ABF calls for annual adjustment to Simples tax thresholds for franchises

The Brazilian Franchising Association (ABF) has made updating the thresholds for Simples Nacional, Brazil’s simplified tax regime for smaller businesses, one of its priorities in discussions with the federal government and Congress. Presented during ABFCon 2026 on Comandatuba Island in Bahia, its agenda includes annual adjustments to turnover thresholds, clarity on the tax transition and measures to support recruitment. These are proposals put forward by the association, not changes that have already been approved.

Automatic threshold adjustments proposed

ABF is calling for a mechanism to adjust the Simples Nacional turnover thresholds automatically each year. Its proposal is to base these adjustments on official inflation measures, such as the Extended National Consumer Price Index (IPCA) or the National Consumer Price Index (INPC).

The requests were presented at a press conference during the convention, held from 28 October to 1 November 2026. The agenda covers issues affecting both franchisors and the entrepreneurs running local franchise operations.

The central aim is to establish a permanent adjustment rule, rather than relying on occasional revisions to the turnover thresholds. For franchise operators, however, the announcement of the proposal does not in itself change eligibility for the tax regime. Distinguishing between the association’s policy agenda and the rules currently in force is essential for planning.

Small businesses lend weight to the call

The profile of franchise operations helps explain the importance of this debate for the sector. According to research conducted by the Institute for Social, Political and Economic Research (Ipespe) for ABF and Sebrae, Brazil’s small business support agency, microenterprises and small enterprises together account for 88% of franchised operations.

Microenterprises represent 64% of the total, while small enterprises account for 24%. These figures describe business size; they should not be taken to mean that all these operations fall under the same tax regime.

Smaller businesses also predominate among franchisors. The survey found that 61% of networks have up to 30 operations, while 25% have between 31 and 100. The tax agenda therefore extends beyond major brands: it concerns a sector made up largely of small businesses and smaller networks.

The tax transition requires more than a comparison of rates

Another priority outlined by ABF is establishing clear rules for the transition to Brazil’s new consumption tax system. This comprises the federal Contribution on Goods and Services (CBS) and the state and municipal Tax on Goods and Services (IBS).

The introduction of CBS, scheduled for 2027, was among the issues highlighted by ABF president Tom Leite. It will replace PIS and Cofins, two existing federal contributions. According to Leite, the change requires particular care from companies taxed under the presumed-profit regime, known as lucro presumido.

Leite also noted that directly comparing current and projected tax rates does not reveal the reform’s actual impact. The new system includes tax credit arrangements that must be factored into the assessment. The effects may vary according to a network’s activities and supply chain, among other factors.

This concern is reflected in the survey released on 29 October at ABFCon: 55% of respondents identified the tax burden as one of their main challenges over the following 12 months. The figure helps explain the issue’s prominence on the association’s agenda.

Recruitment and credit round out the picture

The association’s agenda also includes a permanent policy to reduce payroll taxes, alongside tax and employment-related incentives for hiring people into their first jobs. These proposals reflect difficulties reported by franchise networks: recruitment and workforce management were concerns for 50% of survey participants.

High interest rates and access to credit were cited by 34%, while inflation and rising operating costs featured in 33% of responses. In a separate assessment of access to finance, 42% said they found it difficult or very difficult to obtain credit.

For franchisees, the practical advice is to distinguish proposals from rules already in force and review tax planning with an accountant. Before forecasting any savings, operators should assess their tax regime, supply chain and the effects of tax credits.