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

BRASILIA (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, Magazine Luiza and Mercado Libre, and comes after widespread complaints from the sector about unfair competition from Asian giants such as AliExpress, owned by Alibaba Group, Shein, and Shopee, owned by Sea Ltd.

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)