The Customs Code is the basis for Ukrainian legislation on customs. Apart from the Customs Code, Ukrainian customs legislation includes the following:
The Ukrainian customs legislation also includes around 20 Decrees of the President of Ukraine, over 130 Regulations of the Cabinet of Ministers of Ukraine, and 6 Regulations of the Board of the National Bank of Ukraine. The indicated list of documents is constantly widened.
Customs and tariff regulations are a set of measures that set and apply customs duties (import, export, and special ones), levy of the customs duty within specific preferential regimes, control the customs value of goods, and classify commodities and the countries of their origins, in order to secure collection of customs duty in full.
The principles of the customs and tariff regulations in Ukraine are spelled out in the Laws of Ukraine «On the Uniform Customs Tariff», «On the Customs Tariff of Ukraine» and Decree of the Cabinet of Ministers of Ukraine «On the Uniform Customs Tariff of Ukraine».
These legislative acts set:
The Customs Tariff of Ukraine is the main customs and tariff regulation instrument.
On July 1, 2001, the new Customs Tariff of Ukraine entered into force. This document was created on the basis of the Ukrainian Commodity Classification for Foreign Economic Activity (hereinafter referred to as UCCFEA), which corresponds to the Harmonized System for commodity description and coding (HS) of 1996 and the EU's Combined Nomenclature (CN). It includes over 10,000 tariff rates and allows code input at the level of 9 and 10 digits for possible national commodity detailing needs.
At present, the simple average (nominal) rate of the Ukrainian Customs Tariff is around 10.7% for privileged rates and 21.2% for full rates. Nevertheless, these figures differ significantly for different parts of the Customs Tariff.
During 2001-2003, the Law of Ukraine “On the Customs Code of Ukraine” was amended 8 times. In total, 1,220 rates of import customs duties were changed for specific commodities.
Thus, in order to gradually meet the commitments within the Textile Agreement between Ukraine and the EU and establishment of favorable conditions for promotion and strengthening of domestic textile and ready-made garments on the European market, rates of the import customs duty for textile and textile items (commodity positions in groups 51-63) were reduced respectively to the level effective in EU countries.
The Law of Ukraine “On changes to a number of Laws of Ukraine”, which was enacted on May 15, 2003, set ad-valorem duty rates for floral products.
The Laws of Ukraine No.2715-IV dated June 23, 2005 and No.2775-IV dated July 7, 2005, reduced the tariff load by almost 90% of all tariff positions. In addition to that, the indicated legislative acts leveled the privileged and full rates of the customs tariff.
Control over correctness of the goods’ country of origin
Control over correctness of the goods' country of origin is exercised with the purpose of fulfilling legislation in respect to granting of free trade preferences and adhering to agreements with the EU during exports from Ukraine within the Generalized Preference System.
Control over the determination of preferential origin of goods from CIS member states is exercised by customs authorities, according to the Rules for determining the country of origin for CIS countries dated November 30, 2000, and for the goods originating in Macedonia – according to the effective free trade agreement.
Customs value
The need to bring Ukrainian legal norms for determining the customs value into compliance with the international customs valuation system, pursuant to the Agreement on application of WTO article VII, was mirrored in regulations of part XI of the Customs Code of Ukraine, which is titled “Goods’ customs value. Methods for determination of the goods’ customs value”.
Three chapters of the Customs Code have to do with determining the customs value:
According to article 259 of the Customs Code of Ukraine, the CUSTOMS VALUE OF THE GOODS is the value of goods, which are moved across the customs border of Ukraine that is stated by the declarant or determined by a customs official. This value is calculated as of the moment of the goods’ crossing of Ukraine’s customs border and in compliance with provisions of the Customs Code of Ukraine.
Thus, the customs value is a calculated value, which enables authorities to levy the same tax from a unit of the goods supplied from the same producer, however different the commercial conditions of purchase, payment, and delivery of such goods to Ukraine. This is achieved through the calculation of the goods’ value on the same basis, which includes the value of the goods, the cost of their delivery to the entry port to the customs territory and the cost of these goods’ insurance.
The customs value of the goods that are imported to Ukraine’s customs territory is determined through application of the following six methods:
According to provisions of the Customs Code of Ukraine (method 1), the primary basis for determining the customs value is the price, which has actually been paid or is subject to be paid for the goods, taking into account specific elements that form a portion of the value for customs purposes. For example, one of such elements could be expenditures on transportation of goods to the port of entry, when these expenditures were in place and were not included in the value subject to payment.
If the customs value cannot be determined based on method 1, it should be determined based on one of the five subsequent methods, which are to be applied consecutively.
The goods’ customs value stated by the declarant and the submitted information about determination of this value has to be based on reliable information in the quantitative expression, which should be confirmed by documents.
The procedure for declaring the customs value of goods that are moved across Ukraine’s customs border is approved by the Order of the Cabinet of Ministers of Ukraine “On approval of the Procedure for declaration of the customs value of the goods moved across Ukraine’s customs border” No.1375 dated August 28, 2003.
According to the indicated regulation of the Cabinet of Ministers of Ukraine when goods are moved across the customs border with a contract value exceeding EUR 5,000 and these goods are subject to taxes and duties (mandatory payments), in order to declare the goods’ customs value, the importer has to submit a customs value declaration, in addition to the cargo customs declaration.
The indicated regulation of the Cabinet of Ministers of Ukraine sets three customs value declaration forms, the application of which depends on the selected method of the goods’ determined customs value and the customs regime.
During the export of goods, a customs value declaration is to be submitted during completion of customs formalities only for goods subject to imposing an export, anti-dumping, compensatory, or special customs duty (oilseeds, metal scrap, live cattle, and hides).
The procedure for filling out the customs value declaration is approved by the Order of the Customs Service of Ukraine No.828 dated December 2, 2003.
The order of the Customs Service of Ukraine “On setting of risk indicators” No.308 dated April 19, 2005 determines the risk indicators in respect to the determined customs value of specific goods imported to Ukraine’s customs territory.
Non-tariff regulation measures
Apart from the customs control, goods moved across Ukraine’s customs border may also be subject to sanitary-epidemiological, veterinary, phytosanitary, radiological, ecological control, and control over movement of cultural valuables. Customs authorities cooperate with state authorities that exercise the indicated types of control, according to the procedure set forth in Ukrainian legislation.
Customs formalities with the goods moved across Ukraine’s customs border can only be finished after the above-mentioned types of control have been completed for the goods requiring these types of control, pursuant to Ukrainian legislation in force.
According to Ukrainian legislation, if Ukraine does not have national standards and requirements for a specific commodity, corresponding international standards and requirements or foreign standards and requirements effective in countries that are leading exporters of these commodities shall be applied.
The regulation of the Cabinet of Ministers of Ukraine “On measures aimed at stage-by-stage introduction of requirements of EU directives, sanitary, ecological, veterinary, phytosanitary norms and international and European standards in Ukraine” No.244 dated March 19, 1997 defines the main directions and priorities for bringing national technical regulations in compliance with the international system.
The main non-tariff regulation measures include:
Licensing and quotation of foreign economic operations are introduced in Ukraine in accordance with article 16 of the Law of Ukraine «On foreign economic activity» No.959-XII dated April 16, 1991. Decisions on the introduction of export and import licensing and quotation regimes are made by the Cabinet of Ministers of Ukraine with suggestions from the Ministry of Economy of Ukraine. Such decisions include the list of specific commodities (works, services) that fall under the licensing and quotation regimes and their terms of effect. These decisions are reviewed every year.
The Order of the Cabinet of Ministers of Ukraine No.1722 dated December 23, 2004 approved the lists of commodities, export and import of which are subject to licensing and for which quotas are set in 2005.
When the list of commodities falling under licensing and quotation regimes is made up, Ukraine’s commitments in international agreements are taken into account. In particular, these agreements include:
The Cabinet of Ministers of Ukraine issued a separate regulation (No.267 dated March 3, 1998), which approved export quotas to European Coal and Steel Community member states for certain steel items for the period 1998-2001 and the list of codes within the EU Combined Nomenclature for the items covered by the indicated agreements.
A license issued by the Ministry of Economy is a basis for completion of customs formalities with the goods moved across Ukraine’s customs border. Based on such licenses, customs authorities keep records about such goods.
The procedure for application of special measures on goods imported into Ukraine is used in accordance with the Law of Ukraine “On application of special measures on imports to Ukraine” No.332-XI dated December 22, 1998. This law introduces mechanisms for protecting national producers’ interests and regulates the principles and procedure for conducting special investigations into the facts of Ukraine’s increased imports from other countries and customs unions or economic groupings, which significantly impair national commodity producers. Such investigations may result in the application of special measures.
These issues are regulated by the Interdepartmental Commission on International Trade, which is headed by the Minister of Economy of Ukraine. The personal list of Commission members is approved by the Cabinet of Ministers of Ukraine by the suggestion of the Head of the Commission.
As a result of consideration of an issue, the Commission may take a decision in favor of conducting a special investigation. It usually commissions the Ministry of Economy and European Integration with conducting such an investigation and publishes the results in newspapers. The investigation period is normally up to six months. In some instances, it may exceed one year.
If the special investigation reveals a threat for significant harm, the Commission may take a decision in favor of applying special measures such as the imposition of a special customs duty and/or surveillance measures. The time period of surveillance measures is no longer than one year, unless otherwise provided by the Commission’ decision.
The commodity, to which the above-mentioned measures have been applied, can be imported to Ukraine’s customs territory if a corresponding import permit is submitted to the corresponding Ukrainian customs authority. This permit is issued by the Ministry in the form approved by it.
The import permit is effective on all of Ukraine’s territory until 90 days after the date of its issuance.
In order to protect national interests, the Commission may take a decision in favor of the following special measures:
Quotation of Ukraine’s import of the commodities, which are object to special measures, is carried out through the issuance of special licenses by the Ministry.
The procedure for issuing licenses for the right to import and export alcohol, alcoholic beverages, and tobacco products is regulated by the Law of Ukraine “On state regulation of production and circulation of ethyl, cognac and fruit alcohol, alcoholic beverages, and tobacco products” No.481/95-VR dated December 19, 1995.
Import and export licenses for ethyl and fruit alcohol are issued by state enterprises and organizations that are specially empowered to do so by the Cabinet of Ministers of Ukraine.
Import and export licenses for cognac alcohol are issued by specialized cognac enterprises. The list of indicated enterprises is approved by the Cabinet of Ministers of Ukraine.
All business entities of any property forms can import and export alcoholic beverages and tobacco products if they have corresponding licenses.
Licenses for the right to import or export alcohol, alcoholic beverages, and tobacco products are issued separately for each type of business activity for a term of 5 years by the Ministry of Economy of Ukraine.
The legal principles for certification of commodities imported into Ukraine are set by the Decrees of the Cabinet of Ministers of Ukraine "On state supervision over adherence to standards, norms, rules, and responsibility for their violation" No.30-93 dated April 8, 1993 and "On standardization and certification" No.46-93 dated May 10, 1993.
According to article 3 of the Decree of the Cabinet of Ministers of Ukraine No.30-03 dated April 8, 1993, the objects of state supervision, in particular, are as follows:
Article 18 of the Decree of the Cabinet of Ministers of Ukraine No.46-93 dated May 10, 1993 states that correspondence of a product (goods) imported to and sold on Ukraine's territory to the mandatory requirements of norms and standards effective in Ukraine can be confirmed by a certificate or recognition of a foreign certificate, which are issued by the State Committee of Ukraine on standardization, metrology, and certification or an authority empowered (accredited) to do so.
The State Committee of Ukraine on standardization, metrology, and certification includes the certified product into the Uniform Register of products certified in Ukraine, based on the issued certificate of correspondence or certificate of recognition of a foreign certificate.
Customs authorities complete customs formalities with imported goods based on information in the Uniform Register, according to the procedure set by the Cabinet of Ministers of Ukraine.
The list of products subject to mandatory certification in Ukraine is approved by orders from the State Standard Committee and is updated constantly.
The procedure for customs formalities with imported commodities, which are subject to mandatory certification in Ukraine, is approved by Regulation of the Cabinet of Ministers of Ukraine No.1211 dated November 4, 1997.
Pursuant to this Procedure, the reasons for completion of customs formalities with goods (products) for free circulation on Ukraine’s customs territory are as follows:
The effect of the mentioned certificate of correspondence (certificate of recognition) or a copy extends to:
A customs officer has to make a note of the number and issuance date of the certificate of correspondence of goods or certificate of recognition of a foreign certificate in the cargo customs declaration.
The procedure shall not be applied to imported goods which are moved to Ukraine:
In order to carry out measures aimed at the introduction of EU directive requirements in Ukraine, sanitary, ecological, veterinary, phytosanitary norms and international and European standards approved by regulation of the Cabinet of Ministers of Ukraine No.244 dated March 19, 1997, Ukraine enacted:
The basic legislative act for regulation of relations connected with the exercise of sanitary and epidemiological control is the Law of Ukraine "On securing of the population's sanitary and epidemic safety" No.4004-XII dated February 24, 1994.
According to article 16 of this law, business entities can import raw materials and products (manufactured items, equipment, technological lines, etc.) on the condition that there is available information about safety for the population's health.
The list and content of this data is set by the chief sanitary doctor of Ukraine.
The legal basis for exercise of phytosanitary control is determined by the Law of Ukraine No.3348-XII dated June 30, 1993 "On plant quarantine", which is aimed at prevention of import and spreading of dangerous pests, plant diseases, and weeds on the Ukrainian territory.
The plant quarantine is understood as a legal regime suggesting a system of state measures aimed at protection of plants, their products, raw materials, specific cargoes, etc. from quarantined objects.
The list of quarantined objects is determined by the Ministry of Agriculture and Food of Ukraine.
Principles of Ukraine's territory protection from entry of contagious animal pathogens from other countries' territories and exercise of state veterinary control over quality and safety of animal produce, which is moved across Ukraine's customs border, are determined by the Law of Ukraine "On veterinary medicine" No.2498-XII dated June 25, 1992.
Pursuant to article 14 of this Law, Ukrainian enterprises, institutions, organizations, and foreign economic entities have the right to import veterinary preparations, substances, ready-made compound feeds, and feed additives that are registered in Ukraine.
Veterinary preparations, substances, ready-made compound feeds, and feed additives that are not registered in Ukraine can be imported to Ukrainian territory for the purpose of:
In accordance with provisions of the Partnership and Cooperation Agreement between Ukraine and the EU and with the purpose of harmonizing Ukrainian legislation with EU legislation, a uniform interdepartmental database has been created in Ukraine under the title of "Medical substances registered in Ukraine". The state department of control over quality, safety, and production of medical substances and items for medical purposes updates this database permanently, jointly with the State Customs Service of Ukraine.
One of the principally-important factors for following international trading rules is the application of equivalent customs procedures, irrespective of the country that owns the goods, cargo, and means of transportation. One of the top-priority tasks is democratization and unification of customs control procedures in respect to imported goods.
The following types of customs regimes are regulated in detail according to the purpose of movement of goods across the Ukrainian border:
Reimport is a customs regime, according to which goods originating in Ukraine and moved beyond Ukraine's customs territory within the export customs regime are imported back into Ukraine's customs territory, no later than within the time period determined by the legislation, for free circulation within this territory.
Within the re-import customs regime, goods can be moved across Ukraine's customs border if they:
If the goods are re-imported within one year after the date of their export, the export customs duty amounts, which were levied during their export, are refunded to owners of these goods or the persons empowered to receive these funds by the owners, based on their applications. Refunds are made at the expense of the State Budget of Ukraine by authorities of the State Treasury of Ukraine upon submission of respective customs authorities.
The person that moves goods in the re-import regime pays the amount received by the exporter as payment or at the expense of other incentives, which were granted during export of these goods, as well as the interest incurred on these amounts, which should be calculated based on the discount rate of the National Bank of Ukraine.
Re-export is a customs regime, according to which goods originating in countries other than Ukraine are moved beyond Ukraine's customs territory in the export regime, no later than within the time period envisaged by the legislation after the moment of import to Ukraine's customs territory.
Goods originating from other countries can be moved beyond Ukraine's customs territory in a re-export regime if:
Temporary import (export) is a customs regime, according to which goods can be imported to Ukraine's customs territory or exported beyond Ukraine's customs territory on a condition of mandatory return for these goods without any changes except for those resulting from natural deterioration or losses under normal transportation and storage conditions.
Movement of goods in a temporary import (export) regime suggests the following conditions:
Permission for temporary import of goods into Ukraine's customs territory (or their temporary export beyond Ukraine's customs territory) is acceptable, based on a commitment to move them back, in respect of the following items:
The total time period allowed for temporary import (or export) of goods is one year after the day of import to Ukraine's customs territory (or export from Ukraine's customs territory). By taking into consideration the purpose of import (export) of these commodities and other possible circumstances, the corresponding customs authority can extend this period.
By the end of the time period for the temporary import (export), the person that made a commitment to move these goods back has to do one of the following:
A special customs zone is a customs regime, in which customs authorities do not apply tariff and non-tariff regulation measures to goods imported into the special (free) economic zones' territories from outside Ukraine's customs territory, as well as to goods exported from territories from the indicated zones beyond Ukraine's customs territory, unless otherwise provided by the Ukrainian legislation in force.
Special customs zones are parts of Ukraine's territory, which are under the special customs zone regime. For taxation purposes, goods imported to special customs zones' territories are considered beyond Ukraine's customs territory.
One specific feature of Ukrainian legislation is the fact that special customs zones are established according to the Law of Ukraine "On general principles for establishment and functioning of special (free) economic zones" No.2673-XII dated October 13, 1992. With this purpose, a separate law is made for each special customs zone, which determines its status, territory, time period, for which it is created, and specific features of Ukrainian legislation which is applicable on its territory.
The law spells out the requirements toward special customs zone, types of commodities that are allowed for import into such a zone, and descriptions of permitted transactions with the goods within the zone. The law also states the requirements for the organization of work in the special customs zone and responsibilities of the zone's managing authorities with respect to fulfillment of customs legislation's requirements to the customs control in such zones.
Processing on Ukraine's customs territory is a customs regime, under which goods that are imported to Ukraine's customs territory and originate from other countries are processed, according to a procedure set forth in legislation, without the application of non-tariff regulation measures to them, on the condition that the products for processing are moved beyond Ukraine's customs territory in the export regime.
Operations on processing of goods on Ukraine's customs territory can be as follows:
The number of operations on processing goods in the customs regime of processing on Ukraine's customs territory is not limited. If according to the terms and conditions, several processing operations have to be performed by several enterprises, each of the enterprises that is taking part in the processing process has to receive permission for processing the goods on Ukraine's customs territory from a customs authority. The goods can be moved between the enterprises that are taking part in their processing, upon permission and under control of customs authorities.
The time period for processing goods on Ukraine's customs territory is calculated beginning with the date of completion of customs formalities with the goods, which are imported for processing.
The time period for processing goods on Ukraine's customs territory is set by the customs authority upon granting permission to the Ukrainian resident enterprise, proceeding from the duration of the goods' processing and disposal of the products of their processing. As a rule, this time period cannot be longer than 90 days.
Proceeding from specific technological features of processing, the Cabinet of Ministers of Ukraine may set different time periods for processing the goods, based upon suggestions from a corresponding ministry or another central executive authority.
Customs authorities exercise control over the mandatory recovery levels for the products that are received as a result of the goods processed on Ukraine's customs territory. Information about mandatory recovery levels is mentioned in the agreement (contract) for processing goods on Ukraine's customs territory. If the goods that were imported for processing on Ukraine's customs territory or their products are subsequently exported from Ukraine, they are subject to the customs regime. In this case, a separate document should be filled out, namely, a customs declaration, which mentions the quantity and value of the Ukrainian goods, which were used for processing of the goods that were imported for processing.
Customs warehouse is a customs regime, according to which goods imported from outside Ukraine's customs territory are stored under customs control without taxes and duties and without the application of non-tariff measures to them and other limitations during the storage period. The goods that are moved beyond Ukraine's territory are stored under customs control after the completion of customs formalities until they move beyond Ukraine's customs borders.
Any commodities can be moved into the customs warehouse regime, excluding the goods prohibited for import (export) to (from) Ukraine and transit through Ukrainian territory, as well as the goods, the list of which is determined by the Cabinet of Ministers of Ukraine.
The term of storage for goods, which were imported from outside Ukraine's customs territory in the customs warehouse regime, cannot exceed three years after the day these goods were placed in the indicated regime.
The terms of storage of the goods is subject to an excise duty payment in the customs warehouse regime, and cannot exceed three months after placement of these goods in this regime.
With the purpose of FEA liberalization, the Cabinet of Ministers of Ukraine issued the Order "On facilitation of FEA" No.593 dated April 14, 1999. The regulation provides the State Customs Service with the right not to apply non-tariff regulation measures and other limitations in respect of bona-fide business entities at the time when customs formalities are completed. This statement concerns only business entities that are indebt on foreign economic transactions or on taxes and dues to the budget and that strictly follow the customs and tax legislation). The criteria and procedure for making of a list of such enterprises is set by a joint Order of the State Customs Service of Ukraine, the Ministry of foreign economic activity and trade of Ukraine, and the State Tax Administration of Ukraine No.411/488/357 dated July 7, 1999.
Regulation of the Cabinet of Ministers of Ukraine "On import of specific types of commodities to Ukraine's customs territory" No.390 dated March 29, 2002 determines the procedure for import of specific commodities to Ukraine's customs territory with any purpose (except for transit through Ukraine's customs territory). The list of these specific commodities is set by the State Customs Service of Ukraine, depending on the means of transport that is used for their movement. In order for these goods to pass across Ukraine's customs territory, the business entity, which imported the goods is addressed, has to present the previous cargo customs declaration and its electronic copy to the customs, which is responsible for the zone of this entity's location.
These goods are allowed to move across the customs border after the customs located at Ukraine's customs border checks the correspondence of the cargo and information in the accompanying documents with information contained in the electronic copy of the previous cargo customs declaration.
In this scheme, the business entity, to which the imported goods are addressed, can choose to supply customs with a measure that provides for the delivery of goods to the destination:
The State Customs Service determines the procedure for application of measures for securing of the goods' delivery to the customs at the destination, depending on the commodity type and means of transport, which is used for carrying these goods.
The previous customs declaration, as well as the electronic copy, should not be submitted and the measures aimed at securing of delivery of the goods to the customs at the destination should not be applied if customs formalities are completed directly at the customs office located at Ukraine's border in the instances determined by the State Customs Service of Ukraine.
The State Customs Service has the right not to apply the measures aimed at delivery of the goods to the customs at the destination at the time customs formalities are completed so that the resident Ukrainian enterprises can enjoy the facilitation regime, pursuant to regulation of the Cabinet of Ministers of Ukraine "On facilitation of foreign economic activity" No.593 dated April 14, 1999.
Prepared in accordance with the materials of the State Customs Service of Ukraine