Brazil’s Congress advances bill to tax low-cost online orders

BRASILIA, (Reuters) – Brazil’s lower house of Congress approved on Tuesday the main text of a bill that would enact a new 20% import tax on international online purchases under $50, significantly down from a higher tax rate that was originally proposed.

The bill must still be voted on by the Senate.

The new import tax rate for purchases that cost $50 or less was set on Tuesday following negotiations between lawmakers and the administration of leftist President Luiz Inacio Lula da Silva, which had previously expressed its opposition to the unpopular tax proposal.

An earlier version of the bill sought to raise the online orders tax to 60%.

Global online retailers including Alibaba’s AliExpress and Shein have a huge presence in the Brazilian marketplace.

While Lula’s government has sought to balance public spending with more tax revenue, the president said last week that he was inclined to veto the new tax if Congress approved it.

If he were to make good on that threat, lawmakers could overturn a Lula veto with a simple majority vote.

Last year, Lula’s administration tried to implement a version of the online sales tax, which is supported by local retailers amid growing presence of Asian e-commerce giants in Brazil, but at the time he gave up after a strong backlash from online shoppers.

Lower house lawmakers opted to attach the 20% tax proposal to a bill that also includes sustainability tax incentives for automakers.

Reporting by Maria Carolina Marcello in Brasilia; Writing by Andre Romani; Editing by Tom Hogue and David Alire Garcia