass IBS or CBS into prices, while purchases from formal companies will carry both taxes.