The limit for duty-free import of goods has dropped to €200: imports will increase in price

Expert Meinhard: “Electronics and household appliances may become more expensive”

For those who like to place orders in foreign online stores, April 1 was definitely no laughing matter. It was from this day that the authorities decided to again lower the threshold for duty-free import of goods to €200 (about 20 thousand rubles). Before this date, it was possible to order goods from other countries worth up to €1 thousand or approximately one hundred thousand rubles without additional payments. According to experts, in the future the threshold may be completely abolished. In this case, you will have to pay extra for every little thing, be it a ballpoint pen or a tea mug.

From April 1, the threshold for duty-free online purchases has decreased from €1 thousand to €200. The duty itself is 15% of the price of the product and the excess price threshold. For example, if a consumer orders a product for €250, then 15% duty must be paid from €50. In total – €257.5.

Previously, the threshold for duty-free trade in the Eurasian Economic Union (EAEU) was €1 thousand and 31 kg. After 2019, it was reduced several times – to €500 and even to €200. Then, in April 2022, the threshold was raised back to a thousand euros – in order to support the economy and more effectively combat sanctions. Then small businesses took on part of the burden of filling the domestic market with goods.

Opinions of departments and stakeholders on the advisability of the current limit reduction are divided. The Ministry of Finance, the Federal Customs Service (FCS), the Ministry of Economic Development and the Ministry of Industry and Trade insisted on reducing it. The Chamber of Commerce and Industry (CCI), the Federal Antimonopoly Service (FAS) and logistics operators are in favor of maintaining the current threshold. In addition, individual market participants also have their own interests and actively lobby for solutions that are beneficial to them. Thus, an increased threshold for duty-free trading is certainly beneficial for marketplaces. While retail chains, especially those focusing on Russian manufacturers, definitely do not. It’s already difficult for them to compete with the growing online world. But, despite the presence of opponents of the reduction, from April 1, 2024, the threshold for duty-free online purchases fell to €200.

Anna Vovk, a member of the Council on Financial, Industrial and Investment Policy of the Chamber of Commerce and Industry of the Russian Federation, believes that this measure is aimed at developing import substitution so that consumer goods – from nails to complex electronic devices – are produced in Russia. “The reduction in the threshold will only affect the consumer. He will have to either stop consuming the usual goods or look for them elsewhere. But the measure is unlikely to stimulate direct production in Russia,” the expert believes.

Reducing the threshold can be assessed as a step that ensures a reduction in import volumes and, as a result, support for the national currency, as well as a carte blanche for Russian manufacturers who receive a price competitive advantage compared to foreign analogues, says Arthur, head of the analytical department for global markets at Fontvielle Investment Company Meinhard.

At the same time, the ruble is now gradually devaluing against key currencies. Annual inflation in Russia is at a level almost twice the target values, and import volumes for 2023 ($379 billion), after a drawdown in 2022 ($347 billion), have recovered to the values ​​of 2021 ($380 billion). At the same time, the consumer sentiment index, judging by the March data from the Bank of Russia, has updated its historical maximum for the third month in a row, so nothing threatens the national currency.

“Strong consumer sentiment does not contribute to reducing inflation in the country, and now this is a priority task of the Central Bank,” the expert continues. -Thus, taking into account the statistics, it is logical that the Russian authorities did not extend the increased duty-free threshold. Moreover, even the €200 threshold may be abolished in the future.”

Reducing the threshold to €200, that is, to approximately 20 thousand rubles, according to VTsIOM estimates, will affect no more than 14% of buyers of online goods. Still, the vast majority of consumers fit into a smaller range for their purchases, which means this decision will not affect their wallets in any way.

“The negative consequences of the authorities’ decision will be felt by those who make purchases in the range from 20 thousand to 100 thousand rubles through online services. I assume that we may be talking about electronics and household appliances, which belong to the category of goods in which Russian brands are not represented as significantly as foreign ones. It is too early to talk about full import substitution in these segments, so it is quite possible that the prices of these products will rise,” concludes Meinhard.