Applications and social networks already account for 22% of retail tax evasion

Brazilian retail failed to pay public coffers from R$95 billion to R$125 billion in 2020 due to transactions without invoices by companies and individual sellers operating in the sector, especially in digital channels. The estimate is from a study by the global consultancy McKinsey, which was produced for the IDV (Institute for the Development of Retail) and released this Wednesday (10).

The study also points out that the loss of revenue occurs mainly in the clothing and footwear segments, followed by food and beverage, pharmacy and beauty retail, electronics and cell phones.

Considering the current tax evasion in retail, but which did not originate there, the estimate is that R$176 billion to R$225 billion were not collected in Brazil last year, which would represent five times the annual investment budget of the Union in infrastructure.

The effect of the pandemic on the labor market has accentuated the problem. Informal workers, who are not registered with any company, started to sell products without invoices, that is, without collecting taxes inherent to the retail activity.

Informal work in Brazil has grown and already represents 42% of the workforce, 20 percentage points above the average for countries that are part of the OECD (Organization for Economic Cooperation and Development). During the pandemic, around 40 million Brazilians without a formal contract and government assistance were characterized as “invisible” by Minister Paulo Guedes (Economy).

When analyzing all segments of the economy, evasion or non-collection may have reached up to R$ 600 billion last year, according to the study, when informality and unemployment grew in the face of the coronavirus crisis.

The IDV, which commissioned the survey, represents 76 retailers, including large companies such as Americanas, Magazine Luiza, McDonald’s and GPA, to support public policy proposals against informality and tax evasion.

The study results from rounds of interviews with IDV members and industry associations, market research with more than 200 vendors, and a series of discussions with national and international experts on the sector, as well as analysis of public and industry data.

Of tax evasion in retail, 22% occurred in digital channels, according to the survey. They are digital platforms, chat apps, social networks and websites. The cross-border transaction, which is the international transaction but advertised on channels that operate nationally, represented 70% of the cases, which means up to R$20 billion.

“The digital cross-border has grown a lot. It is an issue that will be increasingly relevant in relation to informality in the coming years”, says Luís Lima, partner at McKinsey.

The study brings the example of an Apple AirPods Pro, Apple’s wireless headset, offered at a price 80% lower on platforms where the seller is able to evade taxes.

Without specifying where the product is advertised, the study exemplifies an advertisement in which the seller guarantees the item’s originality: “Usually, we will take the initiative to declare a low price for you during shipment, such as about $20. country need to declare a lower price, please make a note after ordering”.

Other products such as Barbie dolls and anime toys are 38% and 65% cheaper, respectively, if purchased through channels with little monitoring of international transactions without invoices.

According to the survey, almost half (47%) of respondents who declare themselves microentrepreneurs and MEIs (individual microentrepreneurs) claim to have income above the limit allowed in their tax categories; 25% of MEIs say they operate in digital retail through multiple companies; and 10% of sellers admit to having purchased products without invoice for resale online.

The perception of sellers is that informal work is facilitated in chat applications (56%) and social networks (47%). Digital platforms and own websites keep 21% and 24%, respectively.

Instruction to sellers, CNPJ and CPF control and requirement to issue an invoice are recommended practices for digital platforms. Mercado Livre, which has the largest e-commerce operation in Latin America, has been working to regularize small and medium-sized companies that sell on its platform.

“If small and medium-sized companies are formalized with payroll exemption, with tax simplification, we will have many more employees contributing to Social Security, and this favors not only small companies, but the entire economy. If small and medium-sized companies are not doing well, the big ones aren’t there either,” says Marcelo Silva, president of the IDV.

Digital platforms have different levels of monitoring of the informal situation of sellers. For Silva, it is important that social networks have the same control as other retailers.

“It’s one thing to advertise your product [como modelo de negócio], another is to sell on the marketplace, then we understand that it is a commercial transaction, and, as such, it should have the same controls and pay the same taxes that we Brazilians pay,” he says.