Brazil: taxation of orders placed on foreign websites

Taxation of international purchases in Brazil is a done deal.

Finance Minister Fernando Haddad said Monday (29) that a new tax plan would be finalized in the coming days.

However, tax rates for businesses and consumers have not yet been set.

“It is in the final stages; the rate has not yet been decided,” he said.

The Ministry of Finance and the Federal Tax Service are currently studying how taxes on products sold on foreign websites can be paid at the time of purchase.

The tax is collected when the foreign product is imported into the country.

However, there are suspicions that many international retailers sell the goods as if they were intended for individuals, which are exempt from the tax up to a value of US$50.

The goal is to develop a procedure for paying the tax before the goods are shipped to Brazil.

DETAILED REVIEW

The plan consists of a card system that offers benefits to participating companies.

Companies participating in the program receive a “green card,” allowing for faster product release.

Companies that do not participate in the program will receive a “red card,” their products will be subject to an in-depth audit to detect possible tax fraud.

The new model does not change the tax provided by law or create a new tax, but the measures will impact consumers’ wallets.

Currently, the import tax is 60% and levied on the total purchase value, including the product and freight.

LEVELING

This way, the tax on a purchase of R$300 would be R$180 reais.

This should end the advantage of foreign retailers over local retailers.

“Once taxes are levied on imports regularly, buying goods through websites and e-commerce platforms will become more expensive.”

“With this balance in taxation, we can expect a greater alignment of prices, which will improve the competitiveness of local companies,” said Marcos Maia, professor of tax law at the Getulio Vargas Foundation in Rio de Janeiro (FGV-Rio).

Due to the unpopularity of the e-commerce tax, which caused a stir since the Ministry of Finance started talking about it, the government will try to protect consumers by keeping the US$50 exemption amount, assessed attorney Denis Passerotti, who holds a Ph.D. in finance and tax law from the University of São Paulo (USP).

“The consumer who exceeds the exemption limit must declare and collect all taxes.”

“Since these are indirect taxes, it is clear that the entire burden will be added to the product or, if the compliance program is implemented, the consumer will pay the taxes even before receiving the product,” he said.

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