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SME and Entrepreneurship Policy in Brazil 2020

image of SME and Entrepreneurship Policy in Brazil 2020

This publication presents the findings of the OECD review of SME and entrepreneurship policy in Brazil. SMEs play an important role for economic growth and social inclusion in Brazil, accounting for 62% of total employment and 50% of national value added. However, productivity gaps between SMEs and large companies are wider in Brazil than in the OECD area, which is also the result of low innovation and export propensity among Brazilian SMEs. Business ownership and business creation are common, but growth-oriented entrepreneurship is much less widespread.

Brazil’s SME policy is enshrined in the 1988 Federal Constitution, which grants to micro and small enterprises a preferential treatment in different policy areas (e.g. tax and labour law). Brazilian SME policies are, therefore, mostly aimed at this constituency, whereas mid-sized firms are largely missing in the national policy debate. Simples Nacional, a preferential tax and regulatory regime, is the main federal SME policy, but Brazil also operates a large number of targeted programmes for SMEs. This report provides policy recommendations to enhance Brazil’s SME and entrepreneurship performance, covering, among others, innovation policy, export support, access to finance, and women’s entrepreneurship.

English

The business environment for SMEs and entrepreneurship in Brazil

This chapter gives an overview of the main strengths and weaknesses of the business environment for small- and medium-sized enterprises (SMEs) and entrepreneurs in Brazil. Brazil’s participation in global trade is only half the OECD average, which limits opportunities for SME exports and SME participation in global supply chains. Product market regulations, including tax compliance, continue to be burdensome for many companies, including larger SMEs ineligible for one of the two existing preferential tax regimes (Simples Nacional and Micro Empreendedor Individual [MEI]). Credit market conditions are also tight for SMEs, as shown by a high interest-rate spread between SME loans and large-company loans. Nonetheless, the government has introduced some important reforms to remedy these problems. In the area of trade policy, local content requirements are being progressively lifted. MEI and Simples Nacional have simplified considerably the regulatory and tax environment for micro and small companies with gross annual revenues respectively below BRL 81 000 and BRL 4.8 million. And a series of policy reforms have reduced the degree of credit subsidy and banking concentration in the domestic credit market.

English

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