On Friday, Brazil’s Finance Ministry exempted enterprises in the tax collecting service’s new compliance program from federal taxes on e-commerce sales up to $50.
The country aims to eliminate a loophole that Asian e-commerce companies use to avoid taxes by delivering shipments as individuals.
Finance Minister Fernando Haddad told reporters the legislation aims to “balance competition” between marketplaces, calming local shops.
Companies pay a 60% federal tax on imports, while individuals pay the same tax on orders over $50.
The ministry’s statement stated e-commerce enterprises that voluntarily meet government standards would receive speedier and cheaper customs procedures starting Aug. 1.
Declaring imports and adding taxes to product prices before they enter the country are the criterion.
E-commerce enterprises must disclose product origin, value, and federal and state taxes under the scheme. They’re optional now.
Consumers pay taxes after the revenue service analyzes and notifies them, which delays delivery.
E-commerce companies will relieve the revenue service of such chores.
As some firms imported products as individuals to avoid higher taxes, the government moved to abolish exemptions on all imports.
The move targeted Alibaba Group’s AliExpress, Sea Ltd.’s Shopee and fast-fashion behemoth Shein.
After public outcry, the government opted to keep the $50 tax exemption for individual shipments and study a digital tax-collecting mechanism for enterprises.
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