State Lifts Duties: Foreigners Doubtful
29 November 1994
By Anne Barnard
The State Customs Committee has freed most foreign businesses from import duties on cars, furniture, office equipment and other goods intended for office use, but foreigners expressed doubts Monday that the measure would be observed at the border.
Companies, banks and organizations that are officially accredited in Russia may now import unlimited office-related goods duty free, provided they keep them for their own use and export them if and when their accreditation expires, said Antonina Yevstigneyeva, spokeswoman for the State Customs Committee.
The new rule is good news for many companies that have recently found themselves slapped with unexpected customs fees, said Karen Handelsman, an attorney in the Moscow office of Baker & McKenzie.
"It was a Catch-22," she said. "Either you leave the goods in storage while you argue with the customs officials, and accumulate storage fees, which are quite expensive, or you pay the tax, which in many cases, especially with cars, was quite a hefty sum."
Under previous rules, companies shipped in office goods duty free, but customs taxes kicked in if the goods were not re-exported after two years.
Recently, tax officials began levying a monthly tax on these "temporary" imports: 3 percent of the total value-added, excise and other taxes applicable to the goods, Handelsman said, adding that customs officials often demanded advance payment at the border.
The tax was "a surprise" and "unbudgeted" for many firms, and meant that if companies kept goods in Russia for two years they ended up paying 68 percent of import taxes anyway, she said.
Yevstigneyeva said the new rule, effective since Nov. 11, was introduced to accommodate the vast majority of firms, which come for more than two years.
But Handelsman said customs officials could still stop shipments at the border if the nature or quantity of the goods delivered aroused suspicion that they might be headed for the marketplace rather than the workplace.
"If you are importing something, the documents must be very clear so there is no room for customs officials to think you are going to sell it in a kiosk or somewhere," she said.
Customs officials at Sheremetevo-2 airport, for example, recently forced The New York Times to pay a 100 percent import tax on $400 worth of reporters' notebooks, according to company employees.
"They were regular, yellow-backed, cardboard reporter's notebooks, bought at a stationery store in Virginia," said Douglas Herbert, a researcher at the paper's Moscow bureau. "How innocuous can you get? It's not like we were bringing liquor in."
Customs officials told The Times the notebooks were doubly suspicious because they were shipped from the stationery store to the newspaper, not from a private individual to a specific Times correspondent, Herbert said.
After his experience, Herbert was pessimistic that the new customs committee measure would be observed by individual customs officers with the power to hold up needed shipments.
"If you told me this law was going to be faxed to every customs post and had to be hung up on the wall," he said, "then maybe I would say it might make a difference. Maybe."
Companies, banks and organizations that are officially accredited in Russia may now import unlimited office-related goods duty free, provided they keep them for their own use and export them if and when their accreditation expires, said Antonina Yevstigneyeva, spokeswoman for the State Customs Committee.
The new rule is good news for many companies that have recently found themselves slapped with unexpected customs fees, said Karen Handelsman, an attorney in the Moscow office of Baker & McKenzie.
"It was a Catch-22," she said. "Either you leave the goods in storage while you argue with the customs officials, and accumulate storage fees, which are quite expensive, or you pay the tax, which in many cases, especially with cars, was quite a hefty sum."
Under previous rules, companies shipped in office goods duty free, but customs taxes kicked in if the goods were not re-exported after two years.
Recently, tax officials began levying a monthly tax on these "temporary" imports: 3 percent of the total value-added, excise and other taxes applicable to the goods, Handelsman said, adding that customs officials often demanded advance payment at the border.
The tax was "a surprise" and "unbudgeted" for many firms, and meant that if companies kept goods in Russia for two years they ended up paying 68 percent of import taxes anyway, she said.
Yevstigneyeva said the new rule, effective since Nov. 11, was introduced to accommodate the vast majority of firms, which come for more than two years.
But Handelsman said customs officials could still stop shipments at the border if the nature or quantity of the goods delivered aroused suspicion that they might be headed for the marketplace rather than the workplace.
"If you are importing something, the documents must be very clear so there is no room for customs officials to think you are going to sell it in a kiosk or somewhere," she said.
Customs officials at Sheremetevo-2 airport, for example, recently forced The New York Times to pay a 100 percent import tax on $400 worth of reporters' notebooks, according to company employees.
"They were regular, yellow-backed, cardboard reporter's notebooks, bought at a stationery store in Virginia," said Douglas Herbert, a researcher at the paper's Moscow bureau. "How innocuous can you get? It's not like we were bringing liquor in."
Customs officials told The Times the notebooks were doubly suspicious because they were shipped from the stationery store to the newspaper, not from a private individual to a specific Times correspondent, Herbert said.
After his experience, Herbert was pessimistic that the new customs committee measure would be observed by individual customs officers with the power to hold up needed shipments.
"If you told me this law was going to be faxed to every customs post and had to be hung up on the wall," he said, "then maybe I would say it might make a difference. Maybe."
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