SME manufacturers supported the Ministry of Finance’s proposal to introduce a 22% VAT on foreign online purchases
Russian entrepreneurs believe that the measure will help level out the competitive environment
Quick Look
Russian manufacturers of small and medium-sized businesses supported the initiative of the Ministry of Finance to establish a 22 percent VAT on the online purchase of foreign goods through marketplaces to create fair competition.
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Why It Matters
Currently, foreign online purchases by individuals are not subject to VAT; only a duty applies for a value of 200 euros or more or a weight of 31 kg or more.
MOSCOW, October 1 - RIA Novosti. Russian SME manufacturers responded positively to the Ministry of Finance’s proposal to introduce a 22% VAT on online purchases of foreign goods on electronic platforms, reports the press service of the SME Corporation.
The development institute provides the data on the SME Digital Platform.
According to entrepreneurs, this will equalize the fiscal burden for Russian and foreign companies and create an effective competitive environment, where quality and level of service will be key.
“The introduction of 22% VAT on online purchases of goods from abroad will allow us to achieve fairer competition in the market. Now Russian enterprises operate under conditions of significant tax and regulatory burden - these costs inevitably affect the final price of the product. At the same time, foreign sellers who sell goods directly often have a different structure of obligations, which causes an imbalance in the formation of cost,” said the founder of the Parallels Perfect Tools brand Denis Kochurkin, his words are quoted by the press service of the Corporation SME.
In his opinion, equalizing fiscal conditions is an important step in supporting domestic business.
We are talking about establishing a VAT rate of 22%, which online trading platforms will have to pay. Currently, this tax is not levied when purchasing foreign goods on online platforms. Currently, foreign online purchases by individuals are not subject to VAT; they are subject to only customs duties if the cost is more than 200 euros or if the weight limit is exceeded - 31 kilograms per parcel. The Ministry of Finance explained the innovations with the need to create a competitive environment and create conditions for whitewashing the economy.
An expert in the field of e-commerce, individual entrepreneur Konstantin Fionov also notes that today domestic business bears a tax and regulatory burden, which is taken into account in the final cost of products.
“Equalization of tax conditions is important primarily for Russian companies that create jobs, invest in production and develop their own products. With comparable rules, competition will be based to a greater extent on quality, price, service and the ability of a business to offer in-demand solutions,” Fionov believes.
Open Questions
- When exactly is the new VAT rate planned to be introduced?
- How will final prices for consumers change?
