Chapter 8 Taxation of international e-trade: Russian particularities

Alexander Pogorletskiy and Sergei Sutyrin*1 Abstract

Tax rates on e-commerce in Russia should remain moderate, given the small size of its digital trade operations (so the rise in tax revenues from higher rates would be small) and substantial growth prospects (so future tax revenues from a developed sector could be quite large). The Russian Federation’s (Russia’s) taxation of e-commerce activities presents two important challenges. First, consumer goods purchased directly from foreign online sellers enjoy significant tax advantages compared to imports purchased in Russian retail outlets, undermining the profitability of Russian importers and reducing tax revenues. Second, the value-added tax (VAT) levied on foreign exporters of electronic services creates uncertainty because the legal definition of electronic services is unclear and impedes the operations of multinational companies in Russia because VAT is taxed on intra-firm imports of services. Russian authorities are establishing effective automated systems for collecting taxes and customs duties on cross-border e-commerce, calculating VAT compensation to exporters and accounting for receipts from online stores. These systems will help to prevent abuse of the tax system, as well as reduce the cost of compliance by firms.

* The contents of this chapter are the sole responsibility of the authors and are not meant to represent the position or opinions of the WTO or its members. 180 CHAPTER 8

Introduction The basic idea developed by the authors is that the tax regulation Issues of tax regulation on of international e-trade should be international e-trade transactions implemented very cautiously. Cross- became relevant immediately border e-commerce transactions in following the emergence of the value terms are still very modest virtual component of international compared to traditional trade in goods trade at the turn of the 21st century. and services. At the same time, they Over the past 20 years, the most have a clear potential for impressive obvious problems in this area have growth. Thus, a large portion of the been solved, for example, the revenues from taxing international remoteness of transactions and the e-trade incomes and operations in the related complexity of determining the short term could be foregone in the jurisdiction of the sales revenues interest of supporting the long-run formation, the qualification of sales growth of the sector through low/ revenues in the context of existing moderate taxation. We also argue double taxation agreements, and the that expansion of international application of indirect taxes, especially e-commerce in its turn would facilitate VAT and sales taxes, to e-commerce overall trade and gross domestic transactions. Modern information product (GDP) growth (see also technologies and the digitalization of Sokolovska, 2016). the economy contribute to the improvement of tax administration Particularities of foreign methods and the tax control of trade and its virtual electronic foreign trade transactions, component development including those operating on the basis in Russia of intergovernmental cooperation. At the same time, the taxation of cross- Some of the necessary tools to border e-commerce transactions in encourage foreign trade are taxes national economies in the current and duties, which can also be used conditions of global economic to obtain the necessary resources for development is still beset by a number the targeted budget financing of state of challenges actively discussed by the programmes that support foreign academic community. economic operations. With the digitalization of the national economies This chapter analyses features and the entire system of international of the tax regulation of international economic relations, an increasing (cross-border) e-trade operations number of transactions take place in the Russian Federation (Russia). in a virtual form. This is also true for We note the particularities of foreign international trade, which firstly can trade and its virtual component be carried out in the field of export development in Russia, discuss and import of tangible goods and the intricacies of cross-border services based on new digital e-commerce transaction taxation technologies, and secondly gradually and consider the tax specifics of includes in its turnover an increasing international e-trade operations with amount of virtual digital content. digital content in Russia, as well Taxation should also adapt to such as tax administration issues. e-commerce operations by properly CHAPTER 8 181 regulating related transactions 2019). The rapid growth rate of the with tangible goods and digital cross-border e-commerce segment is items, including e-services and obviously an interesting issue for tax virtual content. regulation in Russia, especially in the context of the stimulating role of Both e-trade as a whole and its taxation (OECD, 2018; Sperling, cross-border component are small Orszag and Gale, 2001). That is, in comparison with retail sales in the maintaining moderate tax rates on domestic market or with the foreign e-trade (rather than increasing tax trade in goods and services (Table 1). rates) would support its continued, Nevertheless, while e-commerce is rapid growth. And given economies of only 4 per cent of Russia’s retail trade scale in this market, encouraging the turnover, cross-border e-trade is growth of e-trade could eventually already 27 per cent of the total Russian result in large, profitable firms that internet trade market (Central Bank provide substantial extra tax revenues. of the Russian Federation, 2018, pp. 52-53). Moreover, cross-border The small size of e-commerce in Russia e-commerce sales have increased is roughly in line with international rapidly (by 20 per cent in 2018), as trends. Currently, less than 1 per cent have international parcels related to the of the value of world exports and delivery of tangible goods ordered in imports are digital products, and their foreign internet stores to Russian share has in fact decreased: in the early buyers (25 per cent in 2018) (IEP, 2000s, it exceeded 2 per cent (WTO,

Table 1: Key characteristics of cross-border e-trade in Russia

2019 2017 2018 (estimated)

Sales (in billions, RUB) 262 316 360–380

Sales (in billions, US$) 4.5 5.0 –

Share in total e-commerce sales 25% 26% 27% in Russia

Share in total retail sales in Russia 3.5% 4% –

Share in total export and import goods 0.60% 0.61% – and services trade of Russia

Share in GDP 0.35% 0.44% –

Volume of international parcels of Russian 264 330 – Post (in millions) The main country of departure of international parcels to Russian recipients China (91%) China (94%) – (share of all countries) Average declared value of an international parcel to the Russian recipient (RUB, with – 564 (7.6) – equivalent in (EUR))

Source: The Gaidar Institute for Economic Policy; Bank of Russia, available at: http://www.cbr.ru/ collection/collection/file/5913/bulletin_18-03.pdf. 182 CHAPTER 8

2018, p. 93). E-trade accounts for a exchange using the internet, then such relatively small proportion of the total operations can be characterized as amount of retail operations. The share electronic commerce (e-commerce or of e-commerce in global retail sales e-trade). Thus, any purchase of both is just over 10 per cent (Amasty, material goods or services and virtual 2018). Thus, for all its potential digital content, if carried out using a attractiveness, e-commerce – computer or a mobile device especially cross-border – is not yet a connected to the internet, can be significant component in the business- characterized as e-commerce in a to-consumer (B2C) segment.2 At the broad sense of the word. In view of the same time, it is necessary to consider rapid spread of relevant technologies, its high growth potential; the growth many worldwide trade operations – as of sales in global e-commerce interpreted by UNCITRAL in 1996 – transactions in 2018 was 21.6 are based on electronic channels of per cent (Merehead, 2018), data exchange between the seller and significantly outstripping both the the buyer. Major components of the growth of the world economy (3.1 process include the search for goods, per cent in 2018) and the growth of services and digital products; their global exports in goods and services order; order confirmation by the seller; (4.3 per cent in 2018).3 non-cash payment by the customer of the purchase using electronic bank All of the above suggests that, at payments; and issuance of an present, due to the limited importance electronic cash receipt to inform the of e-commerce, including cross-border, buyer of the delivery of the paid goods. the fiscal effect of its taxation on national budgets (including the Russian From the point of view of our one) is insignificant. Thus, the tax discussion, e-commerce transactions regulation of cross-border e-commerce should be divided into two should not focus on increasing the components: collection of direct and indirect taxes, but rather should seek to support the 1. Remote purchase of material goods rapid growth of e-commerce activities. through virtual stores or platforms, where the delivery of goods is Features of taxation of carried out through the sales cross-border e-commerce channels mechanically with transactions electronic payment or cash to the courier (representative of the The United Nations Commission on seller); and International Trade Law (UNCITRAL) Model Law on Electronic Commerce 2. Remote purchase of digital content provides for the inclusion in the (including electronic services) and relevant transactions of any sales its order, payment and delivery, carried out through an electronic data which is carried out virtually using interchange (UN, 1999). Accordingly, modern information and if the order, payment or delivery of communications technologies. products (tangible goods, virtual content and services) is carried out The problems in the first case are through the channels of information related to the tax regulation and control CHAPTER 8 183 of sellers’ activities, but the movement (VAT/sales tax, customs duties and of goods can be tracked and subject excise duties) are involved as the main to indirect taxes. In the second case, tools of regulatory impact on the the digitalization of trade complicates movement of tangible goods, external controls of the receipt of electronic services and digital content. payments by sellers, as well as the This is not typical for international tax fact of delivery of virtual content law, the object of which is usually only to consumers. direct taxes. At the same time, VAT (sales tax) payers also can have Figure 1 presents the main tax cross-border fiscal consequences, implications for cross-border which are particularly unusual in e-commerce transactions in goods international tax law. Indeed, the and digital content (including already established world practice for e-services). As is evident from the remote sales of electronic services and scheme, cross-border e-trade may digital products requires the seller from affect revenues from the income tax country A to register as a VAT payer in (corporate profit tax), the VAT/sales destination country B. Thus, the seller tax, export and import customs from country A will pay VAT on its duties, and excise taxes. intangible products imported by the buyer from country B to the budget of From the international tax law the destination country B. Thus, in perspective, cross-border operations addition to the two generally accepted of e-commerce are notable for the principles of international taxation, the fact that indirect taxes and duties residence principle and source

Figure 1: Tax consequences of cross-border e-commerce transactions

VAT refund GOODS on export Import duties physical delivery VAT/sales taxes by transport (post) Excise duties paid by the buyer

Export duties, export excises paid by the seller Buyer Seller Remote order and payment in virtual form (Consumer) Country A Country B

Tax on income from sales of goods, services and digital products ELECTRONIC SERVICES AND DIGITAL SERVICES Import VAT remote delivery (Google tax) using electronic paid by seller communication channels VAT refund on export 184 CHAPTER 8

principle, the sphere of international Furthermore, after the goods cross the tax regulation has gradually included a border of the buyer’s jurisdiction, the third principle – the destination one. obligation to pay the import duty for This principle was formerly applied remote deliveries (without the for VAT imposition in international participation of resellers in the country transactions with tangible goods. of destination) is assigned to the buyer. Previously VAT was used only as an In certain instances, especially in incoming tax for importers of wholesale deliveries for resale, the commodities to equalize domestic buyer will also have to pay VAT prices in comparison with foreign (sales tax) and excise tax (for ones. Now VAT is applicable both excisable goods). for commodities and services plus virtual context in e-trade. When providing remote cross-border services, the seller (exporter) in its In the process of cross-border jurisdiction is exempt from VAT but e-commerce transactions, the will have to pay VAT (“Google tax”4) movement of tangible goods between in the country of the services’ final countries can be tracked and the destination. The delivery of digital payment of the relevant indirect taxes content largely resembles the export and duties can be controlled. At the of electronic services. In addition, same time, the country of the buyer of course, the seller pays tax on the location does not claim to tax the income from the cross-border sales income of the remote seller – a of goods, services and digital products resident of a foreign jurisdiction. in its own jurisdiction. However, the jurisdiction in which the goods are finally consumed may The issues concerning taxation require remote retail exporters to pay in the cross-border supply of digital VAT as well as excise duties, which are content have been resolved by based on the customs value of the the Organisation for Economic goods in their budget. This is done to Co-operation and Development equalize the conditions of competition. (OECD). Since 1998, the OECD In the case of the cross-border supply has defined criteria for the of digital content, which is closely classification of the place of origin related to intellectual property rights, of income from a sale transaction as well as taking into account the rapid and the interpretation of existing tax digitalization of services, it is also agreements, taking into account difficult to control the fact of delivery e-commerce transactions with digital of such virtual products (crossing the products. Accordingly, the main border of the destination country). problems in the area of the taxation of That clearly complicates taxation. cross-border e-commerce transactions currently relate to the movement of In the case of remote order and tangible goods ordered through virtual payment via electronic electronic channels of data exchange communication channels, the seller, as between sellers and buyers, as well as an exporter, is reimbursed for the value the application of destination-based of VAT upon delivery of tangible goods. VAT to the remote seller upon delivery Meanwhile, the seller will have to pay of electronic services and digital export duties (if any) and excise taxes. products. Now, let us consider the CHAPTER 8 185 relevant features of the taxation 3. Transactions in which a Russian of cross-border e-commerce personal buyer (consumer) receives transactions in Russia. a parcel of goods ordered in a foreign online store from a foreign Tax consequences for retail seller – B2C import transactions: international e-commerce operations with tangible  Russian import duties according to goods in Russia the rates shown in Table 2; for postal items weighing less than 31 The main taxes applied in the field of kg and a declared customs value of cross-border electronic trade in goods less than EUR 500 during one in Russia are as follows: calendar month, import customs duties in Russia are not applied 1. Transactions in which a Russian (starting in 2020, the cost limit remote retail seller delivers goods becomes EUR 200 while removing purchased in an online store to a restrictions on time and number of foreign buyer (consumer) – B2C received parcels). export transactions: 4. Transactions in which a Russian  Russian profit tax of 20 per cent wholesale buyer purchases goods of the seller’s income from sales online from a foreign wholesaler for of goods. resale – B2B import transaction:

2. Transactions in which a Russian  Russian import duties according to remote wholesaler delivers goods the rates shown in Table 2; and purchased in an online store to a foreign wholesale buyer (reseller)  Russian import VAT (rates of 10 or – B2B export transactions: 20 per cent) and excise taxes for excisable products.  Russian profit tax of 20 per cent of the seller’s income from sales of One of the problems of e-commerce goods; and development in Russia is the tax competitive advantages of foreign  Russian export duties (rates 0–80 remote sellers of goods sold through per cent (Garant, n.d.)) apply internet platforms. Indeed, differences mostly for raw materials and in taxation in cross-border and mineral oils and export excises domestic online sales often put paid by the seller. Russian online retailers in a less advantageous position. For instance, The Russian remote wholesalers Russia currently has a very high share that export excisable products of cross-border e-commerce (such as tobacco, alcohol, mineral transactions with China: more than oils, etc.) of their own production 90 per cent of foreign orders of are exempt from the payment of Russian retail customers come via excise taxes. In addition, the parcels from Chinese online stores wholesaler receives a VAT refund (Lenta, 2019). Given the low value of on export (VAT rates in Russia are most purchases (usually less than EUR 0, 10 or 20 per cent). 200), customs duties are not charged 186 CHAPTER 8

when sending goods to Russia by mail. VAT, and from the reduction in tax Import VAT (standard rate is 20 per revenues from the incomes of large cent) is also not charged to retail importing companies and individuals buyers in the case of purchase for employed in the import-oriented sector personal consumption. Accordingly, of the national economy. the final price of foreign goods for the Russian buyer is only the cost of their In contrast, if the Russian online production plus a small profit for the retailer supplies goods to China, manufacturer and distributor of the then almost 70 per cent is added goods, as well as the constantly to the original price of goods when decreasing cost of postal delivery. crossing the Chinese border – import After crossing the Russian border, VAT (17 per cent), consumption tax the price of Chinese goods will not (its rate varies between 1–56 per cent change in any way in comparison depending on the type of commodity with the cost of the internet order products, on average about 42 per (moreover, a remote exporter/Chinese cent) and customs duty (about 10 seller can even return VAT, the amount per cent). Considering the previously of which in China is 17 per cent). withheld and included in the customs The price of goods imported from value Russian VAT of 20 per cent China by a legal Russian wholesale (which is impossible to compensate importer is at least 25 per cent higher for when exporting through electronic than the price of goods purchased from trading platforms in retail format), the the Chinese online store (the import price of Russian goods intended for customs duty equals 5–20 per cent the Chinese market is almost twice plus 20 per cent for VAT, which can the price of those for the domestic be offset by the compensation of Russian market. As a rule, these Chinese export VAT). In other words, products cannot compete with e-commerce makes direct retail similar goods made in China. purchases from Chinese manufacturers with the delivery of goods to the final Thus, the task of the tax regulation consumer by mail more lucrative. of e-commerce operations in Russia At the same time, the Russian budget with tangible goods is to create equal suffers both from the loss of potential competitive conditions for domestic import customs duties and import and foreign internet sellers by levelling

Table 2: Rates of customs duties on imports delivered by post in Russia in 2019

Standard rate customs Customs duty rate for Customs value (RUB) duty (RUB) electronic declaration (RUB) Less than 200,000 500 375 200,000.01–450,000 1,000 750 450,000.01–1,200,000 2,000 1,500 1,200,000.01–2,500,000 5,500 4,125 2,500,000.01–5,000,000 7,500 5,625 5,000,000.01–10,000,000 20,000 15,000 More than 10,000,000.01 30,000 22,500

Source: https://www.glavbukh.ru/art/97949-tamojennyy-sbor-import-2019. CHAPTER 8 187 the low tax burden of remote retailers and excise rates between the from countries that actively stimulate EAEU countries could stimulate their exports. At the same time, cross-border e-commerce but increasing the fiscal burden on significantly distort tax revenues for imports through online stores should the budgets of the member states, be a goal approached with caution, especially Russia. as higher prices due to higher taxes would have a negative impact For example, the excise duty on beer in on consumers, reducing their Russia is twice the duty in the Republic disposable income. of Belarus, and almost two and a half times the Most Russian purchases “Two main duty in Kazakhstan in foreign online stores directions should (Table 3). In addition, are of relatively low-cost be distinguished there is a noticeable goods (the average in contemporary difference in the declared value of standard VAT rate, an international parcel to cross-border which in Russia and the Russian recipient in e-commerce Belarus is 20 per cent, 2018 was less than EUR activity in Russia: and in Kazakhstan 8 – see Table 1). Since transactions in only 12 per cent. consumers are turning tangible goods Accordingly, beer to foreign online stores ordered in Belarusian or to save money, any and transactions (especially) Kazakhstani attempt to tighten tax in digital goods online stores delivered and customs control and services.” to the Russian consumer over imports in the field will, due to differences of e-commerce instead in national tax rates, be of increasing tax collections and significantly cheaper compared to the protecting the domestic market from retail price in Russia. foreign competitors could lead to opposite results. In contrast to that, a The solution to this problem lies in the large volume of mail at low customs tax harmonisation (coordination) tariffs will bring additional revenues to process in the EAEU. This process has the budget. Therefore, it is necessary already begun: from 1 January 2019 in to increase the fiscal burden on the EAEU countries, a single customs consumers and operators of e-trade tariff for imported parcels has been very carefully, and in some cases this introduced (Pro2019god, 2019), and should be completely avoided, taking the harmonisation of VAT and excise advantage of the economies of duties is the next step. scale from the growth of trade in goods through internet platforms Tax consequences for with low taxes. international e-commerce operations with electronic Another important problem with the services and digital content participation of Russia in the cross- in Russia border e-trade in goods relates to the framework of the Eurasian Economic The main types of taxes and their rates Union (EAEU). The difference in VAT in Russia in the implementation of 188 CHAPTER 8

Table 3: Differences in level of excise duties on beer in Russia, Belarus and Kazakhstan (2018)

Russia Belarus Kazakhstan Excise duty per 1 litre of beer with a volume RUB 21 BYN 0.35 KZT 48 fraction of ethyl alcohol up to 7% (RUB 10.9) (RUB 8.6)

Sources: http://znaybiz.ru/licenzirovanie/otdelnye-vidy-deatelnosti/akcizy/na-pivo.html#i-2; https://nalogikz. kz/taxcode/2018/51.html; https://www.gb.by/novosti/nalogi/kakie-stavki-aktsizov-deistvuyut-segodny.

cross-border e-commerce with Currently, one of the serious tax e-services and digital products are problems in Russia for cross-border as follows: e-commerce in terms of trade in digital content is VAT levied on foreign 1. Transactions in which a Russian exporters of electronic services and remote seller delivers electronic products, the so-called “Google tax”. services and digital products to a This tax has a clearly expressed fiscal foreign buyer (consumer), both orientation: after the introduction of the individual and corporate – B2C “Law of Google tax” in 2018, foreign and B2B export transactions: internet companies in Russia paid RUB 12 billion VAT on sales of electronic  Russian profit tax of 20 per cent content (digital products and services) for the seller’s income from sales to individuals (B2C segment), and the of e-services and intangible amount of VAT paid to the Russian products; and budget after the appearance of the Law (1 January 2017) increased in 2018 by  VAT refund on export operations 28 per cent.5 “Electronic services” in (excluding e-services and digital accordance with Russian tax legislation products initially exempt from VAT include the transfer of rights to use under Article 149 of the Russian programmes, advertising, website Tax Code: medical intangible support, storage and the processing of products and services, educational information. At the same time, the and financial e-services, licences definition of electronic services in the and exclusive rights for software, Russian legal field is blurred; many data bases etc.). documents, including licences and technical contracts, come under the 2. Transactions in which a Russian law. Therefore, due to the current buyer (consumer), both individual uncertainty, large parts of Russian and corporate, receives e-services subsidiaries suspended payments for or digital products ordered online services to foreigners provided via from a foreign seller – B2C and electronic communication channels. B2C import transactions: From 1 January 2019, the provisions  VAT at the appropriate rates of 0, of the Tax Code came into force, 10 or 20 per cent imposed on the according to which foreign companies foreign remote seller that has to that remotely supply electronic be registered as a VAT payer (using services to Russia must pay VAT when corresponding tax accounting) in working with corporate customers the Russian jurisdiction. (B2B segment). The problem is that CHAPTER 8 189 even transactions related to the effective automated systems for provision of cross-border electronic collecting taxes and customs duties in services within the same corporate terms of cross-border e-commerce structure fall under the Russian incomes and operations. In Russia, “Google tax”. In particular, the German there are digital platforms on which the company Siemens bears additional accounting of VAT revenues, the control tax costs when working in the Russian of the movement of excisable goods market, a point emphasized by its and the payment of customs duties are representatives. In addition, many built. In addition, special electronic foreign companies delivering their algorithms are used to identify possible digital products and services in Russia abuses by companies and individuals (including Cisco, IBM, Qiwi, Opera engaged in foreign economic activity. Software, Siemens and NokiaSolutions) via the mode of remote access from There are also mechanisms for VAT abroad had to register with the Federal compensation to exporters and even Tax Service of Russia (FTS) to pay accounting for receipts in online the “Google tax” (Vesti Ekonomika, stores. This prevents abuses in 2019). Under the circumstances, e-trade, making the sale of virtual transnational companies will be content similar in its tax transparency reluctant to establish subsidiaries in to the sale of tangible goods. The Russia, with a resulting loss in future lies in the exchange of data investment and technology transfer. between national specialized VAT and Presumably the imposition of VAT on excise control systems, as well as their B2B services will reduce Russian integration, especially within regional firms’ access to new technologies. trade and economic communities such as the EAEU. This can be of serious In total, approximately 1,500 foreign help to the process of tax harmonisation companies that are suppliers of (coordination), contributing to the electronic services and products in convergence of tax base calculation Russia were registered with the FTS methods and the equalization of tax as “Google tax” payers by the end of rates and tax benefits. spring 2018. The first 200 of these began paying the “Google tax” back in In modern Russia, the regulator, which 2017 for selling online games, music, often used rather strict methods of tax e-books and other digital content as administration and control during the B2C transactions. In the first year of the initial stage of the national tax system introduction of the “Google tax” (2017), formation (in the 1990s), including the the FTS managed to collect RUB 9.4 demonstrative power to affect taxpayers, billion in VAT, and it collected RUB 12 has now moved to cooperative billion in 2018 (Finmarket, 2019). methods of working with business and individuals. The FTS currently Tax administration issues positions itself as a service structure in Russia related to cross- that convinces businesses and border e-commerce individuals of the importance of the reputation of an honest taxpayer. The The FTS and the Federal Customs activities of the FTS are supported by Service of Russia have already created advanced digital technologies, which and are successfully testing fairly on the one hand facilitate the payment 190 CHAPTER 8

of taxes, including in the field of Endnotes e-commerce, and on the other hand highlight the possibility of the rapid 1 The chapter was funded by RFBR and identification of unfair taxpayers. CASS according to the research project No. 19-51-93009. Conclusion 2 According to Statista’s preliminary data for Based on the above, we can draw 2019, the value of the global business to the following conclusions: business (B2B) e-commerce market (US$ 12.2 trillion) is six times more that of  The rather modest share of the B2C market (Statista, 2019). e-commerce transactions in the total amount of foreign trade operations in 3 The World Bank (https://data.worldbank.org/ Russia does not make e-trade fiscally indicator). attractive for the Russian budget. Moreover, the high positive dynamics 4 The law of the Russian Federation No. of cross-border e-trade development 244-FZ dated 3 July 2016 (Consultant, and its significant share of internet 2016) obliged from 1 January 2017 that trade transactions in Russia imply the VAT should be paid by foreign companies need for caution in imposing providing electronic services and selling substantial taxes on the sector. digital content to buyers in Russia. Since the list of electronic services subject to  Two main directions should be VAT includes internet search engines, distinguished in contemporary including Google, this law in Russia cross-border e-commerce activity was unofficially named “the law of in Russia: transactions in tangible Google tax”. goods and transactions in digital goods and services. In each case, tax 5 FTS: “Tax on Google” in 2018 brought in implications will vary – customs duties RUB 12 billion to the budget. Rambler, and excise duties are more important Finances, 8 February 2019, available at: for visible goods, while the VAT on https://finance.rambler.ru/money/41679127- imports is more important for fns-nalog-na-google-v-2018-godu-prines- e-services and digital products. byudzhetu-12-mlrd-rubley/. This is also relevant to the global trends in e-trade. References

 Russia has the necessary practical Amasty (2018), Global e-commerce trends experience in the taxation of cross- and statistics 2017-2018, Amasty blog. border e-commerce transactions https://amasty.com/blog/global-e-commerce- (for example, in terms of VAT trends-and-statistics-2017- collection from international 2018/#GLOBAL_E-commerce_STATISTICS_ e-trade transactions or via the OF_2017 concept of the friendly interaction of tax authorities, businesses and Central Bank of the Russian Federation citizens, which is the basis of national (2018), “What do trends say”, tax policy), and this experience is a Macroeconomics and Markets 3(23). http:// useful asset that can be utilized by www.cbr.ru/collection/collection/file/5913/ other countries. bulletin_18-03.pdf CHAPTER 8 191

Consultant (2016), Federal law: “On tamozhennye-poshliny-s-1-yanvarya-2019- amendments to parts one and two of the Tax goda/ code of the Russian Federation”, 3 July 2016, N 244-FZ (latest version). http://www. Sokolovska, O. V. (2016), “Trade freedom consultant.ru/document/cons_doc_ and revenue from trade taxes: A cross- LAW_200490/ country analysis”, Vestnik of Saint-Petersburg University, Series 5, Economics 2: 52-67. Finmarket (2019), “In Russia, the number of ‘Google tax’ payers increased six times”. Sperling, G. B., Orszag, P. R. and Gale, W. http://www.finmarket.ru/news/4986979 G. (2001), Stimulating the Economy Through Tax Policy: Principles and Applications, The Gaidar Institute of Economic Policy (IEP) Brooking Institution. https://www.brookings. (2019), Report on Research Work on the edu/research/stimulating-the-economy- Topic: “Overview of the E-Commerce Market through-tax-policy-principles-and- State in the Russian Federation”, Moscow: IEP. applications/

Garant (n.d.), Export customs duty rates. Statista (2019), In-depth: B2B e-Commerce http://ivo.garant.ru/#/document/108095/ 2019. https://www.statista.com/study/44442/ paragraph/7094:0 statista-report-b2b-e-commerce/

Lenta (2019), Transboundary paralysis. United Nations (UN) (1999), UNCITRAL https://lenta.ru/articles/2019/03/25/it_ Model Law on Electronic Commerce with market/ Guide to Enactment 1996 with additional Article 5 bis as adopted in 1998, New York: Merehead (2018), Trends and Tendencies of UN. http://www.uncitral.org/pdf/english/texts/ E-commerce 2018. https://merehead.com/ru/ electcom/V1504118_Ebook.pdf blog/7-top-ecommerce-trends-2018/ Vesti Ekonomika (2019), FTS: in 2018 Organisation for Economic “Google tax” provides 12 billion rubles Co-operation and Development (OECD) to budget. (2018), Tax Policies for Inclusive Growth in a Changing World: OECD Report to G-20 World Trade Organization (WTO) (2018), Finance Ministers and Central Bank World Trade Report 2018: The Future of Governors, July 2018. http://www.oecd.org/ World Trade: How Digital Technologies Are g20/Tax-policies-for-inclusive-growth-in-a- Transforming Global Commerce, Geneva: changing-world-OECD.pdf WTO. https://www.wto.org/english/res_e/ publications_e/world_trade_report18_e.pdf Pro2019god (2019), Custom duties from 1 January 2019. https://pro2019god.ru/ 192 CHAPTER 8: COMMENTS

Comments

DÉSIRÉE M. VAN GORP*

The growth of e-trade in the past years discussed in Chapter 8, is an has done more than revolutionize the interesting case because the country’s way business is done around the budget suffers from tax losses globe. It eliminates distance-related reflected in the fact that despite the barriers to trade increase, while it may growing significance of e-trade as a also increase the digital divide between portion of overall international trade, technologically advanced and less the fiscal effect of its taxation on advanced countries with technological national budgets is insignificant. This deficiencies. At the same time, it may chapter suggests focusing on the serve as a tool for many developing stimulating role of taxes in international countries to further engage in trade rather than on increasing the international trade by entering the collection of taxes, whereby the online marketplace with a global emphasis on customs duties and increase in the number of internet excises is more important for visible users. Traditional tax systems need to goods, while for e-services and be reviewed because the taxation products, import VAT becomes more issues of e-trade are more complex important. This line of thinking may and demand new frameworks for fair be useful to consider for other taxation while at the same time allowing countries in their effort to make their enough room for innovation. Russia, as tax systems e-trade proof.

* The contents of this commentary are the sole responsibility of the author and are not meant to represent the position or opinions of the WTO or its members. CHAPTER 8: COMMENTS 193