INTERVIEW: E-commerce union wants import duty-free cap cancelled

MOSCOW, Mar 14 (PRIME) -- Russia’s Association of Internet Trade Companies (AITC) wants to cancel a threshold for duty-free imports of foreign online purchases, President Artyom Sokolov told PRIME in an interview on Thursday.

“I believe that discussion of a threshold in duty-free commerce, changes of its level, is a wrong approach in general. We should not talk about this level, there should be no threshold at all. It was cancelled in China in 2016, and Europe intends to follow suit from 2021,” Sokolov said.

Since January 1, Russians can purchase goods for up to 500 euros per month without paying any import duties in comparison to the earlier existing 1,000 euro threshold.

Sokolov said that a purchase in a foreign e-store does not differ from a deal with a local e-store, and terms should be equal for them.

“The tax regime for foreign Internet floors is now 30% easier than for local ones. As a result, the share of foreign companies on our e-commerce market rises every year. It was 8% in 2010, now it’s 38–40%. It means that if we take a volume of money spent by Russians in e-stores, 40% of money went to foreign and 60% to local stores,” he said.

The association also suggests introducing a limit for online sales of alcohol, for example from 2,000 rubles.

“The bill (seeking to approve online sales of alcohol) was returned back to the Finance Ministry for deliberation, because there was much criticism. The Healthcare Ministry thinks that people would lose themselves in drinking with an open access to alcohol via the Internet,” Sokolov said, adding that a price limit could be imposed to cure the ministry’s fears.

The association has also started preparing mandatory requirements to market participants for online sales of medications. The bill was approved by the State Duma, the parliament’s lower house, in the first out of three necessary readings in December 2017, but legislative work on the matter has been suspended since them.

At present, people can book medications online and pick them up in a convenient pharmacy.

The market of online sales of medications is weighted by the association at 37–73 billion rubles with 2.5–5% of it hiding in the gray zone.

Sokolov said that the online market of medications could grow several times after the requirements are approved. “The share of sales of legal players is the lowest, 2.5%. It could spike to 10%. Now the total volume of the pharmaceutical product market amounts to about 1 trillion rubles, and online sales could amounts to 100 billion rubles. It’s a five-year horizon,” he said.

(65.5890 rubles – U.S. $1)

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