OECD - SME and Entrepreneurship Policy in Brazil 2020

This publication presents the OECD country review of small- and medium-sized enterprise (SMEs) and entrepreneurship policy in Brazil. It was prepared at the request of the Brazilian Ministry of Industry, Foreign Trade and Services (MDIC), which was merged into a new and enlarged Ministry of Economy in early 2019. This publication is part of the series of OECD Country Reviews on SME and Entrepreneurship Policy undertaken by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). Previous country reviews have covered Canada, Indonesia, Ireland, Israel, Italy, Kazakhstan, Mexico, Poland, the Russian Federation and Thailand.

The series provides a tool for assessing the design and implementation of SME and entrepreneurship policy, identifying areas for improvement and sharing policy experiences among countries. The reports typically include one or two thematic chapters on issues of special relevance for the government, as agreed between the OECD and the country concerned. This review has two thematic chapters, one on SME export policies and one on the innovative start-up ecosystem.

The report shows that SMEs are critical for economic growth and social inclusion in Brazil, but that the gap in labour productivity between Brazilian SMEs and large companies is wider than in the OECD area. Brazil is also characterised by widespread business ownership, while growth-oriented entrepreneurship is much less common. The business environment presents some challenges for SMEs, for example with respect to the credit market, business regulations and taxation, although important reforms have recently been introduced in each of these areas. SME policy in Brazil rests on the principle of preferential treatment for micro and small businesses, which is enshrined in the Federal Constitution. Accordingly, the main federal policy for SMEs, Simples Nacional , consists of a preferential tax and regulatory regime for micro and small enterprises. There are also many targeted programmes for SMEs, some of which could be scaled up.

The report offers policy recommendations across a number of areas. Preferential tax regimes for micro and small enterprises could be tweaked within the context of a broader reform of the corporate tax system. Competition in the credit market could be strengthened through the further development of alternative domestic lenders, such as credit co-operatives. Government-backed loan guarantees could also be more actively promoted in the domestic credit market. More innovation policy spending could go to start-ups and SMEs by scaling up some successful programmes and by introducing adjustments to federal R&D tax credits. Export finance and supplier development programmes could receive more resources, while womens entrepreneurship would benefit from a larger number of programmes specifically aimed at women-owned businesses.

The OECD review series is based on a standard methodology, which includes a diagnostic questionnaire completed by national government authorities, a fact-finding mission by an OECD team to hold detailed interviews with policy and business stakeholders, and discussion of a draft report at a peer review session in the OECD Working Party on SMEs and Entrepreneurship (WPSMEE), which operates under the auspices of the Committee on Industry, Innovation and Entrepreneurship (CIIE). The report of the Brazil review was discussed by the WPSMEE in October 2019 and approved by written procedure in December 2019 [CFE/SME(2019)10].