Expert explains how much the 20% tax on international purchases up to $50 will weigh if it is finally approved by Congress
““Dude, if I buy this week, will I be taxed?”
“If taxation is approved, will I continue to buy from Shein?”
A quick search on TikTok reveals consumer concern at popular internet brands, such as Chinese retailer Shein, with a bill that intends to tax international purchases up to US$50 (R$265) by 20% – which has been nicknamed the “blouse tax.”
This Wednesday (06/05), the company took another step towards implementation: a project involving taxation was approved in the Senate and, as modified in the Chamber, will have to return to the vote of the Chamber of Deputies.
Then, if approved, the text goes to President Luiz Inácio Lula da Silva (PT) for approval or veto.
After all, how much will the blouse cost if the tax is approved?
João Eloi Olenike, president of the Brazilian Institute of Planning and Taxation (IBPT), explains the calculations below.
How much does the blouse cost with the new tax?
Currently, international purchases from online retailers worth up to US$50, including shipping and other charges, are exempt from import taxes.
But despite the federal exemption, goods pay a tax collected by states, the Goods and Services Tax (ICMS), under the Conform Remittance program, launched by the federal government last year.
In his calculation, João Eloi Olenike, from the IBPT, simulated the example of a purchase that, originally without taxes, costs R$200 (US$37.8494, according to the 05/06 quotation of the Central Bank) on the website from an online retailer.
For the calculation, the effective ICMS rate of 20.48% was used according to the most widespread regime among the States.
This product would have the price calculated as follows, according to current regulations:
R$200 (purchase value) + 20.48% (ICMS) = R$240.96 (purchase value with ICMS increase)
If the “blouse tax” project is definitively approved by Congress and sanctioned, the calculation will be as follows:
R$200 (purchase value) + 20% (import tax) = R$240 (purchase value including import tax)
This value would be before the incidence of ICMS. Therefore the final cost would be the following:
R$240 (purchase value including import taxes) + 20.48% (ICMS) = R$289.26
In other words, in the end, with the new taxation, the blouse would cost the consumer R$48.30 more.
What is the ICMS fee?
Currently, international purchases from online retailers already pay a 17% ICMS fee.
But Olenike warns of an important detail: In most states, ICMS is calculated “from within,” in accounting jargon.
How this tax is calculated, whether “in” or “out”, depends on each state’s legislation, but, in general, ICMS is calculated “in”.
What does it mean? “This means that the ICMS, in practice, is not 17% of the value of the product. It is already 17% of the value plus 17%,” says Olenike.
I did not understand? The president of the IBPT explains it with a more didactic example.
“If the product costs R$100 and the ICMS rate is 17%, the ICMS, instead of being calculated as 20% on R$100, is calculated as 17% on R$117,” says Olenike.
“If you look at your home electric bill, it’s calculated like this.”
In this “internal” calculation, the 17% ICMS charged on international purchases up to US$50, under current rules, effectively turns into 20.48%.
Hence the reason for the real tax rate used in the calculation presented above.
The arguments for and against the tax
Charging a 20% tax on purchases up to US$50 is part of House Bill (PL) 914/24, which creates the Green Mobility and Innovation (Mover) Program, which provides incentives for green transportation .
A change has been made to Project Mover to end the Remessa Compliance program, launched by the federal government last year to organize trade and fight tax evasion.
According to Agência Brasil, the end of Remessa Secondo was included in the Mover bill by federal deputy Átila Lira (PP-PI), the same party as Chamber President Arthur Lira (PP-AL).
Since there is no relationship between the amendment dealing with the tax and the subject matter of the bill, the end of the tax exemption is what is called in Congressional parlance a legislative “turtle.”
The project arrived in the Senate last Wednesday (29/5), one day after approval by the Chamber of Deputies.
In the Senate, Senator Rodrigo Cunha (Podemos-AL) withdrew the Mover amendment.
“If you do a search you will find that just over nine months ago this was the topic of the moment. The government tried to tax blouses and went back,” Cunha said, referring to the creation of Remessa Controle, in a press conference with announcing the withdrawal of the PL amendment.
“It has only been nine months. It is essential that a minimum amount of time is given to see whether this program has worked. An issue like this must be discussed in the relevant committees.”
This generated a strong reaction from Lira, which lobbied the government against the change. In turn, Planalto said it would work to reinstate the proposal in Mover.
Shein, after the approval of PL 914/24 in the Chamber of Deputies, called the approval a “setback”, stating that 88% of the company’s customers belong to classes C, D and E, and has carried out its own price simulation.
“With the end of the exemption, the tax burden that will fall on the final consumer will be 44.5%, which with the exemption remained around 20.82% due to the collection of the ICMS, equal to 17%”, the company specified.
“In other words, a dress that Shein consumers purchased on the website for R$81.99 (with 17% ICMS included) will now cost more than R$98 with the new tax burden.”
Shein, very popular among young people, has been criticized by journalistic investigations which accuse the brand of collaborating with suppliers who violate labor laws.
The company also receives criticism for its fast fashion business model based on the production of large volumes of clothing, with a lot of turnover and at very low prices, which generates a strong environmental impact, according to a BBC report.
Brazilian retail representatives have opposed the tax exemption for international traders, arguing that it creates an imbalance in competition.
Even before the launch of Conformal Remittances, the National Confederation of Industry (CNI) and the Institute for the Development of Trade (IDV) presented a study to Finance Minister Fernando Haddad that estimated up to 2.5 million layoffs due to the exemption for foreign companies, according to Agência Brasil.
João Eloi Olenike, of IBPT, explains that if a Brazilian retailer imported the same item from China as sold by a digital retailer in Brazil, the domestic company would pay more taxes than Shein, such as import tax, ICMS, IPI, Pis and Cofins .
For Brazilian companies there are still costs in the price of the product, says the expert.
“Social security, FGTS, personnel costs. It’s unfair competition,” says Olenike.
However, in his opinion, applying the new tax to purchases of products up to $50 from digital retailers would not eliminate the price difference.
“Even if it taxed 20%, (Shein’s) price would still be cheaper than our domestic market, which taxes imports, sales, wages. Our taxation for Brazilian companies is very high,” Olenike says.
Source: Terra
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