New law creates new opportunities for B2B Ecommerce. In many countries, B2B payments are plagued by issues of trust, particularly when payments must be made across borders. Russia is no exception, and the relative lack of a rigorous legal climate in the country exacerbates the issue.
Russian lawmakers are now considering a bill that would oblige businesses to make payments through some form of intermediary, instead of in cash, for payments of more than $US10,000 in value. Salary payments, which are currently often still made in the old-fashioned envelopes full of cash, would also have to be made through a bank or intermediary of some kind under the new law.
Many Russians still distrust all forms of payment except cash, and, even among businesses, nearly 90% of payments are still made that way. E-commerce has also languished in Russia: There are 62 million Internet users in the country, but less than 30% make purchases over the Net. Distrust of intermediaries and logistics providers are the main reasons cited.
Most e-commerce in Russia is B2B, as law firm Baker & McKenzie point out in a recent article on Lexology. It is concentrated in the IT, telecommunications, and financial services sectors. But the lack of clear regulation – as well as the somewhat vague legal climate in Russia overall – make online B2B transactions there too risky for many businesses to attempt. Cross-border transactions are seen as especially dangerous, even though such deals are often not subject to any taxation under Russian law. Also, for legal reasons, electronic digital signatures are problematic under Russian law.
In general, there are no special taxes for transactions made online in Russia, Baker & McKenzie explain. Goods and services are subject to VAT as they would be if delivered physically; software sales, however, under a special regime are exempt from VAT. There is no tax on financial services transactions between individuals, but purchases of securities are subject to capital gains tax.
All of this should suggest that businesses that work in Russia—and indeed working anywhere in the world—are well served in looking to secure electronic payment platforms for their B2B transactions. Even more, using an escrow-like payment system on an electronic platform would provide guaranteed payment for any seller, and there would be no need to work with cash. Security of funds and tracking would be guaranteed by the escrow-like structure.
Electronic platform solutions can already handle electronic transactions and payments that are secure and compliant with regulatory requirements. In fact, making the transition to electronic payments specifically designed for B2B use would provide the opportunity to address the many other gaps that exist with traditional B2B payment methods. Escrow-like features, real-time, 24/7 payments with full data aggregation and attachment are just a sample of the things that would provide a faster, safer, smarter trading online trading environment for buyers and sellers. Traxpay can help.