Brazil exempts small international orders from paying import taxes

The Finance Ministry has modified import tax rules to exempt companies from paying import levies on any international orders of up to USD 50. The decision will come into force on August 1.

Previously, such exemptions were only granted to consumers. Now, international e-commerce companies that fall under the government’s new compliance plan for online purchases will also benefit from the federal tax exemption on sales of up to USD 50. 

The new measure was published in the Official Gazette without prior announcement from Finance Minister Fernando Haddad, prompting confused reactions from consumers as well as Asian e-commerce giants that have been willing to collaborate with the government.

The use of Asian shopping platforms has been on the rise in Brazil as regulatory loopholes similar to the peer-to-peer (P2P) import tax exemption allow these retailers to offer much cheaper products by “disguising” business-to-consumer (B2C) purchases as P2P.

In April, Mr. Haddad was forced to backtrack on an initial proposal to close this loophole after it was met with consumer outrage on social media. Although the proposal to change regulations aimed at restricting a fraudulent practice that represents unfair competition for Brazilian retailers, it was seen by the general public as a move that increased costs for consumers. 

The issue took on even bigger proportions after First Lady Rosângela da Silva waded into the online discussion and the government was forced to change tack — but it later announced that a “digital tax” would be levied at the time of purchase.

Under the Federal Revenue Service’s new compliance plan, companies must provide more information about their current orders, characterizing them as B2C. Orders that comply with the plan’s data requests will be processed and shipped expeditiously at the post office.

In turn, at the point of the purchase, consumers will have to pay a federal import tax accounting for 60 percent of the value of the goods, in addition to the ICMS state tax of 17 percent of the purchase value. With the change announced today, purchases of up to USD 50 will be exempt from the federal tax but not the state one.

• #taxes