BRASILIA (Reuters) – Brazil’s Finance Ministry announced on Friday an exemption from federal taxes on e-commerce purchases up to $50 for companies participating in a new compliance program by the tax revenue service.
The program comes amid the country’s attempts to close a loophole that some Asian e-commerce giants were seen as using to gain tax exemptions by sending shipments as if they were individuals and not businesses.
Currently, shipments sent by companies of any value are subject to a 60% federal tax rate on imports, while shipments sent by individuals are exempt for orders up to $50, with the same tax rate applied above that amount.
The program, starting Aug. 1, offers faster and cheaper customs treatment for e-commerce companies that voluntarily meet criteria set by the government, the ministry’s statement said.
The criteria include declaring imports and collecting taxes, by adding them on to the price of products, before merchandise arrives in the country.
Under the program, e-commerce companies must also inform consumers about the product’s origin and the merchandise’s total value, including federal and state taxes – procedures that are currently optional.
Taxes, if applicable, are currently paid by consumers after the arrival of the merchandise, following analysis and notification by the revenue service, resulting in longer delivery times.
The program will essentially relieve the revenue service of such tasks when e-commerce firms participate.
The government had previously attempted to end exemptions on all shipments as some companies imported products as individuals to avoid higher rates.
Alibaba Group’s AliExpress, Sea Ltd’s Shopee and fast-fashion giant Shein were identified as the main targets of the measure.
After heavy push back from the public, the government decided to maintain the tax exemption up to $50 but only for shipments made by individuals, stating that it would explore a digital tax collection model for companies.
(Reporting by Marcela Ayres; Editing by Emma Rumney)
