There will be no further delays in the introduction of mandatory tagging of footwear products sold on the Russian market, said Victor Evtukhov, Deputy Industry and Trade Minister. All untagged shoes will be banned for sale in the country from July 1, he added.
The tags consist of electronic chips inserted in the shoes in order to prevent illegal trading practices such as the avoidance of sales taxes. The Russian government first introduced a mandatory tagging system for the domestic footwear market on March 1, 2020, but cancelled it then on March 3, as there were still many shoes without the tags on the market.
The government has now declined an appeal by market participants to postpone the system’s introduction further, said Evtukhov, noting that this would not be fair for those companies that have already begun tagging their shoes, bearing the related costs. Just like with all similar projects, there are responsible companies that adjust their business to the new system well ahead of its introduction, and those deciding to do that at the very last moment, Evtukhov added. As of early June, however, most companies had already prepared to introduce the system, he said.
The Russian Association of European Businesses had called on the government to postpone the introduction of the system for one more year to July 1, 2021, arguing that weak sales in recent months have resulted in most companies having a lot of untagged shoes in stock. The association claimed that the introduction of the system at the scheduled date will cause the Russian footwear industry to suffer losses of 5 billion rubles (€64m-$72m).
The tagging system is meant to help the government to monitor cross-border and domestic trade in the products. The tags can be applied by the manufacturers, the importers or the retailers. All traders must register themselves in the monitoring system, which is due to be also applied to some clothing items as of next Jan. 1.
The compulsory tagging system is also part of an ongoing drive to modernize the retail trade in Russia, which led to an increase of 30 percent to 1,800 in the number of legally registered shoe shops in the country between 2013 and 2018. Illegal sales of shoes are still flourishing, however, as witnessed by an estimated increase in the proportion of counterfeit footwear - mainly sneakers - from 35 to 60 percent of all the shoes sold in market shortly after the government announced the new tagging program.