announced that it will pay the Tax on Circulation of Goods and Services (ICMS) for consumers who make purchases of up to US$50.
The information was released by the CEO of the Chinese company in Latin America, Marcelo Claure. The announcement comes days after Shein joined Remessa Conformo, a federal government program that exempts purchases of up to US$50 from import taxes.
By subscribing to Remessa Compliance, purchases of up to US$50 are exempt from Import Tax, but pay 17% ICMS. Purchases above this value pay 60% Import Tax, in addition to ICMS.
The Asian company did not say how much it must pay to cover the payment of ICMS. In 2022, Shein sold around R$8 billion in Brazil, according to estimates by analysts at BTG Pactual and Itaú BBA.
Considering a rate of 17% on this value, the total ICMS would reach R$1.3 billion.
According to Shein, the measure will only apply to purchases worth up to US$50. For purchases exceeding this amount, the consumer will have to pay both Import Tax and ICMS.
“We made a moral contract with consumers that we would not raise the price on Remessa Conformo. So, the announcement is to ensure this. It is a substantial investment and we will have the challenge of compensating for this 17% with the reduction of additional logistics costs that we had before”, stated the CEO of Shein in an interview with the newspaper O Globo.
Also according to the Chinese company, ICMS compensation is now available through the Shein website and app. The company recommends, however, that the app be updated so that “the new shopping experience” is available.
Conforming Shipping
The program will change the taxation of purchases coming from abroad. Major international retailers can voluntarily join Remessa.
According to the new rules, websites will be forced to charge taxes in advance, unlike what happens today.
On the other hand, purchases of up to US$50 (around R$240, at current prices) will be automatically exempt from Import Tax, a federal tax whose rate is 60%.
What changes
Companies that join the program will benefit from an exemption from paying Import Tax for purchases of up to US$50. With a rate of 60%, the exemption was guaranteed, until then, only for shipments between individuals.
The exemption only applies to Import Tax, a federal tax. The rule will not apply to the collection of Tax on the Circulation of Goods and Services (ICMS), a state tax that continues to be levied on products of any value. In an agreement between states and retailers, it was agreed that the ICMS rate on international shipments will be 17%.
Furthermore, consumers will have access to clearer information about taxation. Retailers will have to provide this information explicitly, on the product’s offer page, even before purchasing.
Stores will have to inform whether the merchandise comes from abroad and will be imported and that the product must be subject to an import declaration.
International shipping and insurance costs will also have to be disclosed along with the value of the merchandise, except when they are already included in the price. Retailers will also need to explicitly inform the value of the postal tariff, Import Tax (60%) and ICMS (17%), in addition to the total amount of the purchase.
Faster arrival of orders
The changes also aim to increase the agility in the flow of goods and reduce the time for final delivery to the consumer.
Companies that join the program will be able to follow the so-called “green channel” of the IRS, which is more agile, which eliminates the need for physical verification of the item and documents after the packaging is scanned. This reduces the time the package spends at customs for analysis.
Goods that were outside the parameters will be sent through the “red channel”, with stricter supervision and a longer process. Depending on the result of this inspection, the products may be seized, returned or released for delivery.
