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Comparing Environmental Policies in Brazil and the U.S.

  Cross-border transactions from Brazilian e-commerce companies To overcome the issues outlined above, merchants must devote time and effort to ensuring that all cross-border obstacles are addressed. Merchants should ensure that their payment gateways can handle foreign transactions and examine the refund process.  Logistics-wise, merchants can employ a cross-docking strategy by selecting brokers to reduce the bureaucracy and logistics of export procedures, as well as exchange and return operations. Forming commercial agreements with important markets might help facilitate clearance.  At the same time, it will strive to assess the challenges faced by businesses existing in Brazil or expanding into global markets. These problems include suffocating bureaucratic procedures, high taxes and complex tax systems, poor distribution infrastructure, a scarcity of talent, political instability, and an unpredictable economic climate. Supplemented with case studies from Netshoes Group and B2W Digi

How Brazil's Social Structure Differs from the United States


Open Market

Mercado Livre was the second largest participant in internet shopping in 2016, accounting for 18% of total value sales (Euromonitor, 2017). Mercado Livre, established in Argentina, is Latin America's leading internet marketplace, including a site dedicated to Brazil. The company benefits from a strong infrastructure, which allows third-party merchants to simply build their own stores. It also earns from providing its own online payment service, MercadoPago, which is similar to PayPal. eBay has a strategic agreement with Mercado Livre, which owns 18.4% of the company's total common shares. In 2015, Mercado Livre's gross merchandise value (GMV) was $2.28 billion. Mercado Livre was one of Latin America's largest marketplaces in the first half of 2016, with 2.2 million unique merchants, 17.6 million unique buyers, and 63 million live listings. Other major players include Cnova, Magazine Luiza, Walmart Brasil, and Maquina de Vendas.

Specifically, in terms of planned tax reform, Simples National is a valuable project for simplification, uniformity of tax collection, payroll exemption, and improved integration of federal entities. Such a step can nevertheless influence and facilitate the passage of proposals aimed at reforming tax law. Because it targets SMEs, plays a major role in Brazil's economic environment, particularly in terms of domestic market promotion, company and employment formalization, and, as a result, social inclusion. However, it should be noted that such a programme has the potential to become inefficient, and businesses may be deterred from increasing their revenue for fear of losing economic advantages such as taxes in this instance. The significant rise in taxes collected when corporations depart the tax regime is a powerful deterrent for companies to opt in. However, the Simples National garnered some criticism. Because the Simples National operates on an opt-in basis, only companies that opt in and are approved can take benefit of the program. Furthermore, aside from the company's gross revenue, numerous additional considerations (as specified in Article 3 of Lei Complementar N° 123/6) limit entry to this tax system. To illustrate, 37.7% of applications are denied (Receita Federal, 2017).

Government Initiatives Driving E-Commerce and SMEs

The Integrated System for Payment of Taxes and Contributions of Micro and Small Businesses (Simples National) is an optional taxation regime that enables the collection of local, state, and federal taxes simultaneously. In addition to unifying taxes, the rates are lower than if these taxes were paid separately due to numerous exemptions, and they are computed progressively based on the company's monthly gross income. It is an opt-in program for enterprises classified as micro or small based on annual gross income. It is governed by the National Simples National Steering Committee (CGSN), which is affiliated with the Ministry of Finance and is in charge of the tax aspects of the National Statute of Microenterprise and Small Business (Lei Complementar N° 123/6). Members of the CGSN include representatives from the union, states, the federal district, and municipalities.

According to the 'Lei Complementar N° 123/6', the following criteria are utilized for consideration of Simples National:
The National Broadband Plan (PNBL) is a Brazilian government program to provide inexpensive broadband internet connection across the country to individuals, governmental institutions, and businesses that do not already have access to this service. This includes dramatically extending the state-owned backbone infrastructure to cover the majority of the population, as well as providing incentives for internet companies to invest in the country's internet service infrastructure. To encourage widespread adoption of telecommunication equipment and investment in the country's communication structure by private organizations, the Brazilian government began to offer tax reductions with the introduction of the Special Taxation Regimen for PNBL, which includes tax relief for broadband network expansion enterprises that used national equipment and construction, revenue for projects specifically developed for telecommunications (15% relief for The expansion entailed making use of underused government-owned fiber optic cables installed by state-owned Petrobras and Eletrobras, as well as adding new lines where necessary. From 2011 to 2013, Telebras oversaw the installation of a nationwide network with over 25,000 kilometers of cabling made up of three fiber optic rings (South, Southeast, and Northeast) and extensions to the North and Center-West regions, as well as radio towers for data transmission and hundreds of POPs (Teixeira, 2014). In 2012, Telebras established a Network Operating Center in Brasília to handle the whole network. Since the debut of PNBL, over 612 Brazilian municipalities have gotten service via the Telebras network, accounting for over 40% of the population. From 2010 to 2014, wired broadband connections climbed from 13.1 million to 23.2 million, while mobile broadband connectivity increased from 15.3 million to 127.2 million, bringing the total number of cities covered up from 681 to 2930. This initiative will undoubtedly help greatly to the growth and development of e-commerce in Brazil.

Micro Enterprise (ME) - gross revenue under R$360 thousand (US$113 thousand equivalent) ⦁ Small Businesses (EPP) - gross revenue between R$360 thousand and R$3.6 million (US$113 thousand to US$1.13 million equivalent).

Despite heavy opposition from states and municipalities who lost the ability to collect taxes from these micro and small businesses, the National Simples Steering Committee's concentrated work resulted in the Simples National being adopted on June 30, 2007. As of January 2017, more than 12 million enterprises were engaged in the Simples National program; Figure 13 depicts involvement from various sectors.

This represented a substantial shift in the tax structure, allowing businesses to profit from consolidated tax collection and a significantly lower tax burden. According to SEBRAE, the average tax burden decrease for new enterprises might be up to 80%, depending on the state in which they operate. It also enabled greater cooperation among businesses and increased access to funding and capitalization.

Second, while the Simples National has resulted in considerable tax cuts for the majority of businesses, others have seen their tax burden rise as a result of the elimination of state-level tax simplification initiatives. For example, the introduction of Simples National eliminated state-level tax initiatives such as Minas Simples, Candango Simples, and Simples Gaucho (Castro, 2010). Another criticism leveled at Simples National is its computation complexity. However, the government has attempted to alleviate this problem by providing an electronic computation method known as the Generator Program Collection Document for Simples National (PGDAS).


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