Venera Petrova on her attempt to regulate trade on the EAEU electronic platforms

Last week, the government introduced a bill to the State Duma designed to solve the problem of double payment of VAT by Russian companies selling goods through marketplaces to consumers in the EAEU. A similar rule has been in effect since January 1, 2022 in Kazakhstan and July 1, 2022 in Belarus – Russian Internet platforms must pay VAT on goods sold to these countries, while Russian suppliers also pay Russian VAT. Deliveries of goods from the EAEU to Russian individuals on the territory of the Russian Federation through marketplaces are still not subject to VAT. Back in November 2021, the Association of Internet Trade Companies (AKIT) asked Mikhail Mishustin to help solve the problem. The draft amendments to the Tax Code prepared by the Ministry of Finance require the collection of VAT on the “country of destination” principle – it obliges entrepreneurs from the EAEU countries selling goods to Russians through online platforms to pay VAT to the Russian budget (through registration of marketplaces with the Federal Tax Service) – and allows Russian sellers to accept deductible tax paid to the budgets of the countries of the union. AKIT calls the solution logical: the EAEU itself is still looking for a common approach to e-commerce issues.

TeDo tax practice partner Vladimir Konstantinov believes: “Apparently, the state has considered that the volume of goods that Russian consumers buy directly in the EAEU countries has reached – or is expected to reach – a scale at which the taxation of such purchases needs to be clearly regulated.” The materials for the amendments provide statistics according to which 2.1 billion rubles were paid to the budgets of other EAEU member states in 2022. VAT, and for the nine months of 2023 – already 5.5 billion rubles. The losses of the Russian federal budget due to deductions will amount to 2 billion rubles. and will be compensated by paying VAT by union companies.

From a practical point of view, the decision proposed by the Ministry of Finance has unobvious consequences: given that goods for “physicists” will be subject to VAT, we are obviously talking about consumer imports: for flows of critical industrial imports, VAT is in effect or exceptions have been introduced. As a result, goods from EAEU sellers on the retail market will become more expensive – given that the union has sharply increased supplies to the Russian Federation without a significant increase in industrial production, de facto we are talking mainly about parallel imports from countries that have stopped direct supplies due to sanctions or voluntary restrictions in connection with military operation of the Russian Federation in Ukraine. And in this vein, the simultaneous provision of “external” VAT deductions to exporters through the same channel looks like a direct stimulation of the export of Russian goods to the EAEU through an additional tax on goods that are no longer officially supplied to Russia.