Brazil to end tax exemption on international orders, targeting Asian e-commerce giants

MercadoLibre

12/04/2023 11:31

BRASILIA, April 12 (Reuters) - Brazil's government
announced on Tuesday it would end a tax exemption on
international orders up to $50 as part of an effort to tax
purchases from global retail giants. 
    The revenue service said that the exemption never applied to
e-commerce but only to shipments from individual to individual,
and had been "widely and fraudulently used for sales made by
foreign companies."
    Confirming information first published by the UOL news
portal on Sunday, the revenue service said that there would no
longer be any distinction in treatment between legal entities
and individuals' shipments, with international orders subject to
the existing 60% taxation on their value.
    The measure is expected to benefit local retailers such as
Lojas Renner  LREN3.SA , Magazine Luiza  MGLU3.SA  and Mercado
Libre  MELI.O , and comes after widespread complaints from the
sector about unfair competition from Asian giants such as
AliExpress, owned by Alibaba Group  9988.HK , Shein, and Shopee,
owned by Sea Ltd  SE.N .
    Finance Minister Fernando Haddad had already stated that the
government would soon unveil tax measures aimed at those who
were not paying taxes in order to boost revenue and improve
public accounts. 
    Haddad emphasized that "one or two global players" were
disguising their e-commerce as person-to-person shipments to
avoid paying taxes. Combating this practice, which Haddad called
"smuggling," is expected to generate 7 billion to 8 billion
reais in new revenue for the government, he added.

 (Reporting by Marcela Ayres; Editing by Steven Grattan, William
Maclean)
 ((marcela.ayres@thomsonreuters.com; +55 11 5047-2444;))