The effects of the national simple tax regime on the small businesses revenue and tax payment in the Ceará state – Brazil

Abstract

This research examines the impact of the Simples Nacional policy on the revenue of Micro and Small Enterprises (MSEs) and their payment of taxes on goods and services (ICMS) in the State of Ceará, Brazil. The Simples Nacional is a tax collection regime created by Complementary Law No. 123/2006, with the purpose of reducing the tax burden for companies classified as Micro and Small Enterprises. The data utilized in this study was obtained from the State Treasury Department of Ceará (SEFAZ), Institute of Economic Research and Strategy of Ceará (IPECE), and Brazilian Institute of Geography and Statistics (IBGE). The difference-in-differences method was employed on a panel data structure. The results reveal an average increase in MSEs revenue ranging from 45.9% to 96.4% and an average reduction in ICMS payment between 8.5% and 11.2%. The data used in this study was not publicly accessible, thereby contributing to the literature on this subject.