Shopping on Amazon or eBay is set to become more expensive for Ukrainians: the government has backed an initiative to decrease the value of goods that can be imported from abroad without taxes.
And not surprisingly, the public has reacted negatively.
Initially, the idea came from the Association of IT enterprises of Ukraine (APITU), which claimed the move would reduce the volume of shady imports to the country and increase tax revenues to the state budget.
Currently, Ukrainian customs regulations allow Ukrainians to receive, without paying value added tax, packages with goods not exceeding a total value of 150 euros. Beside this, individuals may bring from abroad items for personal use worth up to 500 euros free of tax.
According to the APITU, many people see the tax relief as an opportunity for business, ordering goods from foreign online stores and reselling them at a profit in Ukraine. Goods imported under this scheme circumvent taxes that domestic companies have to pay.
As the general director of APITU Yuri Peroganych told the Kyiv Post, 70 percent of the goods sold in Ukrainian online shops, especially electronics, fall into this price range.
The APITU proposed to lower the tax-exemption limit to 22 euros – a sum similar to the European Union’s tax limit on low-value gifts and consignments.
“The idea is to tackle illegal commerce, and increase revenues to the state budget,” said Peroganych.
Both the Finance Ministry and the State Fiscal Services expressed support for the initiative, media reported. Although it will take time for the draft bill to be prepared, public debate over it has already flared up.
Vladislav Chechotkin, the founder of Rozetka.ua, the most popular internet retailer in Ukraine, wrote on his Facebook page that the idea is being lobbied for by a group of importers who want to destroy competition and monopolize the market. He said the measure will lead to a rise in smuggling.
If the initiative is approved in parliament, it will mainly affect individuals who shop cross-border and companies that provide forwarding services, said Irina Kholod, the CEO of e-commerce consulting company Ukrainian E-commerce Expert.
“Considering that 22 euros isn’t that large a price for Western online retailers, the number of packages requiring customs clearance will grow. If we’re talking about European integration and the European tax exemption limit, all customs procedures must be brought into line with European standards too,” Kholod told the Kyiv Post. “Today the procedure of customs clearance in Ukraine is anything but simple.”
Internet retailing is viewed as a highly promising area in Ukraine. According to Ecommerce Europe, an association of European e-commerce companies, there are 3.7 million online shoppers in Ukraine.
Belarus lowered its tax exemption limit from to 200 euros to 22 euros this year, saying shopping in foreign online stores harmed the national economy by moving money out of the country.
