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Russia starts New Year by halving duty-free import threshold for e-commerce

The decision on gradually lowering the duty-free import limit was adopted at the EAEU in December 2017

MOSCOW, January 1. /TASS/. The threshold for duty free purchases Russian citizens make in foreign online stores has been lowered to 500 euros from 1,000 euros as of January 1, 2019. This is according to the rules of the new Customs Code that was adopted by the countries of the Eurasian European Union, namely Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

The measure implies that a buyer from Russia should pay customs duties for the purchases and parcels he ordered online in foreign stores if their total price tag exceeds 500 euros. The cost of purchases is accumulated within one month and the weight of a duty-free item for that period should not exceed 31 kg.

The decision on gradually lowering the duty-free import limit was adopted at the EAEU in December 2017. The measures will be executed in two stages: the reduction of the duty-free threshold to 500 euros from January 1, 2019 and to 200 euros from January 1, 2020. At the same time, starting from 2020 the duty rate will be halved from 30% to 15%.

In general, Russia’s duty-free import threshold is higher than many European countries, where it is set at 20-40 euro.

The Russian Finance Ministry does not rule out that cutting the duty-free import limit may accelerate but so far, the ministry is not holding any special discussions on this matter.



Fast tracking the reduction in the duty free import threshold


Earlier in an interview with TASS, Deputy Finance Minister Ilya Trunin said that the ministry was looking into speeding up the reduction of the duty-free import threshold, but first it has to make sure that the Federal Customs Service will be able to process the growing number of duty payments, when the limit is cut to 500 euros.


To simplify the payment procedure for the public, Russian Post was given the status of an economic operator, which is authorized to make payments for third parties. This payment system had been tested since November. It implies that a buyer, in case his order made in foreign online store is delivered by Russian Post, the client can pay the duty at the moment of the purchase. When this mechanism is fine-tuned, the Finance Ministry may announce how and when the duty-free import limit will be lowered further, Trunin said.


According to the Finance Ministry, the main objective now is to ensure that duties in e-commerce trade are low and easy to pay.



Federal Customs Service’s proposal


In summer of 2017, the Federal Customs Service proposed charging a duty for any purchase made through foreign online stores. According to the agency, this would add 25 bln rubles ($359 mln) annually to the budget and make Russian e-commerce more competitive.


The Finance Ministry said that such a policy could be introduced but not earlier than 2020, when it is clear that the IT system of the Federal Customs Service is capable of processing all the payments.


In turn, the Industry and Trade Ministry criticized the Federal Customs Service's initiative. It said that charging a duty for each purchase made through foreign e-commerce stores would reduce the range of products for Russian consumers. By the same token, it wouldn't boost domestic production, as claimed by the Federal Customs Service.


The Industry and Trade Ministry suggested that the authorities should implement the decision to gradually lower the duty-free import threshold (to 500 euros and then to 200 euros).


The ministry stressed that the administration of duties and VAT costs the state at least 10 euro per parcel. Respectively, a low threshold would make such administration unprofitable. It also cited the example of Canada, where, according to the ministry’s calculations, the authorities spend $160 mln to collect $40 mln of customs duties on goods that cost anywhere from $20 to $80.