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Government freezes bill to lower duty threshold for online purchases

0 25 July 2014

The Government of the Russian Federation has taken the decision to put on hold the bill to lower the tax threshold for goods being shipped from abroad such as purchases from online retailers.

In the bill the government proposed lowering the threshold for duty free imports to €150 and 10kg from the current level of €1000 and 31kg per person per month. Anything more is currently subjected to a duty of 30% of the value of the goods.

The decision to reject the further development of the bill was taken by its authors at the Ministry of Finance, after its subjection to public discussion on the regulation.gov.ru website, which took place from 20th June to 5th July 2014. On 5th May 2014 the Russia President signed off the law which gave government right to change the parameters of duty free e-commerce.

During the debate about the lowering of the threshold, which began in 2013, the Head of the Ministry of Finance, Anton Siluanov, suggested lowering the threshold for duty free imports to €150, and the Head of the Federal Customs Service, Andrey Belyaninov, suggested €150-200.

The General Director of the online store Ozon.ru Maelle Gavet, during a meeting of domestic internet businesses with President Putin in June 2014, discussed with him the problems created for her by Russians purchasing goods from foreign online retailers. Whereas throughout the world the tax threshold for online purchases from abroad does not exceed €200, in Russia it is €1000. Maelle Gavet asked that the threshold be lowered as soon as possible, claiming that without this Russia is losing around 98 billion roubles ($2.8 billion) in tax. 

Commenting on the freezing of the bill, a representative of company Shopozz claimed that work on it is likely to resume from 1st January 2015. The date has to do with the coming into force of the Eurasian Economic Union (EEU), signed by Russia, Belarus and Kazakhstan. This could mean that within the territory of the whole customs union there would be unified customs limits. This would prevent the lowered threshold from being bypassed via Kazakhstan.

According to analysts at Data Insight, the total value of online retail in Russia in 2013 was 520 billion roubles ($16.3 billion). This represents growth of 28% compared with the previous year. The total value of purchases made by Russians from foreign online stores last year according to their data was around 150 billion roubles. The number of online purchasers in Russia was calculated to be 30 million people (up 30% from last year). These figures do however include people who book hotels and make other non-financial transactions.

Data also shows that on the domestic online market in Russia the majority of orders do not exceed 2,800 roubles (at the time of their research the average order was around $75). On the other hand the average value of an online purchase from abroad in 2013 was between $120-150.

Source: CNews

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