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Brazil plans ‘digital tax’ on shipments from e-commerce giants -minister


FILE PHOTO: Brazil’s Finance Minister Fernando Haddad looks on after a meeting with Brazil’s Central Bank President Roberto Campos Neto in Brasilia, Brazil, April 3, 2023. REUTERS/Ueslei Marcelino

 

SAO PAULO/BRASILIA (Reuters) -Brazil’s finance minister said on Thursday the country would implement a “digital tax” on shipments from e-commerce giants, after backtracking earlier this week from a decision to tax individual-to-individual shipments of up to $50.

“We will follow the example of developed nations, a digital tax,” Finance Minister Fernando Haddad told reporters. “Consumers will be exempt from any tax collection when they make the purchase, companies will collect it without passing on any additional cost.”

The move comes after President Luiz Inacio Lula da Silva asked his economic team not to proceed with a previously planned ending to tax exemptions for international orders from individuals.

Haddad did not provide further details on the new proposal.

According to a source at the Finance Ministry, the proposed measure will not involve creating a new tax, but instead adopting an improved collection system. The source emphasized that the tax in question already exists and will be collected electronically prior to the shipment of goods.

“We are not going to create or increase taxes, we are just going to make easier electronic collection possible,” said the source, who spoke on condition of anonymity since discussions are private.

International shipments made by companies are subject to the existing 60% taxation.

Haddad had already announced the government would look for administrative means and implement heightened oversight to close a loophole that Asian e-commerce giants were seen taking advantage of by dispatching orders as if they were individuals to benefit from the tax exemption.

Alibaba (NYSE:BABA) Group’s AliExpress, Sea Ltd-owned Shopee and Shein were seen as the main targets of the measure.

Haddad previously said AliExpress and Shopee had agreed with the tax proposal before the government reversed it. He said on Thursday that Shein was planning to nationalize 85% of its Brazil sales by implementing local production, which the company later confirmed.

In a statement, Shein said it will invest 750 million reais($148.85 million) in Brazil in the coming years as it intends to partner with 2,000 manufacturers in the country, which should generate the creation of 100,000 jobs over the next three years.

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