Russia targets cross-border online shoppers with new duty rules

Reuters News
Posted: Dec 24, 2013 5:17 AM

MOSCOW (Reuters) - Russia plans to start charging duty on purchases worth more than 150 euros ($210) from foreign online stores, lowering the threshold from 1,000 euros and potentially slowing the fast-growing market while benefiting domestic online retailers.

The new threshold, proposed by the finance ministry this week, is still higher than the average transaction made by Russian shoppers in foreign online stores, estimated at no more than 100 euros by industry association AKIT.

The volume of Russians' purchases in foreign online stores may reach up to 120 billion roubles ($3.67 billion) this year, a 100 percent increase over 2012, according to AKIT - the Association of Internet Trade Companies.

The proposal would bring regulation in line with European standards. Russia currently has the world's highest threshold, and the rule is applied to individual shoppers only.

"Although we do not expect a material decline in the number of cross-border (orders) as customers may split their orders, the proposed threshold may lead to a slowdown in growth rates of the number of foreign transactions," Bank of America-Merrill Lynch analysts said in a note.

This may benefit Russian e-commerce platforms, such as Ozon and Yandex, the Bank of America-Merrill Lynch analysts said.

Logistics has been a major hurdle for expansion in Russia by foreign e-commerce firms such as Amazon and eBay.

The Russian e-commerce market is dominated by local players, including Ozon and KupiVIP, which have invested in their own logistics chain to reach out to customers in far-flung regions of the world's largest country by territory.

(Reporting by Maria Kiselyova and Maya Nikolayeva; Editing by Dale Hudson)