The new report about Brazil made by "The Economis" (the one that is basically reverting everything good they have said about Brazil a few years ago) mentions a curious expression: "Peter Pan firms in Brazil".
The expression was not foreign to me, but I hadn't heard it in years.
I think Economist wanted to describe the small and medium-sized business that are under the "SIMPLES" regime of taxation.
SIMPLES is a tax regime that allows for a total tax burden as low as 5% over the gross revenues of the company. The taxation increases as a percentage in proportion to the monthly sales/income. That is, a small business selling 1 thousand dollars a month would pay 5%, and a medium company selling 750 thousand reais a month would pay 12%. And so on.
In view of this tax escalation, many people choose to keep their companies small (very small, as in a hot dog stand), just to avoid any increase in taxation. Such companies never grow, and thus the Peter Pan metaphor.
I write little about this because COMPANIES WITH PARTNERS THAT LIVE ABROAD CANNOT JOIN THE SIMPLES TAX REGIME. Since most of my work is helping foreigners who want to invest in here, I choose to focus on the more traditional tax regimes (assumed profits system and real profits system).
On top of that, I despise SIMPLES, because I see it as a kind of government fraud. The system was designed to keep poor people poor. The Peter Pan effect is no accident.
But, since the expression caught my eye and since the number of foreigners who choose to move to Brazil is increasing, I thought it would be a good idea to mention SIMPLES, in spite of its problems.
