The Ministry of Economy supports the proposal of retailers to introduce VAT on goods imported into the Russian Federation through foreign online stores in the form of mail. This was told by Deputy Minister of Economics Oleg Fomichev, Interfax reports.
According to Fomichev, the introduction of VAT on this category of goods is necessary to equalize the competitive conditions for Russian and foreign trading floors (AliExpress, eBay, Amazon). Otherwise, it will remain more profitable for foreign sites to send goods to Russia directly through mail, and they will not place their representative offices and logistics centers inside the country. This is not about introducing a new tax, but about extending the existing VAT on goods of foreign online retailers, Mr. Fomichev specified.
Foreign online retailers do not welcome the initiative and point out that the cost of administering VAT on millions of shipments may turn out to be more than tax revenues. (According to EY, when VAT is introduced for foreign online stores, the budget of the Russian Federation can lose up to 34,6 billion rubles per year due to the high cost of administering cross-border parcels).
The proposal to introduce VAT in the amount of 18% on all goods imported into the Russian Federation from abroad through online trading platforms was made by the Association of Internet-trading companies (AKIT), which combines Russian retail chains and online stores.
According to AKIT estimates, the volume of cross-border trade in the first half of the 2017 year increased by 34% compared to the same period of the 2016 year. 90% of the goods that Russians buy are in China, 4% from the EU, 2% from the USA.