Thirteen million small business owners in Brazil have been running their books against the same revenue ceiling since 2018. No inflation adjustment, no phased increase — just a flat R$81,000 (about $15,600) a year that a solo entrepreneur cannot cross without either underreporting income or jumping into a far more complicated tax regime. Eight years of inflation later, that ceiling buys a lot less than it used to, and Brazil's Congress is finally moving to do something about it.
If you run a small business anywhere in the world, the specifics of Brazil's MEI program are worth understanding — not because you'll ever file a DAS-MEI payment, but because "frozen revenue threshold slowly strangles the businesses it was designed to help" is a pattern that shows up in tax codes everywhere, from VAT registration limits in Europe to the U.S. sales-tax economic nexus threshold. Watching how one country tries to fix it is a useful preview of a fight your own jurisdiction may be having, or will have soon.
What MEI Actually Is
MEI — Microempreendedor Individual, or "Individual Microentrepreneur" — is Brazil's simplified formalization status for solo operators: independent couriers, hairdressers, electricians, freelance developers, small shopkeepers, and anyone else running a one-person (or nearly one-person) business. It's the main on-ramp Brazil uses to pull informal workers into the formal economy, and it works because it's genuinely simple.
Instead of filing separate returns for federal, state, and municipal taxes, a MEI pays one flat monthly amount called the DAS-MEI:
- R$82.05/month for commerce and industry
- R$86.05/month for services
- R$87.05/month for activities that combine commerce and services
That single payment (roughly $16–17 USD at current exchange rates) bundles in the INSS social security contribution plus a small fixed ICMS or ISS component, depending on the activity. The only other real obligation is an annual revenue declaration — the DASN-SIMEI — due every May, which is mandatory even if the business made zero income that year. No bookkeeper, no accountant, no complex filings. It's the tax equivalent of a subscription plan, and it's a big part of why MEI has over 13 million registrants today.
Why a Frozen Ceiling Quietly Punishes Success
The catch is the revenue cap: R$81,000 per year, unchanged since 2018. There's a built-in 20% tolerance band — a MEI can earn up to R$97,200 in a given year and simply pay the extra tax owed the following January — but cross that line and the business is forced to migrate into Microempresa (ME) status under the broader Simples Nacional regime.
That migration is a genuine cliff, not a gentle ramp. Simples Nacional brings real bookkeeping requirements, tiered tax rates that run from roughly 4% up to 33% depending on revenue band and sector, and a tax ceiling of R$4.8 million — a completely different administrative universe from a flat R$82-a-month payment. For a solo entrepreneur who just barely outgrew MEI, jumping straight into that regime can mean hiring an accountant for the first time just to stay compliant.
Since the ceiling hasn't moved since 2018, inflation has done the rest of the damage on its own. A business earning what R$81,000 was worth in 2018 needs meaningfully more revenue today just to keep pace — and Brazil's Congress has, in effect, been quietly shrinking the space MEI was designed to occupy, one year at a time. The predictable result: some growing operators underreport revenue to stay under the cap, while others get pushed into Simples Nacional years before they're actually ready for its overhead, both of which run counter to the program's original goal of keeping businesses formal and growing.
What's Being Proposed
On June 29, 2026, President Lula sent Congress a bill proposing a two-stage increase to the MEI ceiling:
| Year | Annual revenue ceiling | Approx. USD |
|---|---|---|
| Current (since 2018) | R$81,000 | ~$15,600 |
| 2027 | R$110,000 | ~$21,200 |
| 2028 | R$140,000 | ~$27,000 |
The bill also raises the hiring limit — a MEI would be allowed to employ two people instead of the current cap of one. That second detail matters as much as the revenue number: a solo entrepreneur who needs help to keep growing currently has to abandon MEI's simplicity just to legally hire a second pair of hands.
This isn't happening in isolation, either. A separate, earlier legislative effort (PLP 108/2021) has been working through Congress with its own proposal to lift the ceiling to roughly R$144,913 in one step — evidence that lawmakers across different bills agree the freeze has run its course, even if they disagree on the exact number and pace.
Politically, the push has real momentum. Lower-house speaker Hugo Motta has prioritized the measure, and a special congressional committee is targeting a vote before the July 18, 2026 legislative recess. It still needs full congressional approval and a presidential signature before it's law, and the numbers could shift during that process — but for the first time since 2018, an increase looks genuinely likely rather than merely proposed.
The stakes are sizeable: small businesses accounted for more than 80% of formal job creation in Brazil last year, and microentrepreneurs made up nearly 80% of the more than one million new businesses registered in just the first two months of 2026. A ceiling that hasn't moved in eight years is now bumping up against a huge and fast-growing share of the country's formal economy.
Why This Matters Even If You've Never Filed a DAS-MEI
Every tax system that formalizes small businesses with a simplified regime eventually faces this same design problem: pick a revenue threshold, and either update it regularly or watch it quietly become a tax on growth. The U.S. has its own version in state-by-state sales-tax economic nexus thresholds; the EU has VAT registration limits that individual member states periodically debate raising; even the U.S. federal S-corp and Simple IRA contribution rules involve dollar thresholds that Congress has to actively legislate to keep current.
The lesson for any small business owner sitting near one of these lines — regardless of country — is the same: know exactly where your threshold is, and track your revenue against it in real time, not at year-end. A business that only discovers it crossed a ceiling when the annual filing comes due has already lost the chance to plan the transition on its own terms — timing a hire, budgeting for a new tax regime, or simply deciding to slow down billing until the next tax year. A business that watches the number monthly can make that decision deliberately instead of having it made for them by a surprise tax bill.
That kind of visibility depends entirely on how cleanly a business tracks its own books. If your revenue lives scattered across invoices, a bank app, and a spreadsheet nobody updates consistently, you won't see a threshold coming until you're already over it.
Keep an Eye on Your Own Thresholds
Whether it's a MEI ceiling, a VAT registration limit, or a sales-tax nexus threshold, the businesses that handle a regime change smoothly are the ones with clear, current financial records — not the ones caught off guard by a number they hadn't checked since last year's filing. Beancount.io provides plain-text accounting that gives you a transparent, version-controlled view of your revenue at any point in time, so you always know exactly where you stand against whatever threshold applies to your business. Get started for free and see why small business owners and developers worldwide are switching to plain-text accounting.