The Russian government is strengthening the work of establishing a full traceability system for the supply chain of imported products. The core goal is to stop tariff evasion and improve the competitive environment in the Russian market. On October 21st Mishustin, the Prime Minister, set out this direction at a strategy meeting. The new control system aims to determine the actual cost and legality of imported goods. This will not only increase budget revenues, but also create a level playing field in the market.
Solve the problem
Russia-kazakhstan border to become key control area. Over the past few months there have been convoys of vehicles stretching for kilometres. Enhanced inspections have become an important tool in combating grey imports: Russian customs services verify almost all suspicious shipments by means of post-clearance spot checks. Experts say declared goods often do not match the actual goods, leading to the need to amend the tax and make up the difference. Mishustin stressed that the correct declaration is not only related to the budget revenue, but also to protect the rights and interests of honest operators. “It is important to create a level playing field for all market participants, along the entire chain: from verifying the legality of imports of goods, setting reasonable import prices, to ensuring transparency of all financial operations in any form in Russia.” The Russian government is working to harmonise customs rules with risk management tools and other regulatory mechanisms within the Eurasian Economic Union framework. This would create a more predictable and fairer environment for all market participants and minimise the scope for wrongdoing. Mishustin said existing“Minimum controls” provided an opportunity for tax evasion on imports, resulting in a large number of missed payments being discovered each year. Therefore, the implementation of the new reporting mechanism has become the core link of the government’s strategy to balance the competitive environment of enterprises.
Market sources confirm that the current measures have in fact changed the systematic approach to customs declarations: strict inspection on the one hand leads to slow clearance of goods and on the other forces enterprises to regularize declarations. Goods imported in one category but sold at a lower tariff in another must be covered by the tariff difference. The new approach aims to create transparent supply systems, reduce dishonest behaviour and improve market financial discipline. In addition, the relevant measures will optimize the logistics process. Additional checkpoints are being set up at the Russian-kazakh border and other key crossings to help detect violations at an early stage. The implementation of the new reporting method could improve the reliability of trade volume data and reduce the number of illegal products on the market.
Digitalization, e-commerce platform and transparency improvement
The construction of a full traceability system is closely related to the use of modern technologies such as artificial intelligence and big data analysis. Pilot project of production traceability is being implemented in Russia. Once the pilot is completed, similar technology could be adapted to customs needs to automate supply chain controls and improve import transparency. At the same time, the Russian government is tightening controls on the sale of imported goods on digital platforms. For example, the customs department requires details of goods on e-commerce platforms to be marked with information such as origin, customs declaration number and import and export commodity code. More than 8,000 pieces of unlicensed imported equipment have been found this year, and complaints from businesses and consumers about the sale of illegally imported goods have also increased. Experts stressed that digitization and automation measures could help to create a transparent market environment for legitimate imports and in the long run reduce administrative costs for states and honest operators. In addition, greater transparency boosts consumer confidence in the legitimacy of goods purchased and protects operators from Unfair competition.
Current work is also aimed at increasing customs revenue. Previously, the Russian government had relaxed controls on imports through the Eurasian economic union countries to avoid shortages in the domestic market; now, the supply situation has stabilized with the addition of new Asian suppliers, strengthening controls, transparency in the supply chain and the economics of related measures are priorities. A series of measures, including enhanced customs control, digitization and e-commerce transparency, are aimed at creating a level playing field for all market participants, increasing budget revenues and reducing grey imports.
Strengthening import control through the Eurasian Economic Union countries
The Eurasian Economic Union’s unified customs area is complicated by the fact that it is not regulated when crossing internal borders, creating an opportunity for grey imports.
Russia’s customs service has been instructed to step up its crackdown on“Grey” imports into the Eurasian economic union. Finance Minister Sergei Siluanov announced at a customs meeting that this year’s increase in budget revenues through tariffs would require additional administrative and regulatory efficiency measures. The controls focus on imports of cars, electronics and industrial equipment, which are frequently subject to violations such as low import prices and evasion of indirect taxes, mainly vat. Imports, which will be subject to higher tariffs, were down 6-7 per cent year on year at the start of the year, according to government officials. In addition, oil tariff revenues are deducted from the total revenue managed by the customs service, making it all the more urgent to strengthen the control of imports through the Eurasian Economic Union countries. These measures will ensure increased budgetary revenues to cover the loss of tax revenues.
This article appears in the global times’ “Russia in perspective” special issue. The content is provided by Rossiyskaya Gazeta.