02/06/2024 – 11:18
The collection of Import Tax for purchases of up to US$50 (equivalent to around R$260) should be voted on by the Senate this week, according to the President of the House, Rodrigo Pacheco (PSD-MG). The tax mainly impacts purchases of women’s clothing items through international retailers.
Tax collection on international purchases up to US$50 is part of Bill (PL) 914/24, which reached the Senate last Wednesday (29), one day after it was approved by the Chamber of Deputies.
Originally, the PL deals with the Green Mobility and Innovation Program (Mover), aimed at developing technologies for producing vehicles that emit fewer greenhouse gases. The taxation of international purchases was included in the PL by decision of deputy Átila Lira (PP-PI), rapporteur on the matter.
As soon as it arrived at the Senate, the Government leader, Senator Jaques Wagner (PT-BA), requested that the process be processed urgently, which speeds up the vote. The President of the House informed that he will consult party leaders to decide whether the project will be processed urgently or not.
What is the impact of taxation on prices?
The measure approved by the deputies determines that international purchases of up to US$50 will be charged with Import Tax (II), at a rate of 20%, and is now called the “blouse tax”.
Purchases within this limit are very common in websites from foreign retailers, notably from Southeast Asia, such as Shopee, AliExpress and Shein.
These platforms are called market placethat is, a large showcase of third-party products, and prices are usually much cheaper than those of Brazilian manufacturers.
The charge handled by the PL is a federal tax. Other than that, purchases within this limit of US$50 receive a 17% rate of Tax on Circulation of Goods and Services (ICMS), a state charge.
The consumer who buys a product worth R$100 (shipping and insurance already included) would have to pay the 20% Import Tax plus ICMS, which would bring the final price to R$140.40. According to the project, charges above US$50 and up to US$3,000 will have a rate of 60% with a discount of US$20 (around R$100) of the tax payable.
If it passes through both legislative houses, the measure will need the approval of the Presidency of the Republic to come into force.
On Friday (31), the vice-president and minister of Development, Industry, Commerce and Services, Geraldo Alckmin, said that he believes that the PL will have the approval of President Luiz Inácio Lula da Silva.
“My understanding is that he will not veto it, because it was approved practically unanimously. It was an agreement by all political parties. I think it was a smart agreement, it won’t burden those who are buying a product from abroad too much, but it will make a difference in preserving jobs and income here”, he stated in an interview with BandNews TV.
How is it currently
The debate on taxation began in April 2023. It would be a way for the government to prevent companies from circumventing the IRS, because remittances between individuals of up to US$50, without commercial purposes, were not taxed, and companies would be making sales as if they were sent by individuals.
Furthermore, Brazilian retailers asked for some form of charging for these foreign products, alleging unfair competition.
The announcement of the charge attracted mixed reactions. In this way, the government created the Remessa Compliance program, which came into force on August 1, 2023. Companies that adhered to the regulation were exempt from charging tax on products up to US$50, as long as they complied with a series of standards, such as provide transparency about the origin of the product, sender data and breakdown of charges, such as ICMS and shipping, so the consumer knows exactly how much they were paying for each of these items.
One of the effects of the program, which had the approval of the main market placeis that deliveries became faster, as Federal Revenue inspection became easier with the information provided by companies.
According to the Minister of Finance, Fernando Haddad, Remessa Segundo provided more transparency for international purchases. “Remessa Conform is to provide transparency to the problem. Knowing how many packages are coming in, how much it costs, who is buying it”, he said at the Finance and Taxation Committee of the Chamber of Deputies last Wednesday (22).
Items between US$50 and US$3,000 continued to have a 60% rate. Above this value, imports are prohibited by the Post Office and private carriers.
Pressure from Brazilian companies
The exemption provided by Remessa Compliance disturbed sectors of industry and commerce in Brazil. Representative entities point out that the non-collection of taxes allows for an imbalance in competition, which favors foreign companies.
Even before the start of Conformal Shipping, the National Confederation of Industry (CNI) and the Institute for Retail Development (IDV) presented Minister Haddad with a study that estimated up to 2.5 million layoffs because of the exemption for companies from outside the country.
Shein talks about regression
After the approval of PL 914/24 in the Chamber of Deputies, the Chinese company Shein, one of the main beneficiaries of the exemption, called the approval a “setback”. Pointing out that 88% of the company’s customers are from classes C, D and E, the retailer stated that it sees a risk for consumers.
“With the end of the exemption, the tax burden that will fall on the final consumer will be 44.5%, which with the exemption remained at around 20.82% due to the collection of ICMS, amounting to 17%. . In other words, a dress that Shein consumers bought on site for R$81.99 (with ICMS of 17% included) it will now cost more than R$98 with the new tax burden, formed by the Import Tax of 20% plus the ICMS of 17%”, he estimated in a note.
“Shein reaffirms its commitment to the consumer and reinforces that it will continue to dialogue and work with the government and other interested parties to find ways that can enable the population to continue to have access to the global market.”
The retailer also minimized the relevance of e-commerce from foreign companies. “Studies indicate that the e-commerce, overall, represents between 10% and 15% of national retail. Meanwhile, the portion of e-commerce of international platforms would not reach more than 0.5% of national retail, according to a 2024 study by Tendências Consultoria.”
Brazilian entities
When defending that there is no exemption for foreign companies, the National Confederation of Commerce of Goods, Services and Tourism (CNC) presented last Monday (27) a study carried out with data from the Secretariat of Foreign Trade (Secex), of the Ministry of Development, Industry, Commerce and Services (MDIC).
According to the survey, the number of consumer goods items with an import value of up to US$50 per unit grew 35% in 2023 compared to 2022. Products originating in China led the way in orders (51.8% of the total). The segment with the biggest increase was women’s clothing items, such as pants, shorts and shorts (up 407.4%).
“The exemption of up to US$50 is an offense to Brazilian businessmen, who are responsible for generating jobs, income and taxes for the Brazilian economy”, criticized the CNC’s chief economist, Felipe Tavares.
In his view, the potential loss of jobs in Brazil does not compensate for the opportunity to buy cheaper products abroad. “Without national companies, there is no work. Without work, there is no income. Without income, it doesn’t matter if that blouse costs R$1 or R$1 million, there’s no way for Brazilians to buy it.”
In a joint statement with the CNC, the CNI classifies the approval of the 20% rate as inefficient.
“The decision to tax international purchases at just 20% is not enough to avoid unfair competition, although it is a very timid first step towards tax equality and its equality with national production”, says the statement.
The note lists the textile products, clothing and accessories, footwear, leather products, cleaning products, cosmetics, perfumery and personal hygiene sectors as the main affected sectors.
The approval of taxation by federal deputies is “an important advance in the debate on the necessary search for tax equality”, he assesses joint statement the Brazilian Association of the Textile and Clothing Industry (Abit), the Brazilian Textile Retail Association (Abvtex) and the IDV.
#Blouse #tax #prices #exemption #purchases #US50 #approved