International Tax Newsletter - Setembro 2023

Shein joins the Brazilian Federal Revenue Remessa Conforme Program and receives certification

The Federal Revenue announced a significant certification for the company Shein, which was published in the edition of the Official Gazette of the Union (DOU). This certification allows Shein to participate in the Remessa Conforme Program, which has important implications for online purchases of up to US$50.

The main change is that international purchases made on Shein's Brazilian website are now exempt from import tax, as long as they do not exceed the limit of US$50. This means considerable savings for consumers who usually buy Shein products.

However, this exemption does not come without conditions. The company must comply with the rules established by the Federal Revenue Service for sending orders to Brazil. In addition, the Tax on the Circulation of Goods and Services (ICMS) applied to purchases across the country will be set at 17%, standardizing the rate where there were previously differences.

With the inclusion of Shein in the program, orders sent by the company will now have an easier entry into the country, speeding up the customs clearance process. This means that the IRS will have access to product information even before it arrives in Brazil. Packages considered low risk will be released immediately after being scanned, providing faster deliveries and reducing logistics costs, as announced by the government.

This Shein certification is an important milestone in international e-commerce and has the potential to significantly benefit Brazilian consumers who choose to purchase the company's products.

Taxes on international purchases: companies must announce prices including taxes

The Secretary of the Federal Revenue, Robinson Barreirinhas, made an important announcement related to companies that sell products from abroad to Brazilian consumers. Barreirinhas highlighted the need for greater transparency in price disclosure, with the aim of avoiding unpleasant surprises for consumers.

Barreirinhas emphasized that companies that wish to comply with Brazilian rules must clearly present the value of the product on their websites, including taxes. He explained that payment of taxes must be made at the time of purchase, with the corresponding amount being passed on to the competent authorities, ensuring a fair distribution for the federal government and the states.

This important statement took place during an event by the Parliamentary Entrepreneurship Front (FPE), where the Secretary emphasized the importance of protecting consumers and promoting transparency in international commercial operations.

President Lula and Joe Biden sign commitment to protect labor rights

President Lula met this Wednesday (20) with American President Joe Biden. The two countries launched a joint program to defend labor rights in the face of technological, climate and economic challenges.

This was the second meeting between the two presidents since Lula took office. Before the meeting, they spoke to the press. President Joe Biden said Brazil and the United States are standing up to defend human rights around the world - including labor rights.

The United States and Brazil have committed to cooperating to value dignified and inclusive work, with the right to diversity and the environment. Union leaders from both countries participated in the event, as well as the director general of the International Labor Organization, Gilbert Houngbo, and the Minister of Labor, Luiz Marinho. The joint document, with only the general guidelines, proposes, among other points:

• Expand knowledge about labor rights;
• Empower workers and protect the rights of those who work through digital platforms;
• And seek private sector partners to create decent jobs, combat discrimination and promote diversity.

Biden defended that the poor have the opportunity to get ahead in life; he said, "The rich don't pay enough taxes." She stated that new technologies, including artificial intelligence, must work for people and set the goal of ending discrimination in the workplace.

Lula spoke next. She said that the objective of the joint proposal is to offer more perspective, especially for youth, at a time when the job market is undergoing transformations - such as the climate crisis and artificial intelligence - and warned of the harmful effects of informality.

Biden said the U.S.-Brazil Partnership for Workers' Rights will start as a bilateral initiative, but that other nations and organizations were welcome to join.

Lula, warned that democracies were under threat around the world, said it was critical to shore up workers' rights, and said the new initiative would help "arouse hope" for working families while deepening ties between the two countries.

Investment in innovation with Lei do Bem breaks record, with R$ 27 billion 

The Lei do Bem, the main tax incentive for RD&I (research, development and innovation) projects in Brazil, recorded a record R$27.19 billion in investments made by companies in initiatives in 2022, generating a tax reduction of R$5 billion for these agents, according to an unprecedented study conducted by GT Group.

The Lei do Bem 2023 Panorama analyzed historical data from MCTI (Ministry of Science, Technology and Innovations) between 2005 and 2022 to be an annual market intelligence guide and boost the growth of innovation in the country.

The research revealed a 55% growth in the amount claimed by companies in the last fiscal year of 2022 (base year 2021) compared to the previous year, which was R$17.40 billion. Membership increased by 18%, from 2,564 to 3,012 requests for the benefit. The Southeast leads with 70% of companies benefiting through tax reductions – with São Paulo predominating – totaling R$19 billion in investments – in the previous year it was R$12 billion.

The majority of business initiatives (60%) aim to innovate products, while 33% of them seek to improve or create new processes and another 7% aim to create or improve services, according to the survey. In general, projects seek efficiency, waste reduction, improvement in quality and productivity.

Chamber approves 18% tax on revenue for online sports betting companies

The Chamber of Deputies voted and approved the Bill (PL) that regulates online sports betting companies and defined that these businesses must pay 18% tax on revenue.

The proposal not only provides for taxation of company revenues, but also taxation of winners' prizes and also seeks to establish an initial grant to authorize websites to operate legally.

The Bill defines that the value of the initial grant for authorization to operate the sites will be R$30 million and the paying sites will be able to operate for 3 years in Brazil. Prizes for individuals will be taxed at 30%, including the initial investment, in addition to winnings. This model is already adopted today in the federal lottery. The text now goes to the Senate for analysis.

If approved, the government expects to collect R$700 million in 2024 alone and intends to distribute the tax on the revenue of these companies as follows: 2% for Social Security; 1.82% for the Ministry of Education; 6.63% for the sports area, with 4% for the Ministry of Sports and the remainder for sports confederations, with the exception of the CBF; 5% for the tourism area, 4% for the Ministry of Tourism and 1% for Embratur; and 2.55% for the National Public Security Fund.