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Russia's inet shopaholics to brace for EUR 150 monthly cap on duty-free package import

January 28, 2014, 18:06 UTC+3 Alexandrova Lyudmila
© ITAR-TASS

MOSCOW, January 28. /ITAR-TASS World Service/. Russia has decided to subject its shopaholics to compulsory treatment: the Russian authorities are introducing new rules of electronic commerce that would make foreign online shopping far less profitable. The limit of duty-free package imports to the country will be lowered from €1,000 ($1,370) to €150 ($205) a month.

Currently Russia allows duty-free imports of parcels worth up to €1,000 weighing up to 31 kilograms each month.

The Economic Development Ministry has agreed with the Finance Ministry that one person will be allowed to make duty-free cross-border monthly purchases worth €150, Economic Development Minister Alexei Ulyukayev said Monday. The Finance Ministry proposes lowering both the threshold of a duty-free buy’s customs value to €150 and its weight to 10 kg a month. In case of overweight, the duty will remain at 30 percent, like now, but not less than €4 per kg.

The Finance Ministry’s draft law on reviewing state duties has not been agreed upon yet with all departments concerned, but the figure will remain unchanged. “We had differences over the cutoff price, but ultimately agreed on €150. There were more radical proposals, but in our view they are excessive,” Ulyukayev said.

The idea to cut the value of duty-free acquisition in foreign online shops down to €150 was made public by the Finance Ministry in late December after President Vladimir Putin stressed the necessity to streamline e-commerce.

Russia’s duty-free threshold is one of the world’s highest. In the European Union, the figure is €22. Purchases cheaper than €150 are only subjected to local VAT, and those more expensive — to VAT and customs duties. Russian Internet shops that advocate restrictions believe low duties play into the hands of resellers who buy merchandise wholesale as individuals and then resell it.

Electronic commerce rules are also being toughened in other spheres. A new list of documents required for people to enter packages from Internet shops for customs clearing came into force on January 4. Parcels will only be handed to recipients at their place of registration.

To receive each package, they will have to collect a great number of documents: a copy of the passport with the address of registration, an order form from the Internet shop, photographs of the package contents, as well as a copy of the bank card and the original account statement in which the Internet shop is indicated as the payment’s recipient. If the buyer paid with someone else’s card, he will have to explain in written form why this happened. Just as in the situation where the merchandise was ordered to an address that does not coincide with the permanent registration address.

Due to customs problems, many large foreign Internet shops have started warning Russian clients that the delivery of their purchases may take up to three months. Reports appeared last week that express delivery operators making part of Russia’s Association of Express Carriers (DHL, DPD, PonyExpress, SPSR, TNT, FedEx, UPS) would stop importing to Russia express cargoes containing private goods. Later Yury Shevchenko, DHL Express Russia’s vice president of operations said the express carrier decided to absolutely stop importing foreign cargoes for individuals from January 27.

Foreign online shops have also started giving up the practice of delivering goods to Russia. Clothes sellers Net-a-porter.com, Theoutnet.com, as well as Shopbop.com and Easdane, owned by big online retailer Amazon.com, announced that on their websites last Saturday.

According to the Federal Customs Service, some 7 million such packages worth overall 2.8 billion euros ($3.8 billion) were imported to Russia in 2012. According to postal operator Russian Post, in 2012, the share of parcels worth not over €100 was 45%, packages worth €100-500 accounted for 41%, the share of parcels costing €500-1,000 totaled 11%, and packages more expensive than €1,000 accounted for 3%.

“An average buy on eBay today is assessed at $43, an average purchase in our Sotmarket, at 5,200 rubles ($150). Both sums are within the €150 threshold. That is why the bulk of consumers will not suffer from the innovations,” RBC Daily quoted E-Commerce Development Association President German Klimenko as saying.

At the same time, data from the economic and sociological research laboratory of the National Research University - Higher School of Economics show that the new duty-free import threshold may affect many gadget fans: only 48.3% of online electronics shops’ clients stay within €200 when buying goods. Online shopaholics, according to the laboratory, will suffer a bit less: 61.7% of customers of online clothes shops order goods worth less than €200.

“The reduction of the duty-free threshold to €150, as well as the departure of international players will strongly affect the volumes of imports from foreign Internet shops. This demand will partially move over to the Russian Internet segment, which will be positive for retailers operating in Russian territory who have a well-developed Internet business,” Meruzhan Dadalyan, managing director of Concern General Invest’s brokerage service department, said.

Opponents of restrictive measures against e-commerce plan to voice their position in Moscow’s downtown Bolotnaya Square on February 8. The Consumer Rights Protection Society insists that the measures being taken are nothing else but “fight against Western Internet giants who are winning their competition with Russian online shops.

 

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