The government is going to drastically reduce the limit of duty-free online shopping

How this will affect the wallets of Russians – buyers in online stores

Reducing the threshold for duty-free online shopping in foreign stores is being discussed in the government. It is proposed to reduce it from the current 1,000 euros in ruble equivalent by two or even five times. Such a proposal was discussed at a meeting of the working group on customs and tariff regulation at the Ministry of Economic Development. Why did the authorities take up online trading right now and what do they want to achieve?

At the moment, any goods ordered for personal needs from abroad, the value of which does not exceed 1,000 euros in ruble equivalent, is not subject to duty. However, already from October 1, the situation is in danger of changing: the limit may be reduced by two or even five times. At a recent meeting of the working group on customs and tariff regulation, the Ministry of Economic Development, the Ministry of Industry and Trade and the Federal Antimonopoly Service (FAS) proposed lowering the threshold for duty-free online trading to 500 euros, and the Ministry of Finance and the Federal Customs Service (FTS) immediately to 200 euros in ruble equivalent.

The low duty-free threshold in Russia was already introduced more than three and a half years ago. In January 2020, it was set at 200 euros to equalize the working conditions of foreign and domestic online stores in the market. However, after the start of the special operation, at the end of March 2022, the threshold was raised to 1,000 euros. Thus, the authorities decided to support domestic demand in the face of unprecedented sanctions that have fallen on our country and the withdrawal of Western brands from the domestic market. Prime Minister Mikhail Mishustin then directly indicated that raising the threshold would allow Russians to continue shopping in foreign online stores, despite the restrictions imposed by “unfriendly” countries. As subsequent events showed, this decision had a serious impact on the market. According to the Association of Internet Commerce Companies (AKIT), the volume of Internet commerce in Russia in 2022 reached almost 5 trillion rubles, having increased by 30% over the year. But this happened due to an increase in trade on domestic online platforms. Cross-border trade, by contrast, has declined from 13% at the beginning of last year. The volume of purchases from Russian retailers in monetary terms increased to 4.81 trillion rubles, showing an increase of 33%, noted in ACIT. Accordingly, by the time they discussed lowering the duty-free threshold to 200 euros, the departments had already seen a general trend towards an increase in domestic turnover in online commerce and a decrease in cross-border online flow.

It is curious that the subjective assessments of citizens differ from the statistics of e-commerce. Thus, according to the latest VTsIOM poll, about 42% of Russians believe that a possible reduction in the duty-free threshold after October 1 will worsen the situation of buyers. As the Associate Professor of the Department of Economic Theory of the Russian University of Economics named after A. Plekhanova Ekaterina Novikova, lowering the threshold was originally a temporary measure. And it has partially fulfilled its task. Over the past year, companies have been able to rebuild their supply chains for the Russian market. We have a large number of Chinese-made goods, and high-quality foreign brands (clothing, shoes, bags, phones, etc.) are more profitable to order via the Internet than to buy on the Russian market. In this regard, according to the expert, the still increased duty-free threshold for the import of goods begins to negatively affect the domestic manufacturer, since, as part of the import substitution policy, Russian companies are trying to produce more products for the domestic market, but achieving the quality of foreign brands is still a rather difficult task. . In this connection, even the return of the duty to its original position will not lead to significant changes in the preferences of Russian consumers who are ready to pay extra and use the goods for a long period of time, Novikova is sure.

“The benefits of the state from lowering the limit are obvious: firstly, the growth of budget revenues due to an increase in the collection of duties,” says Maxim Osadchiy, head of the analytical department of the BKF bank. – Secondly, the strengthening of the fight against shadow trade and tax evasion: entrepreneurs under the guise of “physicists” sometimes receive goods from abroad with the help of cross-border online trade for the purpose of resale. The negative effects are also obvious: lowering the limit will increase inflation and reduce the real disposable income of the population.”

At the same time, this measure is of a protectionist nature, it will help reduce imports, which will ease pressure on the ruble and increase demand for Russian goods, and will contribute to import substitution, the expert noted.