April 9, 2025
The Chamber of Digital Economy of Uruguay (CEDU) confirmed that the massive increase in overseas purchases made by the Chinese app Temu and its impact on domestic trade has caused increasing concern among its members, given the negative impact it has had on their sales.
In a statement, the chamber said it will submit a legislative proposal to increase the import tax from $200 to $500 on overseas purchases.
CEDU noted that a preliminary survey it conducted revealed that seven out of ten member companies reported a negative impact on their sales, with a decline of more than 10% since the platform’s arrival in 2024.
Furthermore, it noted that 70% of digital economy stakeholders surveyed believed that Temu’s arrival had a negative impact on trade overall.
Another major concern, the statement highlighted “unfair competition” due to the conditions under which the Chinese company operates, influenced by factors such as the tax regime applicable to these purchases and the inspection requirements local merchants face with regard to Timo. In contrast, local businesses seek to improve the shopping experience, enhance customer service, and differentiate themselves with their products and services.
Internationally, the emergence of similar collective trading platforms has elicited mixed responses. While Mexico has implemented tax measures to ensure equal contribution from e-commerce companies, Chile has eliminated tax exemptions on low-value imports, promoting tax equality. The Economic and Social Development Commission notes that “both examples illustrate the need to establish policies that regulate the digital market and competition within it.” Customs has taken action in response to the “exponential growth” in online purchases due to the “Timo effect.”
In this context, the Chamber offers proposals to balance the domestic trade situation. Regarding trade in general, the report proposes fair regulation of product imports, including applying uniform rules to all stakeholders and aligning the rules affecting local companies when importing or manufacturing certain products (such as eyeglasses or toys) with those that apply to those using a franchise or simplified import system. It also proposes reducing customs duties and import taxes.
Colin Huang, Founder of Timo
Regarding e-commerce, the Chamber recommends strengthening public policies that encourage greater adoption of technology by domestic companies so they can develop more efficient and competitive online sales channels.
Furthermore, it proposes improving investment conditions in digital advertising by amending the General Directorate of Taxes (DGI) decision prohibiting the deduction of advertising expenditures on international platforms such as Google or Meta from income tax.
It proposed a simplified mechanism for the adoption of advertising impact taxes: “This provision increases the digital marketing costs faced by local marketers, creating another situation of unfair competition with foreign players.”
Another recommendation related to digital trade is to implement a “Cross-Border E-Commerce Observatory,” which continuously monitors products entering the country and generates evidence to design policies that promote domestic trade.
The Chamber believes that if these recommendations are not heeded by relevant authorities, the draft law proposing to raise the import tax exemption from $200 to $500 will exacerbate the situation for local businesses, as they fail to compete with the Chinese platform and with foreign purchases in general.
