Offline sellers complained to the government about online, banks are losing profits, Putin met with Xi Jinping

Russian offline trade felt that online competitors were doing too well and demanded benefits for themselves

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The Union of Trade Centers of Russia (STC) complained about the competitive advantages of online marketplaces and asked the state to reduce (or cancel) VAT and other benefits. The authorities have so far responded only with a promise to tighten the law on state regulation of trade.

• STC addressed the Ministry of Industry and Trade, the Ministry of Economy, the Ministry of Finance, the Federal Tax Service and the government of the Russian Federation with a letter, which refers to the “competitive pressure” of online marketplaces; Kommersant reviewed the document.
• The authors of the letter call marketplaces “branches of the Sadovod market” and complain that online platforms are not responsible for counterfeit goods, are exempt from VAT and incur lower acquiring costs.
• Therefore, STC considers it necessary to provide benefits to traditional retail: reduce property tax rates, introduce a special tax regime, allow the involvement of self-employed people and reduce or even eliminate VAT for two to three years, similar to the restaurant and hotel business.
• The Association of Internet Trade Companies (AKIT) explains the advantages by a fundamentally different operating scheme and a different tax regime. Stores purchase and sell goods, and marketplaces provide sellers with a platform for a commission, and responsibility for counterfeit goods lies with the sellers.
• In this regard, AKIT does not see any distortions in taxation, and the Ministry of Industry and Trade promises to amend the law on state regulation of trade and oblige marketplaces to monitor the absence of counterfeit goods on their sites. At the same time, it was on the initiative of the Ministry of Industry and Trade that counterfeits imported through “parallel imports” poured into Russia.
• Russian trade continues to move online: according to AKIT estimates, in 2023 the volume of online trade in Russia increased by 28%, to 6.4 trillion rubles. The share of online trading in total retail sales also increased, but only to 13.8% from 11.6%.

What's in it for me?

So far, only the Ministry of Industry and Trade has responded to STC’s request with a promise to tighten liability for online platforms for the circulation of counterfeit goods. Achieving tax benefits will be more difficult. Revenue from VAT is the main source of growing federal budget revenues, and property tax is regional; retailers should not expect a single solution to this issue.

BANKS

Banks are losing profits

At the end of the first quarter, 20 of the 50 largest Russian banks reported a reduction in profits, in some cases by several times. The biggest losers were Pochta Bank (a 31.2-fold drop, to 190 million rubles), Zenit Bank (7.5 times, to 174 million rubles) and HKF Bank (5.5 times, to 815 million rubles). Organizations explain the decline by various reasons, including rising rates, sanctions, rising income tax expenses and a slowdown in retail lending after the reduction of preferential programs.

TECHNOLOGIES

Microsoft wants to export hundreds of engineers from China

Microsoft is asking hundreds of employees in its cloud computing and artificial intelligence divisions in China to consider relocating due to tensions between Beijing and Washington, writes WSJ. In total, Microsoft has about 7,000 employees in the Asia-Pacific region, most of them based in China. About 700–800 people received offers to relocate, mostly engineers with Chinese citizenship. They were offered to transfer to the USA, Ireland, Australia or New Zealand.

SIGNALS

Putin and Shoigu demonstrate the strength of their relationship

Vladimir Putin made his first visit to China after his inauguration, where, together with Chinese President Xi Jinping, he signed a statement on deepening relations of comprehensive partnership and strategic interaction. The Chinese leader promised that both states would adhere to the principles of non-alignment, non-confrontation and non-direction of relations against third countries. After the meeting, Putin assured that China and Russia will strengthen contacts through banks, and their mutual investments are reliably protected from third countries. Whether this is a signal to unfreeze payments, problems with which are already undermining the Russian economy, will become clear soon enough.

Putin took Sergei Shoigu on the trip. He talked to reporters and said that the war with Ukraine remains his main task in his new post as Secretary of the Security Council.

NATIONALIZATION

The plant that left Podolsk without heat was nationalized

Shares of the Klimovsky Specialized Cartridge Plant (KSPZ) were confiscated from private owners in favor of the state. This decision was made by the Zhukovsky District Court of the Kaluga Region at the request of the Prosecutor General's Office. In January, an accident occurred in a boiler room located on the territory of the plant - 170 houses in Podolsk were left without heating and hot water in 20-degree frosts. Governor of the Moscow region Andrei Vorobyov then said that the management of the boiler house “was going very badly,” and the plant would be nationalized on Putin’s instructions. Rostec, which owned 36% of KSPZ shares, announced its readiness to take control of the enterprise.

What else is going on?

• The life of Slovak Prime Minister Robert Fico, who was assassinated, is not in danger. The politician was operated on and is conscious, said Deputy Prime Minister Tomas Taraba.
• The FSB and the Ministry of Digital Development want to tighten the requirements for SIM card sales. One of the proposals is to oblige Russians to take biometrics. Options for limiting sales channels and using a digital signature are also being considered.

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