Monthly Tax News - SEP 2024

It’s the start of a new month, and there’s always something new in the tax and compliance sectors. So, what’s changed recently?  

1. Temu opens to European sellers

In a sign that competition is intensifying in the e-commerce market, Temu has started opening its platform to European businesses, aiming to position itself as a direct challenger to Amazon and other major multinational platforms.

Businesses with a company entity in Europe, and where the director holds a valid European passport, are now able to apply to join Temu’s local warehouse programme. 

Under the programme, new sellers are able to sell on Temu but are responsible for managing their own warehousing and fulfillment arrangements. 

Whilst Temu is known for a rapidly growing consumer audience, it’s also generally known for lower quality and cheaper mass-produced goods, primarily shipped from China.  It therefore remains to be seen how this expansion into Europe will impact the wider e-commerce marketplace and consumer trends. 

2. EU proposes abolition of import duty tax exemption on cheap goods

As competition in the e-commerce market continues to accelerate with the rise of Chinese-linked platforms such as Temu, the European Commission has proposed the abolition of existing import duty exemption rules.

Under current rules, it is possible to import goods under €150 into the EU without facing any additional import duties.  This means that platforms such as Temu and Shein, which primarily ship from China, are able to import vast quantities of low-priced goods into the EU without incurring any additional costs, and often undercutting local sellers in the process.

In 2023, it was estimated that 2.3 billion items were imported into the EU and declared as below the threshold for import duties.

3. Brazil implements new import tax, affecting major online marketplaces

The Brazilian government has introduced new taxation rules. 

The new rules means that all international shipments will be subject to an import tax of 60%, unless the seller is enrolled in the new Remessa Confrome programme. 

Previously, goods valued under US$50 and sold by an individual seller were exempt from import tax.  This meant that sales made by companies were often liable for the very high import tax rate.

Under the Remessa Conforme programme which went into effect on the 1^st of August, online marketplaces and companies can apply for an exemption which will allow shipments under US$50 to be exempted from import tax.   However, the seller will still be liable to pay a state tax of 17%, the costs of which are likely to be passed on to customers.

So far, both AliExpress and Shein have publicly committed to joining the programme.