NATALIA KORNIENKO: TO SPEAK ABOUT DECREASING THE THRESHOLD FOR DUTY-FREE PACKAGES AS A WORLD TREND IS WRONG
Natalia Kornienko, Head of Tax System Development Department of the Gaidar Institute, was interviewed by radio station “Echo Moskvy”.
The topic of interview concerned reduction of threshold for duty free parcels from foreign online-stores.
On December 11, it became known that the First Deputy Prime Minister and Minister of Finance Anton Siluyanov took the initiative to gradually reduce duty-free threshold for goods from foreign online stores to € 20 per parcel in 2022. Head of the Ministry of Finance argued his position that VAT and import customs duties are not levied when goods are sent for personal use, while these payments are present in traditional retail. As a result, Ministry of Finance noted the flow channels of profits and taxes from Russia transferred to online stores located in foreign countries.
Natalia Kornienko commented: “I see this as exceptionally protective measures because it would be wrong to talk about the need to lower the threshold for duty-free import of parcels as a global trend. Other countries, on the contrary, raise these thresholds. Those countries that previously lowered the bar including our closest neighbors, for example Belarus, have raised it again since this year because the authorities faced mass evasion of paying duties, moreover, in legal ways. Since we do not have a customs border with our neighbors, goods arrived in Russia and then transported to Belarus.
However, not only EAEU countries have a different view on this issue. Countries that develop Internet commerce for a long time including cross-border trade, indeed raise thresholds. For example, in 2015 the United States returned to the threshold of $ 800. We can say that other countries are not a guide for us, that we need to save national retail. Nevertheless, let us see what kind of goods are in question. Is our retail trading Russian goods? No, this is the same import.
Another argument: many experts in the field of online commerce including cross-border trade, diagnosed a slowdown in market growth in H2 of this year. Therefore, it is unclear how it is planned to increase fees. Market is shrinking, it is not growing and if you increase the load, then, people will simply stop buying anything. For the most part, consumers purchase low-value goods in foreign online stores, with an average check of up to Rb 1000. If this market is now starting to decline with such an average check, question arises on how the Ministry of Finance will increase fees?
Next: the state invested in construction of about 38 centers handling cross-border parcels by Russian Post and did it again via state owned VTB. If we impose duties on parcels now and their flow decreases, how will these investments pay off? Thus, the situation is not as rosy as it seems. It is ruinous for the treasury to introduce expensive administration for each parcel: revenues will be pitiful accompanied by enormous expenses.
Finally, up to now, we do not have any official statistics on the volumes of internet commerce market. Rosstat avoids creating a unified methodology for calculating volumes of trade, whether it is cross-border or national online trading. All data is presented by different sources, these are commercial companies and someone uses one methodology while others use something different. There is no complete picture, therefore, it is difficult to operate with any data on market losses”.
On December 11, it became known that the First Deputy Prime Minister and Minister of Finance Anton Siluyanov took the initiative to gradually reduce duty-free threshold for goods from foreign online stores to € 20 per parcel in 2022. Head of the Ministry of Finance argued his position that VAT and import customs duties are not levied when goods are sent for personal use, while these payments are present in traditional retail. As a result, Ministry of Finance noted the flow channels of profits and taxes from Russia transferred to online stores located in foreign countries.
Natalia Kornienko commented: “I see this as exceptionally protective measures because it would be wrong to talk about the need to lower the threshold for duty-free import of parcels as a global trend. Other countries, on the contrary, raise these thresholds. Those countries that previously lowered the bar including our closest neighbors, for example Belarus, have raised it again since this year because the authorities faced mass evasion of paying duties, moreover, in legal ways. Since we do not have a customs border with our neighbors, goods arrived in Russia and then transported to Belarus.
However, not only EAEU countries have a different view on this issue. Countries that develop Internet commerce for a long time including cross-border trade, indeed raise thresholds. For example, in 2015 the United States returned to the threshold of $ 800. We can say that other countries are not a guide for us, that we need to save national retail. Nevertheless, let us see what kind of goods are in question. Is our retail trading Russian goods? No, this is the same import.
Another argument: many experts in the field of online commerce including cross-border trade, diagnosed a slowdown in market growth in H2 of this year. Therefore, it is unclear how it is planned to increase fees. Market is shrinking, it is not growing and if you increase the load, then, people will simply stop buying anything. For the most part, consumers purchase low-value goods in foreign online stores, with an average check of up to Rb 1000. If this market is now starting to decline with such an average check, question arises on how the Ministry of Finance will increase fees?
Next: the state invested in construction of about 38 centers handling cross-border parcels by Russian Post and did it again via state owned VTB. If we impose duties on parcels now and their flow decreases, how will these investments pay off? Thus, the situation is not as rosy as it seems. It is ruinous for the treasury to introduce expensive administration for each parcel: revenues will be pitiful accompanied by enormous expenses.
Finally, up to now, we do not have any official statistics on the volumes of internet commerce market. Rosstat avoids creating a unified methodology for calculating volumes of trade, whether it is cross-border or national online trading. All data is presented by different sources, these are commercial companies and someone uses one methodology while others use something different. There is no complete picture, therefore, it is difficult to operate with any data on market losses”.