Secretariat of Federal Revenue is cracking down on some sellers in online marketplaces who falsify data to avoid taxes

05/23/2023

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Main change will be the prepayment of taxes at the time of purchase — Foto: Pixabay

The Finance Ministry and the Secretariat of Federal Revenue are expected to present changes to the current system of international shipments of products purchased by consumers on foreign websites and apps, following discussions and meetings with the industry in recent weeks. Contacts between the tax authority, retailers, and platforms have intensified since the government announced a crackdown on online purchases that enter the country without properly paying taxes.

The main change will be the prepayment of taxes at the time of purchase, which is already required by law. The government is not creating a new tax. The import tax of 60% will continue to apply to all purchases (by portal or air shipment) by individuals up to $3,000 – this item was not discussed. Shipments of products such as gifts (not commercial transactions) up to $50 remain exempt.

Valor had access to this compliance program developed by the Secretariat of Federal Revenue, which can be adopted by foreign companies operating in the country, such as Shein, Shopee, AliExpress, and Wish. The model, called Remessa Conforme, will be better detailed to Finance Minister Fernando Haddad after he returns from Japan for eventual adjustments, but in the Federal Revenue’s view it is concluded.

Companies will not be forced to join the model, but for those who adopt the rules, the release of the products will be faster, through an access called “green channel.” Those outside the program will fall into a slower “red channel” clearance system.

Local retailers have criticized the government’s decision not to force platforms to comply with the changes. The Undersecretary of Customs Administration is expected to address the issue of the new program on Thursday at an event on e-commerce in São Paulo.

The advance on the project comes weeks after disagreements within the federal government over how to expand inspection and control of online platforms. Consumers reacted strongly to Mr. Haddad’s and the Federal Revenue’s idea to end the exemption for shipments of up to $50, and President Lula, fearing a public backlash, put an end to the discussion.

But this did not stop the pressure from Brazilian businesspeople, who claim that there is an informal commerce in the country, with an annual tax evasion of R$20 billion to R$40 billion. Between 70% and 80% of the products imported from online platforms in Brazil come from China, compared with 30% around the world.

Under the changes being debated, consumers will have to pay the taxes related to the importation of goods at the time of purchase on the platform, through a collection document. This is not the creation of a new tax, but only a change in the moment of collection, in order to limit the actions of buyers and sellers who try to avoid customs supervision by manipulating shipping information.

Currently, the payment by the consumer occurs only after the entry of international shipments in the country, on the site of Brazil’s postal company Correios (by cash, through banking bar-coded bills known as boletos, or credit card), but the central problem is that the inspection by Correios does not always identify the need to pay the tax. Correios and Federal Revenue cross-check little information about shipments.

According to data from 2022, only 1.9% of the 176.3 million international shipments that entered the country through Correios had the import declaration for the payment of taxes. Therefore, almost 98% passed through the borders without a declaration, which may include tax evasion and the entry of counterfeit products. Among private-sector operators (Fedex, UBS), purchases with declaration reached more than 70% in 2022, because these carriers bear the payment for this shipment and collect directly from the buyer.

According to the current law, from 1999, the current rate, which will remain in effect, is 60% of the purchase price (including freight and insurance) up to $3,000, from companies to individuals. It is still necessary to pay sales tax ICMS (charged on shipments over $500) and the customs fee of $150.

“Those who want to avoid payment use Correios, but with the change it is very difficult to circumvent the system. By determining the payment at the time of the commercial transaction, between seller and buyer, it is no longer possible to say that it is a transaction between individuals and therefore exempt from tax,” said an executive in a Brazilian retailer.

Under the current law, only individuals who receive something from another individual without any commercial transaction are exempt, up to a limit of $50.

What happens today is that some sellers in online marketplaces falsify data submitted to Correios, often with the knowledge of the buyer, claiming to be an individual and declaring values below $50. The proposal to issue the invoice and payment slip in advance makes it more difficult to commit fraud.

As already discussed, foreign online marketplaces will have to indicate the amount of each tax and postal charge on the product listing page. They will do the calculations for the consumer, detailing each amount. Amazon already operates this way in Brazil.

After that, they will receive the payments from the buyer and split the transaction. The tax portion is passed on to the carrier (Correios), which passes the amount on to the Federal Revenue. The website gets its commission on the sale of the product, and the seller gets the money from the good. In the country, the product follows several possible paths to delivery, depending on the platform’s compliance with the new system. There will be a stamp of the “Remessa Conforme” program for accredited platforms that adhere to the model.

In the last two weeks, the tax authority has been in meetings with Asian platforms and Brazilian retailers to present the ideas, and there was a good understanding on both sides that the model is an advance. There are divergencies, however, over the need for inspections to check those who have the stamp.

“The problem is that Haddad doesn’t want to force anyone to do anything. They understand that there is political pressure against any change, which makes it difficult to make anything mandatory now,” said one source.

Another key point is that the liability of the companies would run up against the aspect of business entities in Brazil. “Some are not even Brazilian companies. And I don’t think tougher enforcement would be appropriate now,” says another person familiar with the discussions.

The Federal Revenue has yet to meet with Mr. Haddad to coordinate the issue, sources say, but if the current draft is approved by the minister, the format is likely to be announced between this week and early June.

Last week, some executives of online retailers raised the hypothesis of a gradual implementation of the program and possible postponement of the advance payment, but with the maintenance of the integrated data exchange between Correios and the Federal Revenue. “There is fear in the sector, but it does not seem to us that the Federal Revenue is willing to postpone this. In conversations they say they are ready. And Correios says it is adapting,” one businessman said.

Retailers want to get this off the drawing board quickly, and foreign platforms, on the other hand, claim that there is strong pressure because local retailers want to defend their markets from competition from Asian online marketplaces “more efficient and with more cash to invest,” as a general manager of a platform summarized. “We understand that the game must be equal, but we also understand that even with 60% tax, we will still be competitive with strategies that we have yet to launch,” he said.

The program may be added to the Federal Revenue’s normative instruction No. 2124, published in the Daily Gazette in December, a source familiar with the proceedings said. A second hypothesis is that this normative instruction will be reissued with the terms of the new program. In any case, the fact is that the “Remessa Conforme” emerges anchored in the normative, which increases its weight.

This norm establishes that Correios will have to forward to the Federal Revenue, two days before the arrival of each shipment in the country, a form with 37 information from the buyer (such as tax ID number, purchase value, and full description of the contents).

The Asian platforms will have to provide the data to Correios and private-sector operators, which will send it to the Federal Revenue. The change will allow the tax authority to identify the tax IDs that move large volumes of purchases.

In other words, it will be up and running in just over a month and the “Remessa Conforme” would come in this environment of change.

Asked to comment on the new program, the Federal Revenue said that when the rules are validated internally, it will make the appropriate disclosure. The Finance Ministry and Correios declined to comment.

This week, there is already an agenda on e-commerce. It is scheduled for Tuesday a public hearing requested by Deputy Julio Lopes to discuss the matter.

It is not yet clear, on the part of the platforms, the measures for future adequacy of the payment system and sending data of all shipments, should the program move forward.

Sought for comment, Shein said it has been closely following the discussion and believes that the potential of a country and an industry is enhanced by “equitable tax justice solutions.” The online platform said it “sees it positively,” but understands that it is “very important the dialogue with the sector and the government” for a solution that is “indeed effective and that seeks to support consumers.”

Last week, Shein’s management team said the company would pay any taxes collected from the consumer – without elaborating on the model and percentage. Companies can afford to pay if they want to – through discounts and coupons – but the industry has been looking for measures to defend the profitability of companies for at least two years, and the payment can affect the margins of the groups. Asked about this, Shein did not comment on whether this payment may involve the Federal Revenue’s program.

AliExpress said it will remain available and cooperative with the government “in favor of who matters most, the consumer.” It says that once the document is received, it will be studied and analyzed so that it can be implemented. Shopee declined to comment.

*Por Adriana Mattos — São Paulo

Source: Valor International

https://valorinternational.globo.com/