Russia - Domestic trade



A central marketplace is a common feature of urban areas in Russia. Outside of Moscow and St. Petersburg, small open markets and kiosks are the primary retail establishments. Nationwide distribution channels are still largely undefined.

Many consumer goods, which were often traded via the black market during the Soviet era, are now openly available. However, inflation and slow economic recovery severely constrain domestic purchasing power. Since the underground economy was so well-developed during the Soviet period, distribution and trade through informal channels is still common. The appearance and rapid development of organized crime in post-Soviet Russia may also be seen as a result of Russia's affinity for informal domestic economic activity; local businesses are often forced to pay protection money to organized crime. Commercial advertisement, virtually unknown during the Soviet era, is now commonly used.

As of 2001, a value-added tax of 20% (VAT) applies to most goods and services. The VAT is reduced to 10% for certain foods and children's clothing. Pharmaceuticals and certain financial services are exempt. Additional sales taxes are levied locally. Credit cards are being accepted at major hotels and restaurants in Moscow and St. Petersburg, but many other retail establishments still operate on a cash-only basis.

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