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Russian industry minister issues proposals on urgent support to consumer market

The package of measures for a period from March 28 to September 28, 2020 covers all segments of business

MOSCOW, March 29. /TASS/. Russian Minister of Industry and Trade Denis Manturov has submitted to Prime Minister Mikhail Mishustin his proposals on urgent measures of support to the consumer market for a term of six months, as follows from his letter TASS obtained on Sunday. The letter’s authenticity was confirmed by two sources.

The package of measures for a period from March 28 to September 28, 2020 covers all segments of business - both small non-networked and network business and businesses service the consumer market, including production of consumer goods, public catering, wholesale and retail trade, services, commercial estate, logistics - warehouses, logistic centers, pickup outlets, transport, deliveries infrastructure, hotels, etc.

The minister emphasized that these should be urgent measures of support. "We must give consumer market players, with the exception of trade in food products, a possibility to take a pause," the document says.

The crisis period for Russia’s consumer market, except trade in food products, may last at least six months, the minister noted. "Extra restriction that have been imposed for a period from March 28 to April 5, 2020 and that are applicable to restaurants, cafes, bars and canteens, non-food stores, shopping malls and that can entail a slump in consumption for at least six months will result in financial collapse of trade, public catering and the services sector, and trade centers along with them," as follows from the letter.

According to the minister, the sector’s players, including owners of companies, say the crisis period will last for at least six months. "This is an optimistic scenario in case the government takes a package of urgent measures," the document says.

According to the ministry’s data, revenues of public catering companies, non-food trade and services organizations have already dropped by from 50 to 80% depending on the region. At least 20% of employees have been reduced. Administrative measures to stop it may only worsen the situation, the ministry argues.

"The drop of the sector’s revenues by 50-80% automatically entails closure and impossibility to pay taxes. Tax delays will only result in deferred bankruptcy rather than help resolve the problem," the minister stressed.

Sources in the ministry confirmed to TASS that Manturov had submitted his proposals to the prime minister, adding that they had been elaborated after consultations with businesses.

The package of support measures includes abolitions of value added tax for these sectors for a term of six years and a six-month delay for already invoiced taxes, abolishment of income taxes and a delay for already invoiced taxes for a term of six months.

Apart from that, the minister thinks it necessary to abolish property taxes, land rentals for these companies, including shopping malls, payroll taxes, unified taxes on imputed income, and taxes under simplified patent system taxation.

Russian President Vladimir Putin earlier instructed the government to amend laws to delay tax payment, with the exception of the value added tax for small-and medium-sized businesses.

Apart from that, the maximal loan rate for public catering and non-food trade companies is to be under eight percent.

It is also proposed that public catering and non-food trade companies be allowed to put on enforced leave for a term of six months and inform social protection bodies about these people to pay them government allowances of up to 80% of their monthly wages.

The ministry also proposes the so-called "rental amnesty" for the consumer market companies, with the exception of food retail outlets, for the period of the coronavirus-associated crisis. Rates for food retailers are to be equalized to the percent of revenue.

It is also suggested a ban be imposed on tenancy agreements termination other than upon mutual consent. The tenancy agreements are to be extended for a period of the "rental amnesty."

Apart from that, the ministry proposes to impose a moratorium on any measures of extra regulation of the consumer market, in particular, environmental and disposal fees.

The ministry also suggests pre-installation of Russian software on electronic and household devices be postponed.

In case of a quarantine, the ministry insists food retail outlets operate routinely whereas public catering companies shift to delivery and takeaway regime. The ministry also thinks it important to avoid ration cards as it will bury the entire food segment.

The ministry also says small retail and public catering outlets be freed from all administrative measures.