Shein pledge to manufacture in Brazil may be too good to be true

The issue of taxing cross-border sales has been a major headache for the Brazilian government’s economic team. 

After announcing an ambitious fiscal framework plan that relies on consistently raising federal revenue, the Finance Ministry proposed taxing peer-to-peer purchases from foreign marketplaces such as Shein, AliExpress, or Shopee as one of the ways to raise more money for the public coffers. 

In addition to increasing government revenue, the move catered to local retailers. Peer-to-peer purchases worth up to USD 50 made abroad by Brazilian individuals are exempt from tax. However, many companies use this loophole to fraudulently obtain cheaper inventory. 

IDV, a lobby for Brazilian marketplaces, last year listed a litany of possible transgressions embedded in cross-border shopping, focusing on a range of areas: competition, taxation, consumer relations, internet regulations, and criminal law.

The news, however, sparked an uproar among voters, as Shein, AliExpress, and Shopee — all hailing from Asia — combine for more than 13 percent of visits to retail e-commerce websites from Brazil. The country is among AliExpress’s top five global markets, according to a 2022 report by Beyond Borders. Meanwhile, Shopee recorded 140 million orders to the tune of USD 70 million from Brazil in 2021.

For 16 percent of voters, the issue was the single...