1. Postponement of tax reform policy It must be said that Brazil’s tax reform is full of twists and turns, and the mood of cross-border sellers has also been ups and downs. According to reports, Brazilian Finance Minister Fernando Haddad recently stated at a year-end breakfast meeting with reporters that the federal tax on cross-border goods below $50, which was initially promised to be implemented at the end of 2023, will be suspended and is expected to take effect. It will be released when the Brazilian e-commerce market and politics are more "mature". In fact, since the beginning of this year, news about Brazil’s tightening of cross-border e-commerce tax policies has been widely circulated in the industry. Subsequently, a technical note from the Brazilian Federal Tax Service confirmed that these rumors were not groundless. The note pointed out that the Brazilian authorities are considering adjusting the import tax exemption policy for cross-border goods purchased under $50 through platforms such as Shopee, Shein and AliExpress. Specifically, the Brazilian government plans to introduce relevant tax systems before the end of this year and officially impose a 28% import tax on goods under $50 starting next year. Sellers are not happy to impose taxes on imported low-priced goods, but now things are turning around. Fernando Haddad pointed out that the e-commerce import tax "is still controversial in the government and Congress" and the Brazilian government will wait for the outcome of the lawsuit by the Federal Supreme Court (STF) and the conclusion of Congressional negotiations on the issue. 2. Going overseas is risky This year’s reform process of Brazil’s e-commerce tax system can be summed up in one word: twists and turns. In March this year, the Brazilian government released news that it would cancel the tax-free policy for imported goods under $50 on e-commerce platforms. This was later discontinued due to strong opposition from Brazilian consumers. In June, after a multi-party game, the Brazilian financial department unanimously decided to Goods sold on platforms such as Shopee and Shein are subject to a 17% goods and services circulation tax (ICMS); starting in August, the Brazilian tax compliance plan was officially implemented. It is worth mentioning that the Brazilian government also stipulates that any e-commerce platform that joins the Brazilian Compliance Program can enjoy the tariff-free policy for cross-border packages under $50. In order to seek more profit margins for cross-border sellers, after the Brazilian tax compliance plan was launched, platforms such as Shopee, Shein, and AliExpress immediately submitted applications to the Brazilian government. However, less than three months after the implementation of the compliance plan, the issue of taxes and fees surrounding low-price imported goods has once again been brought to the table. Although the current tax-free policy for imported goods under $50 is still valid, judging from the attitude of the Brazilian government , the gradual tightening of tax policies for cross-border goods is very likely to be one of the main lines of future development of the Brazilian e-commerce market. Despite this, there are still many platforms and sellers who are willing to "fly into the flame" and rush into the Brazilian market to make money. Data provided by Research And Markets points out that the Brazilian e-commerce market will reach US$56.9 billion in 2023, with an annual growth rate of 11.04%. In the next few years, the potential of this market will continue to explode. It is expected that by 2027, Brazilian e-commerce The scale will be expanded to US$81.3 billion. It can be seen that the Brazilian e-commerce market has unlimited potential, and even the wavering tax policy cannot extinguish the enthusiasm of platforms and sellers to make money. Of course, as the saying goes, “There are policies from above, there are countermeasures from below.” In order to obtain better performance growth under the shadow of Brazilian taxation, many platforms have also found new ways to shift the focus of their e-commerce business to selling local Brazilian products. For example, fast fashion e-commerce Shein has previously announced that it will cooperate with 330 local suppliers and logistics companies in Brazil to launch a series of locally produced products in Brazil for all Brazilian consumers and promote the localization of the platform. In addition, Shein Brazil also promised that by 2026, products produced in Brazil will account for 85% of platform sales. All in all, although there are considerable risks and high thresholds, the huge development potential is destined to be a hot market in Brazil. For cross-border sellers, the increasingly tightened tax policies will inevitably compress the profit margins of sellers. If they want to continue to take root in the Brazilian market in the future, sellers must work harder on product quality, brand awareness, etc., and strive to win in the giant market. Find a safe harbor before the waves come.