Russian Internet business sought protection from Chinese competitors

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Российский интернет-бизнес просит защиты от китайских конкурентов

The members of the Association of companies the Internet-trade (AKIT) appealed to Russian authorities to equalize the conditions of doing Internet business for Russian and foreign companies. Otherwise, the AKITA is ready to create its infrastructure abroad, which will reduce tax revenues to the Federal budget, reported “Kommersant”.

A letter to the head of the Ministry of economy Alexei Ulyukayev, a proposal to equalize the rights of Russian and foreign online stores was sent by the President of AKITA Alexei Fedorov.

Now the working conditions for Russian and foreign (particularly Chinese) online stores differ substantially. So, foreign online stores registered abroad, deliver goods directly to Russian buyers without any customs duties. Under existing legislation, the Russians are paying duty on packages worth more than 1,000 euros and weighing more than 31 kg. In practice, these options are generally unlikely. In addition, goods bought in foreign online stores are not subject to value added tax (VAT).

Russian entrepreneurs importing goods to Russia, rastamazhivayut them, paying customs duty and import VAT. In addition, Russian companies are obliged to accept claims from consumers, to carry out the laws on technical regulation, consumer protection and others. Thus, the Russian businessmen cannot compete with similar products from foreign online stores.

In contrast to the Russian conditions for foreign online shops, China this year, “blocked all inbound B2C traffic by setting a tax on parcels of up to 60% of the cost, as well as the zero threshold of duty-free, in addition, there is an obligation to certify all products that come in parcels to China,” said Alexey Fedorov. Exports to China in such conditions is impossible.

Acceptable way out of this situation, the head of the AKITA considers the conclusion in the border countries of the Russian Internet shops that will reduce tax revenues in the budget of the Russian Federation. In this case, the Russian business will be able on equal terms to compete with Chinese and other foreign online shops.

The Ministry supports China

No need to defend Russian online retailers from Chinese competitors, said earlier Nikita Kuznetsov. According to him, the Ministry did not find a match for the range of products in the Russian and Chinese online stores.

The official explained that to impose duties on Chinese goods sold through the Internet is impractical because the increase in their value will affect the wallet of the consumers.

Against the imposition of duties and VAT to foreign online stores was also made by the Russian export center is the state organization for exporters. According to the experts, the tightening of conditions of activity of foreign companies will touch the key online players such as Alibaba, JD.com Amazon. The additional costs in any case will have to pay the buyers of the goods.

The Finance Ministry has prepared draft guidelines for tax policy for foreign Internet sites from 2018-2019. It requires that VAT for foreign online business. According to the President of the National Association of distance trade Alexander Ivanov, his administration would cost more than the amount collected and will cause many players to leave the Russian market or to leave “in the shadows”.

According to AKITA, the volume of Russian market of Internet trade in the first half of 2016 increased by 26% to 405 billion rubles. For 2016 it will reach 900 billion, which is 18.4% more than in 2015. “Mail of Russia” from January to September this year, was treated at 145.5 million international shipments with commodity investments, which is 1.9 times more than last year.

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