New import rule calls alert on consumers – 07/11/2023 – Market

The new taxation rules for cross-border purchases have raised alarm bells among consumers and the Brazilian retail sector, but for different reasons.

For the public that consumes products frequently on platforms like Shein and Shopee, the fear is the increase in prices. In addition to the 60% federal import tax —as is the case today— representatives of the states announced that international purchases above US$50 will be charged a fixed ICMS rate.

According to an announcement made by Comsefaz (National Committee of Finance Secretaries) on June 2, the rate will be established at 17%. Before, the percentage varied in each federative unit.

Another concern is a possible cascading taxation, that is, the collection of tax on tax. Products could suffer the application of state ICMS on the price already taxed by the Union, weighing even more on consumers’ pockets.

On the other side of this dispute is Brazilian retail. Representatives of national companies complain about the tax exemption granted by the Ministry of Finance to foreign companies in cases of purchases below US$ 50. The companies fear that the measure could affect the competitiveness of the internal market.

The zeroed rate on Import Tax in these cases was announced after the publication of Ordinance 612/2023, signed by Minister Fernando Haddad (Finance). This applies to submissions made by both companies and individuals.

The federal tax exemption for low-value remittances is the government’s greatest asset in getting foreign companies to adhere to the Conforming Remittance program. The program will encourage platforms to declare the import and payment of federal and state taxes before shipping the goods.

The idea is that products with correct documentation enter Brazil without the need for taxation to be carried out at customs control. In these cases, the consumer is notified that the shipment has been blocked and only after paying the tax is the correspondence released.

The folder also seeks to guarantee the collection of taxes and to map all international transactions carried out. The rules go into effect on August 1st.

At the center of this tug of war are the Ministry of Finance and state secretaries. Understand below how ICMS collection will work and the arguments of Brazilian companies that ask for more taxes.

How the ICMS collection will work on international purchases

wanted by Sheet, Comsefaz said that the 17% ICMS rate will apply only to imported express shipments above US$ 50, already including the price of the product, freight, insurance and any additional charges. Products priced below US$ 50 are not charged ICMS.

The committee stated that the standardization of the ICMS rate at 17% aims to guarantee the efficiency of the Ministry of Finance’s compliance program, in addition to speeding up imports. “The modernization of operations and the integration of state and federal tax authorities will allow goods to enter the national territory with due treatment, without the need to retain the goods”, said Comsefaz.

The committee denied the possibility of cascading taxation. According to the agency, although the ICMS is levied after the application of the federal tax, the ICMS will be levied “from the inside”, that is, on the calculation basis of the tax itself.

Thus, considering the example of a product that costs R$500, the federal tax of 60% will increase the price by R$300. R$ 163.85 to state coffers. In practice, in this example, the rate applicable to ICMS is 20.48% —the so-called effective rate, higher than the rate of 17% initially foreseen.

Why Brazilian companies ask for more taxes

In a note released this Tuesday (11), the IDV (Institute for Retail Development) expressed concern about a possible “wave of layoffs and store closures”, after the ordinance published by the Treasury.

According to the institute, the tax exemption for purchases below US$ 50 causes inequality. “While a purchase made through a digital cross-border sales platform [via importação] will be taxed at 17%, Brazilian industry and commerce will continue to be subject to a tax burden that varies from 80% to 130% throughout its production and distribution chain”, he says in the statement.

“This ends up encouraging the closing of companies and the creation of jobs in other countries”, says the note. Among some of the retailers represented by IDV are Renner, C&A, Via (Casas Bahia and Ponto), Magazine Luiza, Grupo Pão de Açúcar and Livraria Cultura. In all, there are 71 members.

In the statement, the institute claims that it called the Post Office and Senacon. The entity charges the state-owned company for more inspection of illicit or fraudulent shipments. As for the secretariat, the IDV calls for greater protection for consumers who may be harmed by purchasing counterfeit products.

According to the institute, estimates indicate that R$ 137.7 billion were not collected in taxes in the last five years.

Firjan (Federation of Industries of Rio de Janeiro) was also against the adoption of ordinance 612/2023.

The president of the federation, Eduardo Eugenio Gouvêa Vieira, delivered a letter last Friday (7) to Vice President Geraldo Alckmin, who is also Minister of Development, Industry, Commerce and Services, in which he asks for the ordinance to be repealed. The text is signed by entities such as the IDV, in addition to other industry associations.

What does IDEC think?

Ione Amorim, 61, coordinator of the Finance Program at Idec (Brazilian Institute of Consumer Defense), sees that the debate is being conducted in a hasty way. “The tax is not new, what is new is that it is actually charged,” she said in an interview with Sheet.

“I think it could be a gradual process. There would be no need to enter the 60% tax [do imposto federal] for once. Even ICMS. They could be progressive rates. The debate should be better discussed to equate. This problem is not immediate, and there is a lot of maturing for the markets.”

Regarding the application of the 17% ICMS rate, Amorim sees that, even with the tax levied on the inside, the change in practice will be small and could confuse the consumer. “The ICMS will have an impact on the consumer and it is a lot of information for him to assimilate at once. This model is harmful because you do not standardize the understanding. When we talk about taxation, you need to be objective.”

Idec also understands that the positioning of Brazilian companies is natural. “It’s not healthy to have less competition, you take away from the buyer an option. [Porém,] it is not a solution for companies to ask for protection. The ideal is to seek balance,” said the expert.

Finally, the institute sees positively the movement of taxation of goods at origin proposed by Conforming Remittance. “The product already coming with the itemized charge, tends to facilitate the reduction of the delivery period. It allows to better control the value of the products and collection”, analyzed the Idec coordinator.