Lula Signs Debt Relief for Small Businesses
BRAZIL · ELECTIONS
Published Wednesday, 21 October, 1:25 p.m. ET · Source: Folha de S.Paulo, Estadão, Poder360
Key Facts
- What happened On Wednesday 21 October, President Lula signed a law cancelling federal tax debts of micro-entrepreneurs.
- The change The cap on yearly revenue rises from R$81,000 (about US$16,100) to R$140,000 (about US$27,800) by 2028.
- The timing The vote is on Sunday 25 October, four days away.
- Power Index Brazil ranks 1st of 14 in The Rio Times Latin America Power Index, with 75.0 points (October 2026 edition).
- Prediction markets Polymarket gives Flávio Bolsonaro a 77.2% chance of winning the 25 October runoff and Lula 22.5% (21 October, 1:15 p.m. ET). Polymarket puts Flávio Bolsonaro’s chance of winning at 78% and Kalshi at 79% (Lula: 22% and 21%), as of 21 October, 1:40 pm ET; prices are bets, not polls.
- Still open Outlets report different totals for the debt forgiven.
Runoff · Sunday, 25 October
Brazil Runoff 2026: Lula vs Flávio
Date, polls, debates, odds and how the runoff works, updated every day.
Read our Brazil election 2026 runoff guide →
Brazil election 2026 · Brazil election polls · Who will win: Brazil election odds · Brazil runoff date and results start · Brazil election results · Brazil election poll data (CSV) · All election stories
Brazilian President Luiz Inácio Lula da Silva signed a law on Wednesday 21 October that cancels federal tax debts of micro-entrepreneurs, people who run one-person businesses, Folha de S.Paulo reported. The signing came four days before the Brazil election 2026 runoff on Sunday 25 October against Flávio Bolsonaro, senator for Rio de Janeiro.
The law also lifts the revenue limit for the simplified MEI tax regime for the first time since 2018. Folha says the moves are part of Lula’s push to raise his popularity, after he finished the first round behind Flávio Bolsonaro, as our Brazil election polls tracker shows.
What the New MEI Law Does
The text cancels federal debts of MEIs, registered in the national unpaid-debt list or not, up to 13 October 2026, Estadão reported. That covers social security contributions plus interest, fines and legal charges.
The relief takes effect on 1 January 2027. To keep it, a business must pay its dues on time for the next six months and drop any court cases over those debts.
The yearly revenue ceiling rises from R$81,000 (about US$16,100) to R$110,000 (about US$21,800) in 2027 and R$140,000 (about US$27,800) in 2028, according to Poder360. A micro-entrepreneur may also hire up to two employees instead of one.
How Big Is the Debt Relief?
Outlets give different totals. Folha puts the debt cancelled at about R$15 billion (about US$3.0 billion), while Estadão says about R$12 billion (about US$2.4 billion).
Poder360 says the October announcement set the forgiveness at R$12.6 billion (about US$2.5 billion), and it reports a total cost of R$16.7 billion (about US$3.3 billion) for the full package. All US$ figures use the 21 October rate of R$5.04 per US$ from RT, a market data provider.
Free Weekend Transport Proposal
Lula also formalised a proposal for free public transport on weekends through a constitutional amendment, Folha reported. He called the two free days an initial project that could grow if public finances allow, as we reported on his pledge on 20 October.
He said the government knows it will not collect the old debts, which leave about 4 million small business owners with a bad credit record. Poder360 puts the number of beneficiaries at more than 3.6 million.
Why It Matters in the Campaign
Folha says micro-entrepreneurs are among the groups where Lula finds it hardest to win votes. The law was passed by Congress within days, and Estadão says it was approved last week.
Folha adds that the new MEI rules were part of talks between Lula and Hugo Motta, speaker of the lower house, on ending the 6×1 work schedule. Under that schedule many employees work six days and rest one.
What It Means for US Readers
For investors in Brazilian stocks, bonds or US-listed Brazilian shares, spending measures before a vote feed the debate on public finances. Investors tend to watch spending decisions made close to a vote.
For readers following the race, the measures show a campaign pressing for small business votes in the last days. No poll yet measures their effect.
What Prediction Markets Say
On Polymarket, an online prediction market, bettors give Flávio Bolsonaro a 77.2% chance of winning the 25 October runoff and Lula 22.5% (21 October, 1:15 p.m. ET). The “Brazil Presidential Election” market has drawn about US$190.7 million in total bets.
These are bets, not polls, and they can move quickly on news.
Prediction markets · who wins the runoff
Implied chance of winning Brazil’s presidency on 25 October, from traders’ prices.
Polymarket
Flávio Bolsonaro 77.9% · Lula 21.5% (US$191 million traded)
Kalshi (regulated in the US by the CFTC)
Flávio Bolsonaro 79% · Lula 21%
As of 21 October, 1:40 pm ET (18:40 Lisbon), updated every 20 minutes. Prices are bets, not polls, and can move fast.
Why we show this: prediction markets turn real-money bets into a live probability that moves within minutes of the news, which is why investors, campaigns and newsrooms in the United States now follow them closely. We show them next to polls and official results, never instead of them.
What Is Not Known
The exact total of debts cancelled is not settled, because Folha, Estadão and Poder360 each give a different figure. It is also unknown whether the free weekend transport amendment will win the three-fifths majority it needs in Congress.
No poll yet shows whether the small business measures move votes. Lula’s remark that the free-fare plan could be widened depends on the state of public finances.
More: Brazil news in English, every day from The Rio Times.
Frequently Asked Questions
What did Lula sign on 21 October?
He signed a law that cancels federal tax debts of micro-entrepreneurs (MEIs), one-person businesses, and raises their annual revenue ceiling. The ceiling rises from R$81,000 (about US$16,100) to R$140,000 (about US$27,800) by 2028.
When does the MEI debt relief take effect?
The law takes effect on 1 January 2027, and the debts are cancelled from then. Businesses must pay their dues on time for six months afterwards or lose the benefit.
Why does the MEI law matter for the Brazil election 2026 runoff?
Lula trails Flávio Bolsonaro after the first round, and small business owners are a group where he struggles for votes. The vote is on Sunday 25 October.
How much debt is being forgiven?
Reports differ. Folha de S.Paulo says about R$15 billion (US$3.0 billion), Estadão about R$12 billion (US$2.4 billion), and Poder360 R$12.6 billion (US$2.5 billion) at the original announcement.
What is the free weekend transport plan?
Lula formalised a proposal to make public transport free on weekends, which he describes as a first step. It is a proposed constitutional amendment, so Congress has not approved it.
Sources: Folha de S.Paulo, 21 October 2026; Estadão, 21 October 2026; Poder360, 21 October 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief