Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Traders See Warehouses As Way to Skirt Duties

The daily afternoon shuttle from Istanbul lands at Sheremetyevo-2 airport and dozens of merchants who made the trip specifically to stock up on cheap goods to resell on the streets of Moscow make their way through customs empty-handed.


Russia's pop-entrepreneurs, called chelnoki, or literally, "shuttles," have found a way to avoid the airport customs, so messy and expensive. Instead they are now shipping their $10 billion a year trade direct to warehouses in Moscow.


Not only is the new system more convenient, but the travel agencies that ship the goods, contract the warehouses and are licensed to act as customs agents are a good deal less thorough about charging import duties than airport officials are.


The change of pattern in a huge industry that accounts for fully one quarter of Russia's imports came on the heels of an Aug. 1 government directive introducing a 5 ecu (about $6) per kilogram levy on goods whose weight exceeds 50 kilograms.


The State Customs Committee earlier in the year halved from $2,000 to $1,000 the values of a purchase that can enter into Russia duty free.


The tax situation is thoroughly confused and, in principle, ruinous. Not only is there the flat fee of 5 ecu per kilo to pay, but also 30 percent of the value of taxable goods. But in practice, the travel agencies collect the duties only sporadically.


A manager at Irina Travel said, for example, the new taxes had not resulted in any decline in travel because the 30 percent tax is not in fact being collected at the various warehouses because the laws' stipulations are too complicated.


This was disputed by shuttle-trader rights activists, who say racketeering and the higher taxes have sharply reduced the number of trips taken to Turkey and other chelnok destinations in the month of August.


"It's been devastating," said Grigory Dorozh, general director of Strategiya, an employment and social welfare agency. "By last week, trips to China alone had gone down by 60 percent." But another travel agency contacted, East Line, also reported no reductions in chelnok business.


Kverkvelia said chelnoki who previously feared the new laws might make it impossible to go on trading have since relaxed, realizing the new provisions would remain on paper alone.


But as several shuttle traders confessed, it is not the new import duty that is making their trade difficult, but rackets allegedly run by some of the Moscow warehouse owners.


According to some complaints, warehouses such as one located in the southeast Moscow neighborhood of Tyoply Stan pilfer products and fail to promptly release what is left to their legitimate owners.


"We go into these places expecting to get back maybe 80 percent of the things we purchased in Turkey," said one Izmailovsky Park merchant who identified himself only as Sergei.


Others have said the warehouses make artificial queues forcing the traders to wait for weeks or even months before receiving their goods, paying additional storage fees in the process.