Russian the Internet-shops will be able not to pay VAT when exporting goods

Photo: Ruslan Krivobok / RIA Novosti

The state Duma has approved in the first reading the bill which simplifies getting zero VAT rate for Russian online shops that sell goods abroad. It should spur exports, whose share in the shipments of “Mail of Russia” is only 2%

Price advantages

On Friday, April 7, the state Duma adopted in the first reading the bill on amendments to the Tax code of Russia, aimed at improving the application of the 0% rate on value-added tax (VAT). The draft specifies a list of documents that a company that sends goods overseas through the mail, must provide for zero VAT rate. There is enough documents, “confirming the actual payment by the buyer of goods sold”, and copies of the CN 23 customs Declaration (its form is set by the universal postal Union) that accompanies international mail.

According to the current legislation of the exporters that use the mail to transport their goods, could theoretically qualify for zero VAT. Practically, it was impossible. “Imagine a standard pack of paper. Here is a volume of documents necessary to apply for a VAT refund. Okay, if you sent car — then pay off. But when talking about the premise, which on average costs $70, is too much,” describes the current state of Affairs of the President of the National Association of distance selling (NAMO) Alexander Ivanov.

According to the authors of the project, the proposed measures will allow the Russian Internet-shops to the zero rate of VAT and, accordingly, to avoid double taxation in Russia and abroad, the correspondent of RBC present in a plenary session of the state Duma. “The possibility of application of the zero rate will allow you to obtain additional price competitive advantages for our small and medium-sized businesses, which will contribute to the development of the export of our goods and services abroad”, — said the Deputy of the faction “United Russia” Alexander Avdeev. He referred to the experience of such giants as the American Amazon and the Chinese Alibaba.

During a meeting in the state Duma, Deputy Minister of Finance Ilya Trunin said that the Ministry is not expecting huge budget losses due to the zero rate. According to him, now 225 million postal items, decorated with “Mail of Russia”, only 2% is exported.

However, according to the postal operator, the volume of export shipments are steadily growing. In 2016, they increased by a third compared to the year 2015.

Require tax

If exporters do not want to collect supporting documents, the bill allows them to abandon the zero rate VAT and to pay 10 – or 18-percent tax (depending on product category), wrote informed “Vedomosti”.

“Exporters complained about the ambiguity in the legal and tax risks associated with this. Therefore, the bill proposes to give them an opportunity to abandon the zero rate,” — said RBC senior associate of the group indirect tax, KPMG Anton Grachev, participated in the drafting of the bill. Risks arise, for example, when fiscal service at the time was donachislili tax at the current rate, which was unfavorable to the exporter. While Grachev believes that prescribed in the amendments, the procedure for obtaining the zero VAT will improve the competitiveness of the Russian Internet shops and they’re not going to abandon it.

Photo: Sergey Konkov / TASS

Respondents RBC representatives of professional associations also support the bill, but with reservations. Alexander Ivanov of NAMO is some wariness to the fact that the authors of the bill have not agreed on the document with the business before submitting to the Duma.

“The bill makes the procedure of VAT refund easier. If it actually was impossible (needed to provide the foreign trade contract, which is not with individuals), the introduction of new rules of procedure is at least real,” says the Executive Director of the Association of companies the Internet-trade (AKIT) Artem Sokolov. However, according to him, the bureaucratic process remains difficult, says Sokolov. “An exit would be automatic transfer of information to the tax, because each parcel has a unique barcode tracking number” — suggests the interlocutor of RBC.

VAT for all

Along with initiatives to ease the tax regime for domestic Internet stores are preparing measures to tighten it to foreign merchants. Thus, the Federal Antimonopoly service (FAS) on behalf of the President of Russia is preparing a bill to impose VAT on goods from foreign online stores. Lobbying for the bill AKIT, which insists on the need to equalize working conditions on the market for Russian and foreign retailers.

Now the orders are foreign online platforms worth up to €1 thousand and up to 31 kg are exempt from VAT and customs payments. In the project the FAS (there RBC) is proposed to install an 18 percent VAT for foreign companies. Earlier the representative of the FAS reported that they plan to submit the document to the Russian President until 3 April, after which it can be submitted to the state Duma. As explained RBC, the head of Department of regulation of communications and information technologies of the FAS Elena zaeva, the project is still being finalized.

Against the bill is the nads, which includes several large foreign online retailers. The dsna representative expressed concerns that after the introduction of the tax will begin to act shady imports, and foreign Internet-stores — to leave the Russian market.

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