A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
The Russian customs service has agreed to make it easier for e-commerce parcels to get through. But a perk that’s prompted Russian consumers to shop foreign e-commerce sites likely will end, says the chief editor of East-West Digital News.
Following a meeting late last month with shipment service providers, the Russian Federal Customs Service announced that new, simplified customs clearance procedures for e-commerce parcels will be introduced immediately.
“Not only will all the problems raised by the shipment companies be solved, but electronic procedures will be introduced in the next two weeks” to make the customs clearance processes even quicker, the Federal Customs Service stated.
The announcement follows a series of confusing events that saw the customs authorities in two Moscow airports introduce more restrictive procedures in early January and several international courier companies suspend their shipments to Russian consumers as a consequence.
The latest announcement from the Russian authorities comes as no surprise to industry insiders. As revealed in a report by East-West-Digital News, an experiment aiming to simplify customs procedures is being conducted by the Russian customs authorities with some shipment companies and online retailers.
Despite the recent incidents, it seems that this experiment, which started in early 2013, could be extended later this year, with a positive impact on cross-border trade.
Another positive development is that the Russian Post’s measures to improve its logistic capacities have begun coming to fruition. Among them is a giant customs checkpoint and logistic center in Moscow. The facility, which came as a response to the congestion of Moscow airports in the spring of last year, was launched in November.
The end of “duty-free e-commerce”
On another front, the end of the current generous customs duty exemption regime now appears to be almost certain.
Currently, Russian Internet users enjoy tax-free shopping from foreign stores as long as their purchases do not exceed a value of 1,000 euros or a weight of 31 kilograms per person and per month. Above this limit, purchases are subject to a 30% tax.
Due to their concern about losing tax revenues and active lobbying from domestic retailers, the Russian government is likely to lower the tax exemption level to 150 or 200 euros.
Such measures would certainly not kill cross-border sales, since the average order value is below this level in many product categories. But shipping from Western retailers in the fashion segment, for instance, would likely suffer.
The Russian domestic online retail market reached $16 billion last year, while cross-border sales accounted for approximately $3 billion.
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“This article first appeared in East-West Digital News, a Moscow-based online resource for digital industries in Russia.