Economic Union became operational in 2015 and now comprises five countries:
Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. While Eurasian integration
primarily focused on trade cooperation at its inception 20 years ago, since
then the agenda has gradually expanded. Rapid information technology
development provided the Union with new challenges. It soon became clear there
was a need to regulate online trade, collaborate on legislation in the field of
the Internet of Things, develop e-government communication systems, and create
a venture funding market and jointly develop innovations in general.
year a new area of activity was established in the Eurasian Economic
Commission, the regulatory body of the EAEU. One of its main objectives is to
build a common digital space and develop digital technologies.
Member of the Board - Minister in charge of Internal Markets, Information
Support, Information and Communication Technologies of the EEC gave an
interview to TASS New Agency on what is being done in this area at the Eurasian
Week Forum and Expo in the run-up to the first anniversary of the establishment
of the new direction of integration cooperation.
- The issue of
regulating transboundary trade and collecting VAT from foreign online sellers
is currently being actively discussed in Russia. Is it worth introducing a
uniform system of collecting VAT in the EurAsEC space and how can this be
- We have an annex to the Treaty on the Union, which
regulates VAT collection. It defines common approaches to VAT collection on the
territory of the Eurasian Economic Union between its members. If we talk about
foreign Internet platforms, then each State decides how to regulate its
relationship with them. In this direction, Russia has made the most progress —
as of January 1, 2017, a law on VAT taxation pertaining companies selling
online content (the so-called Google tax) will enter into force. This is the
reason behind the creation of simplified digital mechanisms. In other countries
these issues are so far only at the discussion stage.
So far, Belarus has made the most progress in terms of
online trading in comparison to the others. But when we take a deeper look at
the question of the taxation of online sellers, we can see that if Russia
tightens the rules, overseas stores will have the chance to enter the country
via other countries of the Eurasian Union, where regulation is more profitable.
For example, via Kazakhstan or Kyrgyzstan.
We therefore need to harmonise approaches and exclude
those "loopholes" so that discrepancies in regulation do not create
problems for the market participants, for our online sellers, who in this case
would find themselves subject to unequal conditions in comparison with their foreign
— Could the Post
Offices of the countries of the Eurasian Union be VAT collection
- I think that in the digital space there is the
opportunity to work directly with the States under whose jurisdictions the
sellers are. This issue has been resolved in the European Union: the relevant
mechanisms for accounting have been established and what constitutes a foreign
purchase and whether you must pay VAT on it has been defined. Therefore, when
forming common legislation, it is necessary to create digital mechanisms that
sellers can use to remotely register with the tax authorities, submit reports
and pay taxes.
Regarding natural persons (for example, you order
goods on Alibaba and get it delivered by post), then naturally, the Post Office
can act as an indirect domestic tax collection agent. It will be easier for
citizens — they won't have to go to the customs or tax authorities. To simplify
things, a single window mechanism could be established at the Post Office, it
would be beneficial. Incidentally, Armenia has made the first steps in this
- The Ministry of
Communications and Mass Media of Russia, Nikolay Nikiforov, stated that
software from the Eurasian Union can only be entered into the register of
Russian software if Russian software will be provided with similar conditions
in the countries of the Union. What preferences can Russian software make a
- In fact,the issue here is not particular preferences
for the countries of the Eurasian Economic Union. It’s that the Treaty on the
EAEU stated that in public procurement, national treatment is granted to
economic entities. This means that software from other countries must enjoy all
the opportunities available to Russian software. This is the first point. The
second issue is, yes, according to the Treaty, a country can exclude certain
types of goods or services from national treatment for two years. However, to
do so there is a procedure in the Eurasian Economic Union that Russia did not
follow. Therefore, there is a pertinent question about a certain barrier to
software from countries of the Eurasian Union on the Russian market.
Furthermore, there are risks associated with foreign
software entering the public procurement process in Russia via countries of the
Eurasian Union. But these risks can be controlled. To do so, it is necessary to
introduce joint regulatory standards that would mean all the freedoms of
movement of goods, services, capital and labour could be seamlessly implemented
in the territory of the Eurasian Economic Union.
I understand that the Russian Government is taking
certain measures to stimulate the development of Russian software. But our
position is that we need to reach an understanding that the solution of all
problems linked to the digital agenda should be pursued jointly and the EAEU
digital space should be formed with common approaches to regulation. Then, in
the long term, we will be able to develop the Union and its competitiveness
while maintaining digital sovereignty.
As for preferential treatment, as far as I know, there
are no restrictions on Russian software being involved in public procurement in
other countries. But in general, it makes sense to consider the possibility of
establishing a common software register in the EAEU. I think it would be much
— Mr. Nikiforov
also said that Russia will not allow foreign software to be entered into its
register under the guise of software from the Eurasian Economic Union. In your
opinion, does that problem exist?
— In my opinion, this problem doesn’t exist because
the market is transparent enough and there is a sufficient number of experts in
our countries in order to understand where software comes from. Issues of
intellectual property are also relevant in this regard. The transfer of intellectual
property rights on any product to the countries of the Eurasian Union already
means Eurasian software is present.
On the contrary, we must encourage the transfer of
intellectual rights! This doesn’t concern rights of use, but software ownership
rights. Therefore, I don't think these risks exist. Rather, there is a question
of forming transparent relations, and Russia is making progress in this
— In 2017,
regulation of the Internet of Things (both consumer and industrial) may be
introduced. What features should be taken into account for its implementation
— For us, regulation of the Internet of Things is just
as important as any other regulation in any other sphere concerning the digital
economy, because in a global context, the share of the digital economy (most of
it is made up by the Internet of Things) is constantly increasing. According to
some estimates, by 2025, the share of the digital economy in the overall global
economy will be about 40%. In fact, information is becoming the most valuable
resource in the world. Therefore, if we advance towards forming a common
digital space, we need to understand what is necessary and the legislation.
Accordingly, regulation of the Internet of Things must be carried out in all
The Internet of Things requires the introduction of
appropriate standards ensuring a high-quality continuous connection. However,
the key element remains platforms that provide data collection and processing.
They are the main digital asset where value added will accumulate in the coming
years. But if we create different legislations, we will not be able to realise
our goal of carrying out the digital transformation of industries.
Within the EAEU, a joint energy market, and transport,
financial markets are being establishing - they are all industries where the
Internet of things can be used. And if we create the relevant legislation
separately in places and then start talking about a coordinated policy, then,
naturally, there will be inconsistency in these matters at least.
— What do you
think, will it be necessary to create a special body to oversee the Internet of
Things within the Eurasian Union?
- I think the world is moving towards transparency. It
is necessary to establish transparent rules so that we avoid the need for
additional regulatory bodies that create more bureaucracy and more and more
complexity when it comes to running a business. However, the figure should
include smart regulation, a softer, intelligent, dynamic regulation, so that we
do not impede the process of digital transformation in our countries under any
— Will the
“Yarovaya Law" by extended to cover the entire space of the Eurasian
-What is the “Yarovaya Law”? "Yarovaya Law"
is anti-terrorism in nature whereas the Eurasian Union is an economic Union.
And of course, we are not discussing matters of national security within the
Union. Each country determines its rules or they are solved within the
framework of the Collective Security Treaty Organization (CSTO) where
cybersecurity issues are discussed.
However, this project has raised very important issues
on the collection, processing, storage and use of data. And the main issue was,
in fact, the storage of data on the territory of the Russian Federation. These
themes - about storing and structuring data, regulatory legal reference
information about how, and where it is safe to work with this in the Eurasian
Union — we will have to discuss it together in the Eurasian space. Because if
we do not regulate the exchange, storage and transmission of data, we will not
achieve our objective in digital transformation.
- Will a common
system of e-Government be organised within the Eurasian Economic Union?
-We do not have such an objective. We have the objective
of creating a seamless electronic communication system between the governments
of our countries. We are creating an integrated informational system, common
standards for data format description so that public bodies can freely exchange
data among themselves and, if necessary, create a common database. In terms of
intellectual property, for example, we have achieved the stage that we will
create a common register.
The second issue is the provision of public services
and seamless data exchange between public bodies. Regarding transboundary
services, for example, the common medicines market, we will seek to establish
common approaches to providing G2B (government to business) services. So that
it is all the same to business which window it uses - Kazakh, Kyrgyz, Armenian,
Belarusian, or Russian - it enters into this business and obtains a permit.
Public authorities will exchange information among
themselves and give permits to the entire market via a single window. That's
our goal. From this point of view, where we have transboundary supranational
services, we will strive to unite resources and establish a seamless and
interactive integrated system.
- When might this
- We have been creating the integrated system for
three years and we hope that in the near future, it will be introduced into
operation for a number of processes. To do so, the Commission has a dedicated
budget, has created a Department, and are working very intensively.
- Are there any
plans to develop exchange and employment programs for IT specialists living in
- We have a free labour market and our citizens are
free to seek employment in different countries of the Union. What is more
relevant is the issue of establishing a system for remote working. At one of
the recent conferences the topic of freelancers was discussed — it is forecast
that 40% of the labour market will be freelancers in the next five years. This
issue must be addressed.
Moreover, the most important thing for us is to ensure
that small and medium-sized businesses in our countries have access to our
common market via digitalization. The biggest potential for a small company is
entering regional and global markets "digitally" without leaving the
house. It is necessary that they are taught and shown the sequence of steps to
take to enter global markets.
- Will there be
special IT training programs for EurAsEC citizens?
- Our working group is collaborating with universities
and is posing the question of the need to establish a digital economy
department. It is necessary to combine efforts to create a network between
institutions to exchange programs, students, and knowledge in the IT sphere,
and create an ecosystem for the development of information technology
throughout the Eurasian Union. Unfortunately, education is not under the
purview of the Eurasian Economic Commission and the Union yet. But institutions
are organising themselves, realising that the purview is different in different
countries and if we unite, we will get a synergistic effect. What is being
developed, for example, in Armenia, hasn’t formed in any other countries.
At the Forum recently, we listened to Israel's
Minister of Science, Technology and Space. He said that for them it was manna
from heaven when 1.5 million experts came from the Soviet Union and provided
the breakthrough for Israel. Now our objective is to provide the same
conditions for all experts that we educate so they remain and work in the
Eurasian Economic Union.
— How can this be
— Of course, we are discussing how to do this, we are
forming the strategy of creating the common digital space, and are trying to
convey our ideas... But my personal position on this is very simple: we should
provide those who are trying to work with innovations the conditions for failure.
Let me explain: If you launch a startup in America and don’t succeed, no one
says you're a failure, and you won't struggle to find funding for a new
initiative somewhere else. On the contrary, you’ll be told that your next
project will be a success.
This is not the case in our countries: if you takes
funds and happen to fail, you will no longer be able to take advantage of other
opportunities. Therefore, we must create a system where it isn’t very expensive
for the experimenter and innovator to take risks. Risk should be encouraged!
This is the only way we can create an ecosystem where highly-qualified
specialists and entrepreneurs will want to work.
— Will there be a
common fund in the Eurasian Economic Union like the IIDF (Internet Initiatives
Development Fund) or something like the Russian Venture Company (RVC) uniting
investments in Internet start-ups and innovation?
— This is probably my favorite question. I began
to work on it back in 2015. As part of this concept, we are discussing the fact
that we need a single ecosystem for innovation development. But this ecosystem
cannot come into being unless we improve the system of its financing. It is
therefore necessary to create a common market for venture funding, and if we
can do so then, for example, venture capital funds in Russia will be able to
finance successful or potentially successful projects in Belarus, Kazakhstan
etc. If we want to create the relevant conditions for the internal migration of
innovative projects, we need a single market for venture financing.
In our countries, there are various digital market and
venture financing market regulators. In my view, in establishing a common
financial market, we could start with a market for venture financing. This will
create the conditions to support the innovation of general regulation for new
financial institutions such as crowdfunding, crowdinvesting companies, for the
financial digital platforms that serve a new sector of the economy. The
financial market is moving towards technology and it is on this financial
technology market that it is more logical to immediately create common rules