Brazil plans ‘digital tax’ on shipments from major e-commerce brands

Brazil is a country that is known for doing things that are out of the blue and surprise everyone. It is worth noting that the country’s President recently said that he constantly thinks about why the US currency is still the dominating currency in the world even after all these decades. While he is not wrong in thinking about the same, the way in which he told about this is particularly surprising and caught everyone by surprise. Talking about the current report that is coming out of Brazil, the country is now planning to levy a “digital tax” on shipments coming inside the country from major e-commerce brands around the world.

Brazil’s finance minister said that “We will follow the example of developed nations, a digital tax,”. “Consumers will be exempt from any tax collection when they make the purchase, companies will collect it without passing on any additional cost.” A source close to the Brazilian government added that this “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”. The source claimed that they are not creating any new tax but just making “easier electronic collection possible”.

There was a loophole in the Brazilian tax laws that would allow any company to be seen as individuals and dispatch orders so that they can avoid the existing 60% taxation that is present for international shipments made by companies. It is also worth noting that AliExpress’ Alibaba, Sea-owned Shopee and Shein are most likely the main targets of taking benefit of this loophole.

Almost immediately, Shein released a statement saying that 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. Having such a statement released after such a tax proposal makes it clear that the company is having talks behind closed doors to not let the government tax them or even make special proposals so that their company gets exempt from such a taxation.

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