The tax burden
Foreign trade Internet platforms — AliExpress, JD, eBay and others — have to pay taxes on the territory of Russia, in particular this applies to VAT payments. This was stated today by the President of the Association of e-Commerce companies (AKIT; brings together 20 retailers) Alexey Fedorov at a meeting of the working group on the regulation of cross-border trade (created by head of the presidential administration for execution of orders of the President of the forum “the Internet economy 2015”). According to him, soon the BREED will begin to discuss with local authorities mechanisms requiring foreign sellers to become tax residents of Russia. This is necessary to equalize the working conditions of foreign and Russian vendors of the market, Fedorov insists.
The Russian market was in a legal vacuum, has noted in conversation with the correspondent . According to him, this is because seven years ago, “no one of any cross-border have not heard.” “In other countries major players voluntarily go to register, pay VAT in the country where the product was manufactured and where it was purchased by the consumer,” insists Fedorov. Depending on the country there are different conditions for obtaining foreign online store tax resident status: in particular, this can occur when the annual turnover of sites in a given country exceeds a certain level — for example, €100 thousand, said the head of the AKITA.
The proposal was supported by the AKITA attending the event, Deputy head of the Federal tax service (FTS) Dmitry Satin. The representative of Department has specified that the FTS is only concerned with the collection of taxes, and regulatory framework must develop the Ministry of Finance (MOF). A Ministry official who attended the meeting, did not participate in the discussion of this topic. In a press-service of the Ministry of Finance responded to questions .
“The current environment for foreign online retailers in Russia does not allow Russian players to compete with them on prices for the goods. Even if you work zero margins, the price in Russian store is higher than that of the Chinese, because they do not pay taxes,” said CEO Danny Perekalsky Ozon (the Russian shops pay VAT, which is 18% and is included in the price of goods). He noted that he is not a supporter of restrictive measures against foreign competitors. “We do not insist on payment of VAT. You can, for example, to abolish the tax for us, we are happy, and customers. The main thing is to create equal conditions for all,” explained Perekalsky.
While proposals for tax burden for foreign online retailers in Russia are not issued. “We will discuss the various options on alignment of working conditions for Russian and foreign vendors. Taxation is only one of them”, — said the Chairman of the Committee for standardization of the BREED Alexander Logunov. The working group “online+trading” established following orders of the President of Russia Vladimir Putin, consist of the representatives of Russian and foreign online sites. “If possible” the band “will try to reach some agreement,” said Logunov. The first results of this agreement should be submitted to the presidential administration a month later.
“I believe that Russian and foreign companies had the same rights and obligations when carrying out activities on the territory of the Russian Federation”, — says adviser to President Herman Klimenko. However, the introduction of VAT until he appears to be unrealistic: “Sounds good, but in practice will not work well: as hundreds of thousands of companies small and big sellers gathered in the aggregators will be able to register as tax payers do we have?”
The difficulties of levying
To oblige the foreign trading platform to pay VAT in Russia is no easy task. For example, most sellers on eBay are private persons, and to oblige each of them to be registered in Russia for tax purposes is simply impossible, explained the head of the Russian eBay Vladimir Dolgov.
Agree with him and the head of the Russian division Chinese online store JD.com Alexander Vasilyev. According to him, the bulk parcels from China sent private sellers by mail, which will not be issued a VAT refund in China, and in understanding States is not an export. “If they were obliged to pay taxes in Russia, they will have to do it twice, which ultimately will affect the price of the goods and, consequently, will hit the wallets of consumers,” — said Vasilyev. He also noted that if JD.com which is an online shop in Russia will not be complex from a legal point of view, it is possible for private sellers on AliExpress it will be a problem.
Mark Zavadskiy, Director of business development AliExpress in Russia and CIS and General Director Alibaba.com began to discuss with possible problems. “We appreciate that the Russian authorities facilitate the joint dialogue with business on regulatory issues of cross-border online trading. Alibaba is ready to take an active part in it,” said Zawadzki, who was not present at the meeting. He noted that for many Russians, online retail is “the main and sometimes the only way to buy goods” at an affordable price, so when making decisions it is necessary “first of all, take into account the interests of Russian consumers”.
Fedorov with representatives of foreign Internet sites do not agree. “Transactions, which are conducted by the buyers are first directly through AliExpress, and then the site pays sellers. So AliExpress can itself become the regulator,” — said the head of the AKITA. Fedorov insists: AliExpress has a “unique conditions” in Russia, and this fact confirms, in his opinion, the proportion of 30%, which is the Chinese Playground on the Russian market.