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UPDATE 1-Brazil's government backtracks ending tax exemption for international orders

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds details, context) BRASILIA, April 18 (Reuters) - Brazil's government reversed a decision to end tax exemption on foreign shipments targeting Asian e-commerce giants, a measure aimed at improving public finances that faced backlash from lower-income Brazilians, a crucial part of the new government's electorate. Speaking to reporters on Tuesday, Finance Minister Fernando Haddad said that President Luiz Inacio Lula da Silva had asked him not to proceed with ending the tax exemption for international orders from individuals. According to Haddad, Lula has directed the matter to be resolved through administrative means and heightened oversight. The government had previously announced it would abolish the tax exemption on individual-to-individual shipments of up to $50, arguing it never applied to e-commerce but was being "widely and fraudulently" used for sales made by foreign companies.


"It is generating confusion that this could harm people who, in good faith, receive orders from abroad up to that level," said the minister.


"It will be more difficult, but we are going to look into this topic to verify a more effective form of administrative supervision." The idea of closing the tax loophole came after widespread complaints from local retailers about unfair competition from Asian companies such as AliExpress, owned by Alibaba Group , Shein, and Shopee, owned by Sea Ltd . The minister said he had received representatives from AliExpress and a letter from Shopee agreeing with the changes previously announced by the government. Shein has not been in touch, he added. Haddad said that the projected revenue of 8 billion reais
($1.6 billion) from the proposed change was for the upcoming year and that the government will now establish a study group to assess potential measures to address the issue. ($1 = 4.9723 reais) (Reporting by Victor Borges; Writing by Marcela Ayres; Editing by Sandra Maler)

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