SENDING SAMPLES TO RUSSIA HINTS

When you start operations in Russia you might need samples of your product to be shown to Customers. (updated 14.11.2020)

According to Russian regulations majority of products must be certified and marked in accordance with TR TU regulations (Technical Requirements of The Eurasian Economic Union of Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan). This marking should be done before goods entry into Union territory marketing it necessary to mark and certify goods before they are imported into Russia or other Countries-members of the Union.

Before this is done you have possibility to send samples to Russia via following ways:

1. Sending as a parcel to private individual. (Limitations are 30 kg weight and 200 EUR per 1 parcel and number of parcels is not restricted, value is updated 01.01.2020, previously it was 500 EUR per 1 person per month), value includes cost of goods and does not include freight cost). 

If samples are sent as a parcel to private individual it will be duty-free to receive in case limitations are not exceeded. TR TU certificates are not required as parcel is considered not commercial.
There should not be more than 3-5 pcs of 1 item in the parcel, otherwise parcel might be considered commercial.

Parcel can be sent either using international Courier services (please check in advance, because not all of them deliver to private individuals in Russia after Customs rules were changed in 2014) or 
using partner network for fast courier department of Russian post called EMS.
You can find list of partners on EMS website at http://www.ems.post/operators/europe 

I have tried DPD (Aramex) and EMS and they both worked ok. 
My personal experience is that EMS cargoes are being Custom cleared
with less problems / questions.

Normal transit time by EMS is 2-3 weeks for a parcel from Europe.

Note: Before sending out goods please check the list of goods which are accepted to be sent via Courier service and a list of goods accepted by Russian Customs 

2. Sending to Company registered in Russia using simplified Customs clearance procedure. (Limitations are 200 EUR value per month per 1 person, value includes cost of goods and freight cost).

Samples should be sent on free of charge basis to avoid contract registration at tax control.
Consignee should receive samples for inter-Company use only, samples should not be sold or distributed further on. (When Customs clearance is made Consignee sends a letter to Russian Customs that samples are not for sale) 

TR TU certificate is not being requested in this case, but Chestniy Znak marking should still be done for a number of products.
There should not be more than 3-5 pcs of 1 item in the parcel, otherwise parcel might be considered commercial and TR TU certificate will be required for Customs clearance.

Note: Before sending out goods please check the list of goods which are accepted to be sent via Courier service and a list of goods accepted by Russian Customs

3. Sending samples for exhibitions as a temporary import which will be returned after exhibition.

This option requires use of professional Customs broker as issues with Customs might arise.
Please request clear confirmation from Your Customs Broker before proceeding this way.

Important note for all above: To avoid any confusions with Customs Clearance the most important thing is to inform Consignee in Russia about shipment in advance and send all shipping papers for review before sending out goods.This simple action will save much money and time for You and Your Partner / Consignee.

Regards, Yury

SHIPPING INVOICE EXAMPLE TO BE USED TO EXPORT TO RUSSIA

When you are preparing to send goods to Russia attention should be paid to filling in shipping invoice to reduce questions from Russian Customs.

Shipping invoice along with transport documents (CMR, RWB or B/L) is one of the main
documents used for Customs clearance. All terms and conditions, goods value and description mentioned in shipping invoice should 100% correspond to what was mentioned in Contract.

Invoice can be eighther made in dual languages (In English and in Russian) or it can be made only in English with translation on a separate page. Very often the translation is made by Consignee in Russia, but you should take into consideration that the translation cost money and might cause some delays in Customs clearance.

Please find below attached example of shipping invoice which was successfully used for several years in my previous experience to import goods to Russia. Important fields and comments are marked by red color.




Important notes:
1) If Shipper and Seller are not the same, information on it might be added to Contract and shipping invoice.
2) Normally Invoice date should be not before the Contract date, Invoice should be issued the same date or after the Contract has been signed.
3) If Invoice does not have information on weights and cargo places quantity a packing list wll be needed. In this case it should be clear that packing list corresponds to the exact invoice.
4) Commodity code according to Russian Customs code in first 6 digits corresponds to HS code, 4 following digits may vary.

HINT:
Please send shipping invoice to Consignee for review before shipping out the goods.

Regards, Yury

HOW TO EXPORT GOODS TO RUSSIA (IMPORT INTO RUSSIA)

One of the first steps in case you are going to sell products in Russia is to export goods to Russia (import into Russia). 

It is obvious that all goods entering Russia should be custom cleared.

Before sending out the goods following steps should be made:

Step 1: Inform your Partner or Customer in Russia that you are going to send goods to him.

Please notify you Partner or Customer in advance and please ensure that he has duly received notification.

Step 2: Send all shipping documents for review. Do not send goods before getting OK for the documents.

Main documents to be provided by Seller for import of goods to Russia are:

a) Contract, signed and stamped. If Contract total value is equal or more that 50 t.USD currency transaction certificate should be issued by receiving bank in Russia before first transaction is made or import of the goods to Russia is done.

b) Invoice. Invoice should have reference to the Contract, clear description of the goods, quantity, weights, Customs commodity codes. It is highly recommended but not obligatory to have net and gross weights for each commodity code in invoice (if invoice does not have this information, packing list is required with this information, packing list should have reference to corresponding invoice). Invoice should either have above mentioned information in 2 languages (English and Russian), or separate translation should be provided.

c) Technical description of the goods giving clear idea what materials goods consist of and what is the use of the goods. This information is needed for Russian Customs to identify goods correctly.

d) Certifications and Licenses if required according to Russian rules. 

Requirements for certification are mentioned for each commodity code in Russian Customs code and should be checked prior to shipping the goods.

e) Shipping documents depending on means of transport. (CMR, sea bill of lading, rail waybill, air waybill)

f) Other documents. Other documents mean wide range of commercial, shipping and technical documents which might be requested by Russian Customs if they start question the price or correctness of commodity code applied. (Example: Certificate of origin, Export declaration, Market prices for the same commodity codes in exporting country or on local market, etc)

Hint: Please do not send any shipments without notifications. Lack of required documents or documents made not in full compliance with Russian legislation may result in goods being stuck at Russian Customs.

Step 3: After getting OK for sending goods please check that you have all required contact details and addresses at destination.

This is needed for swift communication when the goods are being delivered. This will also help you to avoid extra costs for demurrage. It is better to ask what are the optimal entrance time to the terminal, this will help you Customer save costs on terminal fees.

Step 4: Provide your Customer in Russia contact person in case Russian Customs requires additional documentation or explanations.

Russian Customs is checking the goods and documents at the border and then at the Customs terminal.

Border control is mainly checking documentation:
- pre-advice note for the goods
- licenses and certification if required
- documents for means of transport
- shipping documents
- TIR carnet or another types of Customs guarantees to cover delivery from border to terminal

Truck might be also opened and goods might be inspected or weighed.

When trucks arrives at Customs terminal documents will be checked once again.
During Customs clearance procedure Russian Customs might request additional documents, request weighing, visual inspection or taking samples for testing to identify the goods.

Hint: Numerous requirements from your Customer in Russia may give you impression that something is wrong. If you question any of the requirements you can contact independent Company in Russia for consultation or ask your local office of one of international forwarders for consultation.

Hint: Please use professional forwarder and Customs broker.

Regards, Yury

CALCULATION OF YOUR PRODUCT COST IN RUSSIA

One of first steps to approach Russian market is to understand what is your product price locally and compare it with competitors prices. This will give you idea of contribution margin you can achieve and also give you idea what market segmentyou should aim for.

To calculate cost of your product in Russia you need to:

a) define HS code of goods

b) define average consignment (weight, volume) and askyour forwarder to 

calculate freight cost to your distribution center in Russia or to Customs terminal.

For more precise calculation you can ask forwarder to split freight cost into two parts (delivery from Shipper to the Russian border and further delivery from the border to Customs terminal / end destination)

Note: Roughly estimation for full truck load of 20 tons and 13,5 loading meters is 2000-2200 EUR for delivery on DDP Saint-Petersburg terms from Baltic States of EU.

Once you have defined HS code and freight cost you can use following simplified formulas to calculate cost of your product in Russia.

Cost of consignment on terms DDP Saint-Petersburg without VAT= (cost price of consignment on EXW factory terms +  freight cost to Russian border including cost of making export documents)*import Customs duty + customs fee + terminal fee without VAT + payment to Customs broker / forwarder without VAT + cost of certification without VAT if any.

Cost of 1 pc of goods on terms DDP Saint-Petersburg without VAT = Cost of consignment on terms DDP Saint-Petersburg without VAT / quantity of pcs in consignment

Sales price in Russia with VAT= (Cost price + contribution margin + administrative expences)*VAT

Note: For simplified sales price calculation estimated administrative expences can be 5% of cost price.

Regards, Yury

WHAT PROBLEMS FOREIGN COMPANIES USUALLY FACE IN RUSSIA?

Russian business environment has developed much in recent years, yet there are still problems which foreign companies usually face in Russia:

1.  Bureaucracy. 

Bureaucracy is still one of the problems foreign companies usually face in Russia.

Currently there is a number of separate legal authorities and each of them requires regular reporting, makes inspections to the business units and are able to issue penalty in case reports are not in line with corresponding regulations or were not submitted in due time.

The main legal bodies are Tax control, Customs, Federal agency for Social Insurance, Russian Pension Capital Fund, Federal State Statistics Service and Labor Inspection Service.

In 2016 it is planned that some of above legal authorities will be merged together, but currently they are still separate.

Also to mention each and every business transaction in Russia should be accompanied by correct set of documents. Papers in Russia are very important.

Hint:

-                  You need to have experienced accountant either in-house or outsourcing to submit reports to all bodies above timely and without mistakes. Accountant will also need to ensure each business transaction is accompanied by necessary paperwork.

-                  Corresponding electronic accountant systems should be installed to perform correct reporting and accounting routines. Most commonly used system for this purpose is 1C system in various modifications.

2. Customs.

Problems with Russian Customs is a usual thing foreign companies encounter in Russia.

If you intend to import goods to Russia you will first need to define commodity code in accordance with Russian Customs code. First six numbers of commodity code are the same as

for Harmonized System code (HS code).

When the code is specified you can find out what certification or licenses are needed to have goods imported into Russia and what is Customs duty for the code.

Basically there is 2 options to interact with Customs:

-        You can interact directly by registering your Company as importer.To proceed this way you will need to submit necessary legal papers and buy and install software for submitting electronic Customs declarations.

-        You can interact through licensed Customs broker who will then bear joint and several responsibility for submitted declarations

Based on 10+ years experience of interaction with Russian Customs I recommend to use licensed Customs broker. One declaration with up to 5 commodity codes and one means of transport currently cost about 200 EUR but will save you much more money by reducing time of Customs clearance resulting on less storage fees and demurrage as well. 

Licensed Customs broker have money deposit at Customs account which serves some kind of insurance towards Russian Customs ensuring Customs that duties will be paid in full compliance with applied commodity code. In case of disputes Customs is able to withdraw money from Customs broker license deposit as Customs broker share responsibility with importer on declaring goods.

This makes another good reason for Customs broker to check documentation properly and fight for your rights in case of disputes.

Unfortunately quality of services provided by various Customs brokers differs significantly from Company to Company. To make right choice you should ask Customs Broker to provide his license, reference list of the Customers he is working with including contact details and search open sources (internet) to check Company registration data and ensure that the Company is not under bankruptcy procedure, court procedures, etc.

Hint: 

- Please dedicate some time to select reliable Customs broker. 

- Test delivery might be needed to check if Customs broker is good or not, this might be small or low-value consignment. .

3. Bribes

Bribes is another common problem for foreign companies operating in Russia.

Unfortunately bribes still exist in Russia.

Being involved in operation of international companies in Russia I can confirm that we have successfully done all business processes without any bribes. Yet you can face this problems during tenders, any other competition, etc. when you know you have better price, quality or terms or combination of above but are losing due to some “other” reasons. Official refuse will politely correspond to some minor article in technical requirements, documentation requirements, etc.

Hint: 

- Do not pay bribes on no condition.

Regards, Yury