Flavio Rocha Warns: Brazilian Retail in Danger with Invasion of Imports: The recent decision by the Chamber of Deputies to reinstate the tax he 20% import tax for orders of up to US$ 50 is a temporary relief for Brazilian retailers, but it doesn't solve the issue of tax equity that is harming the sector. This is the assessment of Flavio Rocha, Chairman of the Board of Directors of the Guararapes Group, owner of the Riachuelo clothing chain.
“The measure is a relief. Everyone is giving a vote of confidence that there will be a correction to the lack of tax equity before reducing their teams or dismantling their structures,” says Rocha. “But there is still a ‘lack of protectionism'.”.
Rocha is referring to the clothing industry's request for a tax of 60% on products sold through online platforms, which he says would allow for fair competition between Brazilian companies, which face a high tax burden and strict labor legislation, and Asian ones. As an example, he mentions that when a consumer pays R$ 100 for a garment, only R$ 55 stays with the industry, with the rest going to taxes.
“The Brazilian market is extremely competitive and any 1% makes a big difference to companies,” says Rocha.
Since the implementation of the Remessa Conforme program ten months ago, products worth up to US$ 50 (approximately R$ 250) have been exempt from Import Tax. The measure was adopted to combat the practice of some e-commerce platforms of not collecting any tax. However, it has caused great discomfort, especially among fashion retailers, who compete directly with Asian retailers such as Shein and Shopee.
Rocha destaca que o crescimento das vendas transfronteiriças (importados) dessas plataformas já representa 15% do varejo no Brasil, chegando a 25% no setor de vestuário. “Demos de mão beijada um quarto do setor têxtil para essas empresas, que não geram emprego nem recolhem impostos no país”, critica.
According to calculations by economists Felipe Salto, Josué Pellegrini and Gabriel Garrote, from Warren Rena, the application of the 20% rate on remittances should generate an annual collection of R$ 2.5 billion. As the measure has not yet been approved, the effect should be felt from July onwards, generating additional revenue of R$ 1.3 billion.
What does the industry say?
In a statement, the Federation of Industries of the State of São Paulo (Fiesp) and the Center of Industries of the State of São Paulo (Ciesp) expressed support for ending the exemption for sales of up to US$ 50 made by e-commerce sites.
According to the entities, the proposal corrects what they called the “serious tax inequality faced by the Brazilian productive sector since August 2023”, when the Ministry of Finance granted the exemption to imported goods sold by platforms certified under the Remessa Conforme Program.
Fiesp and Ciesp emphasized that offering tax advantages to imported products causes “damage to companies and workers in important segments of industry and retail”.
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