RUSSIA AND BEL ARUS
Russian flowers receive major impetus as Belarus lifts tax exemptions for international suppliers
Russia’s domestic flower industry has received a significant impetus in 2021 as the government of Belarus abolished the value-added tax (VAT) benefit that had been in effect since 2011 AUTHOR: EUGENE GERDEN PHOTOS: RON VAN DER PLOEG AND FLOWER ACADAMY.
and caused an influx of cheap imported flowers into Russia.
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he Belarusian government’s decision to revoke the floral tax rules should help resolve unequal competition between Russian flower growers and international suppliers. The latter use Belarus as a transit hub for lowerpriced flowers from the Netherlands, Colombia, Ecuador and Kenya, primarily destined for the Russian market.
UNLEVEL PLAYING FIELD Up until August 31, 2021, many flower producers and importers were exempt from the inland revenue adding 20 per cent VAT when importing products into Belarus, including flowers, which were then re-exported to the countries of the Eurasian Economic Union (EAEU),
FLORACULTURE INTERNATIONAL JANUARY 2022
including Russia. The import privilege created the so-called Belarusian export scheme to Russia and benefitted sellers of imported flowers from Ecuador, Kenya, the Netherlands and other countries. It allowed them to sell flowers at low prices on the Russian market, creating an unlevel playing field for domestic producers. The share of imported flowers in Russia was 82 per cent, according to 2020 data from industry body Greenhouses of Russia. Their calculations found that, due to the Belarusian scheme with VAT, the annual losses of Russian rose growers alone amounted to approximately 3.2 billion rubles. This disadvantage is because Russian flower growers have to pay the full VAT rates, unlike sellers of imported flowers.
EXCISE TAX The need to solve the unfair advantage for foreign players in the Russian flowers market was initially expressed by Russia’s Prime Minister Mikhail Mishustin for legislative consideration at the beginning of 2020 after an appeal by industry organisations. A year later, a declaration of the same demand to the Ministry of Finance by Valentina Matvienko, the speaker of the Council of Federation, the upper house of the Russian Parliament Valentina Matvienko. Before the decision by the Belarus government to abolish zero VAT, the Russian Finance Ministry was developing other measures to level the playing field between Russian and foreign flower suppliers. For example, the department considered the issue of
