October

2000

The proposal of the Vitebsk’s businessmen

«About collection of the customs duty and tax on VAT

from the personal businessmen at import of the goods on the customs territory of the Republic of Belarus»

According to the decree of the President of the Republic of Belarus # - 480 from 31.08.2000 and Order of STC of the Republic of Belarus # - 55 from 20.09.2000 the order of registration of the goods imported on territory of RB made in the third countries and put into the free reference in Russian Federation is established.

The requirements of these normative acts create conditions at which activity of the personal businessmen engaging in the retail trade with the income up to 3.000 MW and paying hard fees of the income tax becomes impossible.

The specificity of activity of this group of the businessmen has following features:

-The goods are bought basically in Russian Federation at the wholesale markets by small-sized batches up to piece units. They buy goods at 10 and more sellers for one trip. In the volume of the bought goods the goods made in the third countries make up 90-95 % of a volume in average. The sellers of the markets of Russian Federation do not give invoiced expenses for buying of the goods and certificates to businessmen of RB. When they are asked to some documents the answer is one (so are the rules of the customary competition and principles of contractual relations): «If you do to not like - do not buy». The businessmen repeatedly informed local and state bodies of the management of RB about these circumstances of buying of the goods.

-The volume of purchases on the invoiced cost makes up 1.000 US dollars in an equivalent;

This group of the businessmen is recognised as special category and this fact is confirmed at the state level by the Rule «About the collection of the fixed sums of the profit tax and hard fees of the income tax» recognised by the order of the Council of Ministers of RB from January 31, 1997 # -46. The state has fixed a special rule of this group of the businessmen in problems of the taxation, in periodicity of submission of the reports, and in the recent time (February April 2000) - in problems of imposition of sanctions for administrative breaches of the law. However, when the obligatory customs registration of the goods made in the third countries and imported from Russian Federation was introduced, the features of activity of this group of the businessmen were not taken into account.

Understanding functions and interests of the state to fill the budget we think that these rules in an sphere of customs registration will result in the disappearing of this interlayer of the businessmen. In RB the number of the businessmen fulfilling the activity to the above indicated attributes makes up about 120.000 men. They provide the own income and frequently income of all family with the activity. Each second businessman use people working on hiring in the average of 2-3 men, so not less than 120.000 of the population of RB are supplied with a work place and salary. These businessmen according to the designed technique pay hard rates of income tax before they begin their activity, not knowing the income a businessman pays taxes to the state. In Vitebsk 1.8 % of the income in the local budget are taxes paid by the personal businessmen. Besides in Vitebsk there are 6 markets on which businessmen work. The introducing of such order of customs registration can low activity of the markets to zero point (3 markets in Vitebsk are the property of the state). For today the economical situation in RB is not ready to destroy such form trade as the market. The solvency of the population is low, about 57,7 % of the incomes, on official statistics, of the population is used on food. The market trade gives an opportunity to customers to buy the goods (production) according to their demand, and also, that is even more important, on the prices which satisfy them as the market foresees the absence of the strictly fixed prices.

As to the economic expediency of the introducing of the new order of the customs registration of the goods:

-         In the markets the trade in clothes is predominantly realised. The rate of the customs duty on this group of the goods makes up 30 % from the cost, the VAT for this group of the goods makes up 20% from the cost of the goods taking account the rate of the customs duty (children's assortment and food - 10 %,). To confirm the cost of the goods is possible only when you show the commodity-transport way-bill of the seller and as it was mentioned above it is basically impossible. The absence of this documentation leads to impossibility of customs registration. Such situation makes businessmen to falsify the documents that is extremely unprofitable either for state or for businessmen as it leads to the breach of the laws and applying of the financial sanctions.

-         To prove the genesis of the goods it is necessary to the submit the documents on certification (CT-1) and as it was mentioned above it is also impossible.

The formulation of the adopted new legislative acts on customs registration does not give an opportunity to define strictly consequences of absence of the above mentioned documents (TTN-1, CT-1 or other documents established by the legislation) on the goods made in the third countries. It is only marked that when these documents are absence registration and the payment of customs payments implements is made in the established order. Such formulation can result (this opinion is lead up on seminar spent by customs bodies) in the situation when the customs dues will be paid in the double size – according to the Order of the Council of Ministers of the Republic of Belarus «About the customs tariff of the Republic of Belarus» #-72 from 10.02.97 «things, the country of the genesis of which is not established are taxed with customs dues on things imported on the customs territory of RB increased twice on the rates of the customs dues established by this order». Alongside with this rule, the Rule «About the order to determine the country of the genesis and to grant tariff preferences concerning the goods imported on the customs territory of RB» (is recognised by the order of STC of RB from October 5, 1998 N 354-OD) establishes that «To determine the of country of the genesis of a batch of the goods of the invoiced cost which is equal to less than 5 000 dollars of the USA, the certificate of the form CT-1 is not required; the country of the genesis of the goods is declared on the basis of the information indicated in documents applied to the goods shown with the purpose of customs registration. Thus, marking, shortcuts, identification tag, tables, passports and similar information on the goods should allow to identify them with the information indicated in the documents applied to the goods shown for the customs registration». This standard of the legislation can be bridged over by item 1.4. of the Order of STC of RB from 20.09.2000 # -55 «The Goods are the subject to taxation of the customs dues on the rates which work at the day of acceptance of the customs declaration, depending on the country of the genesis of the goods mentioned in the customs declaration, without granting of the tariff preferences».

According to the above mentioned facts there is a question: do we need the certificate (CT-1) if the invoiced cost of the goods is less than 5.000 US dollars?

Returning to the economic expediency of customs registration of the goods it is necessary to mark that customs dues and the VAT will have an effect on the price of the goods, the prices will increase on 50 % - 80 %. But the consumer capacity of customers does not increase in the same proportions. Such situation will lead either to delaying of the realisation of the goods or to realisation of the goods without an economic gain. In such situation it will be economically profitable for customers to visit independently the markets of Russia and to make necessary purchases and in this case money resources will go by the budget of RB.

The utilised capacity of the customs bodies will be increased at the expense of the volume of the mentioned category of the businessmen so there will be a necessity of considerable increase of number of the workers of customs bodies who are supported by the money from the budget of the republic. As a consequent: deficit of the budget will appears, sources of its replenishment will be found, tax burden will increase, prices will increase, growth of inflation etc.

Not to let the social conflict, destabilising of economical relations which in such situation are inevitable we think that except for the circumstances mentioned above the state bodies should take into account that

the mentioned group of the businessmen is:

-         people who are 40-50, have a speciality, proficiency and experience got in the time when the USSR existed but 5-7 years ago they passed through the reduction of staff and were forced to become personal businessmen who trade in the markets to maintain their life and life of their family for minimum. Naturally, their skill on the speciality is lost, need for such category of the workers at the labour market is very low.

- The second category of persons is the youth who study in the educational institutions or graduated from them, that is from 18 till 25. This group has no experience on the obtained specialities or are forced to earn additionally as the size of their grants is low or they should pay for their studying.

In such situation it is not economically profitable to work on as a personal businessman, so these people will get in the category of the unemployed and then persons who work on hiring for these businessmen (up to 360.000 of the population of RB) will also get in the category of the unemployed. These numbers say about the volume of the unemployment benefits on the part of the state, about looking up for the appropriate work places, expenses to get a new profession and retraining, increase of number of the needy citizens, loss of the institute of the markets as it is. On the basis of above-mentioned we convincingly ask you to consider this situation and to accept the only reasonable solution which is capable to eliminate the indicated conflicts and to avoid of negative consequences:

1.      To suspend work of the Decree of the President of the Republic of Belarus # -480 from 31.08.2000 and Order of STC of the Republic of Belarus # -55 from 20.09.2000 adopted according to it concerning the businessmen who trade in retail, the volume of the incomes of whose does not exceed 3.000 minimum wages, and also - to suspend collection of the fine actions till 1.01.2001 by the analogy with the principle of submitting of essential changes in the tax legislation of the Republic of Belarus - on termination of the report of the year.

2. Simultaneously submit following changes and additions to the indicated normative acts:

-         To cancel the use of the customs registration of the goods and payment of the VAT for the businessmen with the commodity turnover up to 3.000 minimum wages;

- Or to enter the fixed rate of the unified customs fees (customs registration, customs duty, VAT at import) at a rate of 30 % of the fixed rate of income tax;

- Or to register the goods on which there is a way-bill of the form TN-2 written out by a personal businessman. Thus if the customs bodies will have doubts on the prices on the goods they may compare these prices with the reference books by analogy with vehicles. Thus the customs fees (plus VAT) are established at the rate of 10 % of the cost of the goods and can not exceed 250 US dollars in the equivalent.

We ask to consider this letter as the reference of the citizens and to submit answer in the appropriate form in the term established by the legislation.

Yours faithfully

The chairman of the primary organisation

Of the personal businessmen

Of Vitebsk I. L. Frolova.

The member of the council V. A. Moskalkova

210015, Vitebsk, Lenin street, 3-B

Vitebsk centre of support of business

Phone/fax (0212) 25-13-76

The reference to the Vitebsk businessmen

Dear sirs.

All history of the businessman’s movement in Belarus demonstrates that the state takes into the account only well organised force. The Vitebsk businessmen are the most active in the Republic of Belarus. If a customs problem does not be decided in a “peace" way we shall be forced to begin the mass actions of the protest. We think that the actions should pass in organised and amicable way. As well as in the past year, there will be provocateurs. Their task is to organise the spontaneous and separate actions of the protest and then it will be easier for the authorities to “finish” with you one by one. As the provocateurs, as well as in the last time, the state trade unions and separate rogues act. We always sign the applications. If you see the leaflet with an anonymous subscript as for example: the Free trade union, assets, group of the comrades etc. - means that the Belorussian Trade union of the Businessmen, the strike committee are not connected with this leaflet. Our letters and the applications always contain a surname of the official who has signed the document. Inna Frolova is the only our plenipotentiary in Vitebsk region. Only she has the right to make the applications from our name (tel. 36-67-56.)

In Minsk and Minsk region – Leonid Kalitenya (260-97-75) – the Chairman of the co-ordination Council of the businessmen of the Republic of Belarus.

While there is a preparation to the actions of the protest it is very important that they would begin simultaneously. Do not forget to help the trade unions by means. The success of any action depends from its financial maintenance. Prepare the written proposals on the meeting of 23.10.2000 and give them to I. Frolova. What shall we do we shall decide together.

Yours faithfully

Valery Levonevsky