On the first of August 2024, the international purchase tax of up to fifty dollars came into effect. Previously, purchases up to this amount did not have any fees, aside from shipping and ICMS. At the end of June, President Lula signed the law creating a 20% tax on international purchases of up to US$ 50. This applies to all types of products, except medicines.
This measure aims to correct an imbalance between national and foreign sellers, especially in lower-priced products. The Brazilian retail sector is subject to taxes and fees that make foreign sellers – mainly Asian online stores – offer much more competitive prices, even with shipping and ICMS. Consequently, the volume of purchases on these international websites had been very high, which in a way harms the domestic industry and retail. According to the Retail Development Institute (IDV), national retailers are subject to a tax burden between 70 and 110%.
But what changes for consumers, at this moment, is that buyers now need to pay much closer attention to the prices on foreign websites. This is because prices may not be as attractive; hence buying from a Brazilian e-commerce, or even a physical store, may be cheaper. The main rule now is to do thorough research, especially on those products above R$ 100.00 (around US$ 20.00). Many consumers would directly access Asian marketplaces in the first step of the shopping journey, the research, without even considering local suppliers. This was understandable, as surely the prices in these stores would be lower. Now, this purchase step also needs to consider Brazilian retail.
At this moment, you may be wondering: are there good reasons to implement this tax? A question whose answer is not simple. However, let’s look at four important reasons for the taxation of imports.
Improves national competitiveness: it is good to remember that the majority of products affected by the new tax are simple items found in any local store. Therefore, it avoids unfair competition, improving the domestic economy, enabling more employment and economic development.
Combats tax evasion: without taxation on products up to 50 dollars, many individuals in Brazil used to buy in large quantities and in fragmented orders from foreign websites to avoid the import tax for purchases over US$ 50.00, which has always existed. However, they sold here through legal entities. In other words, tax evasion. The approved measure discourages this practice. To give an idea, the Federal Revenue Service recently reported that a single person had sent over 16 million international packages to Brazil.
Encourages foreign investment: Brazil is not just any country in economic terms. We are the sixth largest economy in the world, and investments here are always considered by international companies. Foreign marketplaces, therefore, would not want to lose a share already established in our market. So, partnerships and investments may come into the radar of these organizations. An example is the partnership between Magalu and AliExpress in June 2024, which involves an exchange of products between the two retailers.
Increase in revenue: The federal government has not yet released the expectation of the next revenue increase with the end of the exemption for purchases up to $50. However, the Ministry of Finance informed that this projection will only be disclosed in September. Nevertheless, it is agreed that federal revenue will increase. In times of fiscal austerity and government investment needs, the new tax is significant.
