July 1997

by Derek Nowek

American goods destined for the Russian market are subject to numerous import taxes and fees payable to Russian Customs before they can be released to the importer. The main types of import payments include customs duty, value added tax (VAT), excise tax, and customs clearance fees. Which of these charges are actually levied depends in each case on the type of goods imported, whether they are intended for resale or for the importer's own use, the final destination of the goods (the domestic market or a free economic zone), and the legal status of the importer.

Main Types of Customs Charges

Customs Duty. Most goods imported into Russia are subject to a wide range of customs duties. The duty rate ranges from zero to 30 percent for most goods, but can go up to 100 percent for nearly pure alcohol. This rate can be calculated as either a percentage of the customs value of goods or on the basis of the quantity of goods, reported in ecu (European Currency Units) per item.

Customs value is the principal method used by Russian Customs to determine the value of a shipment. The customs value includes the stated price of the particular goods plus any applicable shipping and handling fees included in the price of the shipment (calculated as CIF--cost, insurance, freight). The importer must determine the customs value of the imported commodity. Customs value is used as a starting point for calculating customs duties, excise taxes, VAT, clearance fees, and any other levies that may apply.

Excise Tax. This tax is levied on most imported luxury goods, such as cars, jewelry, alcoholic beverages, and tobacco products. The excise rate can range from 10 percent for passenger cars to 400 percent for alcoholic beverages. When applicable, this tax can be expressed--at the discretion of Russian Customs--as a percentage of the customs value of the imported goods or a specific rate on the basis of the quantity of goods in ecu, whichever is higher.

Customs Clearance Fees. Every importer must also pay a miscellaneous customs clearancefee equal to 0.1 percent of the customs value of the goods, payable in rubles, and an additional tax of 0.05 percent of the customs value payable in foreign currency (see "Payment Procedures" for details).

Value Added Tax. VAT is applied to nearly all goods imported into Russia. The current rate is 20 percent. For certain food items, agricultural goods, and medicines, the effective rate is 10 percent. VAT is calculated on the total value of the goods, including customs duty, clearance fees, and excise tax, where applicable--in other words, after all other charges have been added to the customs value of the shipment.

Payment Procedures
Customs duties, taxes levied on goods, and clearance fees charged for customs processing are paid before or during customs clearance of goods. Payment(s) may be forwarded in advance by bank transfer to the deposit account of the corresponding customs office or paid in cash at the customs office responsible for clearance. Cash payments are restricted to 2 million rubles. Except for the 0.05 percent customs clearance fee which must be paid in hard currency, custom charges are paid in rubles or in hard currency at the option of the importer.

Importers of excisable goods are required to purchase an excise stamp. Part of the customs charges are paid at the time of purchase. The outstanding balance is then secured with a bank guarantee or by depositing the balance due. The balance must be paid prior to the arrival of the goods at their point of entry into the country. Excisable goods will only be released after the importer presents a receipt of payment.

Customs Exemptions and Partial Tax Relief
A limited number of goods imported into Russia may qualify for partial or complete exemption from customs duties, VAT, and excise taxes. For example, goods imported into Russia as capital assets of Russian companies may be exempt from customs duties and VAT, provided they are added to the charter capital of the company within a strict time limit set forth in its foundation documents.

Full exemptions may also be granted for items imported into Russia temporarily for display at trade shows and exhibitions. Representatives of foreign firms, banks, and other organizations accredited in Russia may also qualify for such exemptions for a restricted number of products brought in for internal use and not for resale. As a rule, the term of full exemptions does not exceed one year.

Other temporarily imported goods may qualify for partial exemptions, as well. For goods that are partially exempt, Russian Customs will assess duties of 3 percent per month of the total duties which would be paid if the goods were released for free circulation. The amounts paid under partial exemptions are not refundable when the goods are reexported, which usually must occur within two years of importation. Complete or partial exemptions from customs duties and taxes must be authorized by the local customs authorities. For more information on Russian customs duties, visit BISNIS Online at www.mac.doc.gov/bisnis/country/ruship.html.

Derek Nowek covers transportation for BISNIS.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)