Brazil Hits Foreign Online Shopping with 20% Tax

In a decisive action, Brazil’s Chamber of Deputies passed a law to tax foreign online purchases under $50 by 20%.

Chamber President Arthur Lira and President Luiz Inácio Lula da Silva scaled down the initial 60% decision after discussions.

This decision is part of the broader Green Mobility and Innovation Program (Mover), now moving to the Senate.

Asian online retailers like Shein and Shopee, previously enjoying low taxes, will now face significant changes.

The new law specifically targets lower-priced imports with this 20% tax, while items above this threshold attract a 60% tax.

It also sets a $3,000 limit on shipments, matching global customs standards.

Domestic retailers argue this tax levels the field against international e-commerce giants who previously paid only a 17% ICMS tax.

This change helps local businesses that were at a disadvantage.

Moreover, the regulation closes loopholes allowing international firms to avoid higher taxes by masking sales as personal transactions.

After negotiation, Lira and Lula agreed to a 20% rate, aimed at appeasing Brazil’s affluent consumers, primarily affected by this tax.

The Mover initiative, with a $19.3 billion budget ($3.73 billion @ 5.17) through 2028, boosts the automotive industry towards cleaner technology.

Companies like Toyota have already pledged investments, spurred by these incentives. This legislation now awaits Senate and presidential approval.

If enacted, it will foster a competitive, innovative industrial environment in Brazil, aligning with global sustainability trends.

Brazil adjusts taxes on foreign e-commerce to protect its market and steer its automotive industry towards greener solutions.

It extends tax reductions on eco-friendly vehicles until 2026.