Lula Government Weighs Scrapping CNPJ and Invoice Rules for Nanoentrepreneurs

Why the Government Is Rethinking CNPJ Demands for Nanoentrepreneurs

Brazil’s tax reform, enacted earlier this year, created a new category—the nanoempreendedor—to cover very small-scale workers earning up to R$40,500 annually, half the cap for a Microempreendedor Individual (MEI). These individuals are exempt from the new federal consumption tax (CBS) and the shared state-municipal tax (IBS). The intent was to reduce bureaucracy and encourage informal workers to regularize their activities.

However, a decree issued in April by President Luiz Inácio Lula da Silva quietly added an unexpected twist: from 2027, even these exempt nanoentrepreneurs would need to obtain a CNPJ (national business registration) and issue electronic invoices for their transactions. The obligation was not part of the original design of the category and immediately caused friction.

Now, senior government aides are assessing whether to revoke the requirement. According to officials, the measure has generated significant noise on social media and complaints among the affected population, raising political alarm inside the Palácio do Planalto. The Ministry of Finance says it is still evaluating “accessory obligations” for the group, emphasizing simplification, but the debate has exposed a rift between the aim of supporting micro-entrepreneurs and the practical burden of formal registration.

The Political and Bureaucratic Fault Lines Exposed

The Political Calculus Inside the Palácio do Planalto

Aides to Lula detected that the CNPJ requirement is stirring anger online and is poorly understood by the very people it affects. The government fears that imposing registration and electronic invoicing on street vendors, moto-taxi drivers, gardeners, cooks, and artisans—most of whom have low income and limited digital access—will be seen as another bureaucratic hurdle, undermining support for the broader tax reform. Reversing the decree is viewed as a way to defuse a growing political liability.

The Formalization Paradox

The tax reform’s architects wanted the nanoempreendedor regime to be a simple on-ramp to formality. Yet the decree’s demand for a CNPJ and electronic invoices directly contradicts that goal. Officials cited in the report argue that formalization should be a natural consequence of business growth, not a barrier imposed from day one. Of an estimated 19 million potential nanoentrepreneurs, around 15.5 million (82%) currently lack a CNPJ. For many, the cost, complexity, and digital skills required to comply could instead push them deeper into informality—exactly what the reform sought to prevent.

The Scope of Those Affected

The 19 million figure captures a vast informal workforce: street vendors, small-scale service providers, and gig workers like app-based delivery drivers and moto-taxi operators. For drivers and couriers using platforms, a special rule counts only 25% of their annual earnings toward the R$40,500 threshold, meaning they can earn up to R$162,000 in gross receipts and still qualify. This nuance highlights how the category was designed to accommodate modern work patterns, but the reporting obligation risks alienating the very demographic the policy aims to protect.

What 19 Million Informal Workers Should Watch For

• If you are among the 15.5 million informal workers without a CNPJ, no immediate steps are required: the decree’s effective date is 2027, and a potential reversal could eliminate the obligation entirely.
• Check the Ministry of Finance’s official communiqués for the final decision. A rollback would mean you can continue your activity without formal registration, preserving the tax exemption and avoiding the upfront cost of obtaining a CNPJ and mastering electronic invoicing.
• Should the requirement stand, you will need to register for a CNPJ and begin issuing electronic invoices from 2027. Early preparation—such as familiarizing yourself with the process or seeking help from local business support services—can reduce the burden if the rule is confirmed.