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EU Changes the Customs Regulations. What Ukrainian Business Should Be Aware of?

Date of publication: 29 April 2016

Olena Omelchenko, Partner, Attorney at Law, Head of International Trade Practice

Source: European Pravda

As early as from May 01 of the current year the main part of provisions of the EU’s new Union Customs Code (adopted in October 2013) will come into force.

Transition to the supranational unified customs system will be carried out gradually and will last till the end of 2020. This will be the moment when the transition period will finally come to an end and new IT-infrastructure (comprising all unified data bases for exchange of information between the EU member countries) will be created.

The customs authorities and participants of foreign economic activities will exchange information only in the electronic form and paper documents will rather become an exception to the rule.

Each EU member country must manage to bring its national legislation in conformance with new norms and regulations which involves dozens and even hundreds of national laws related not only to customs, but also to tax matters. So, what do Ukrainian exporters should expect?

Sizeable changes are expected in customs appraisement which is very important for international companies importing their goods to the EU.

Other important novelties are related to defining of a term “exporter”, special proceedings (warehousing, processing etc.), rules of origin and Binding Tariff Information.

Particular attention in the code must be placed onto activities of authorised economic operators whose powers will be substantially widened. The said economic operators will be allowed to perform simplified customs registration formalities, to provide customs guarantees and, to independently release the goods into free circulation (in certain instances), to define the amount of duties and to partly perform duties of customs houses.

It means that there will be less customs checks and, as a result, more simplified customs procedures.

The whole territory of the EU will have a centralized registration mechanism related to movement of goods through customs offices which will generally contribute to decrease of the quantity of customs procedures.

All customs declarations will be submitted in electronic form via Electronic Data Interchange communication system. In addition to electronic declarations there will also be oral declarations for the goods worth not more than EUR 1 000.00 which, however, will unlikely be suitable for reimbursement of export VAT.

An electronic declaration in XML form will serve as a confirmation of import or export of goods for tax-related purposes. It will be necessary to safekeep shipping documentation throughout 10-year period as a confirmation of import of export of goods over the EU border, as soon as the period of safekeeping of customs documents for customs purposes will be increased from thee (3) to ten (10) years.

It means that customs authorities will have the right to check the documents within a 10-year period and, under certain circumstances, charge additional customs duties.

The national penalty systems will be canceled leaving only the unified system of administrative sanctions and penalties under the Union Customs Code. The procedure of charging fines will be considerably simplified and no responsibility will ensue as a result of accidental or undeliberate decrease of the amount of customs payments for an inessential amount. At the same time the amounts of fines and sanctions imposed for serious violations of customs procedures shall be substantially increased.

The unified the Union Customs Code allows for temporary storage of goods only at the warehouses which receive the permits for this from customs authorities of EU member countries.

In this connection certain EU countries are intended to limit the operation of so-called free economic zones in their territories which will result in their transformation into mere customs warehouses and, thus, their services will become obsolete for the local exporters. To operate customs warehouses their operators will have to obtain a corresponding permit and put down a deposit.

However, Ukrainian exporters should not be greatly worried as all the amendments have been brought in conformance with provisions of the EU-Ukraine Association Agreement and are directed at implementation of the new WTO Trade Facilitation Agreement.