Ukraine has been conducting systemic reforms of the state management, and the Customs house was not forgotten, as it is the trade gates of the country and Ukraine's face for the foreign world.

Ukraine's Customs took the new step on June 1 having introduced the new Customs Code, adopted back in 2011. Experts note that this document will totally reform the working procedure of the Customs service at all levels. The new Customs Code is an essential part of the customs reform, started last year in Ukraine, independent analyst Ruslav Pavlenko says.

Let's look into the main innovations of the Code. First of all, the new document cuts the list of documents, necessary for customs registration. Now there are only three of them: customs declaration, invoice and customs value declaration. The basic time of registration and clearance has also been cut from 24 to 4 hours. Electronic declarations become more and more popular.

Secondly, pre-registration decisions now play the leading role in the process of customs clearance. From now on a customs official will classify the goods (by code and country of origin) before the very clearance process. Head of the State Customs Service of Ukraine Ihor Kaletnik says that such pre-registration decisions will help suppliers to get prepared to the nuances of the clearance process and will ensure smooth inspection.

Thirdly, customs applicants can submit documents in the nearest customs point, and goods cannot be held for longer than four hours. However, customs officials have now the right to hold post-audit control, meaning to inspect applicants after the clearance process is complete. With such procedure officials will be able to inspect accuracy and reliability of customs declarations.  In general, the inspection procedure looks very much alike the approach of tax service officials and many articles of the new Customs Code merely refer entrepreneurs to the norms of the Tax Code.

Nuances of innovations

The most reliable and responsible applicants will be granted the status of the authorized economic operator (AEO). Such status brings certain benefits, namely to keep goods in storage without providing documents for customs control, to remove customs security devices without customs permission or to pass customs control out of turn. AEO status will be available only for financially reliable entities, which have been engaged in foreign economic activities for three years minimum and which have corresponding system of stock account (without debts and registered cases of violations of customs regulations). In addition, any applicants for the AEO status will undergo thorough inspections and self-questionnaire survey.

The Customs house also introduces common customs Tariff, which will make field-specific taxation more transparent and will improve the general business climate in the country. Introduction of the common Tariff also provides for benefits for import of innovation equipment, which in its turn will simplify and speed up technical modernization of industry.

In general, the rights and obligations of customs applicants have been extended. From now on the business will individually determine the customs value of the goods, to registered date and time of declaration application. Suppliers can now demand and receive official written explanations in case the submitted price was not accepted.

As for the violations of customs regulations, customs officials face tougher control and responsibility: for the violation of the terms of customs clearance procedure officials may be fined or even dismissed. Then, the decision on goods or vehicle confiscation can be issued only by court, while customs officials are only authorized to set a fine or issue a warning.

Specialists say that the majority of norms of the new Customs Code have direct force and do not require subordinate legislation. The Code embodied all regulations earlier dispersed in numerous documents and resolutions. From now on the business will be able to calculate the time and expenses as well as follow the procedure without difficulties. "For the first time in 20 years we have a solid document which meets international and European standards and regulations. I officially declare that from June 1 the new history of relations between the business and Customs house begins," Kaletnik said.

Social role

Customs officials are now testing a procedure, which stipulates for customs clearance of one specific kind of goods through one specific customs house. Hence, Kyiv regional Customs house clears 80% of imported medicine and associated ingredients, going to Kyiv and the region. The rest 20% fall within Boryspil airport customs authorities.

According to a member of the State Customs Service of Ukraine board Viktor Bondar, such approach is aimed at several goals. The first one is social: medicine costs usually get overrated through offshore zones and as a result become unaffordable for the majority of population due to high consumer's price. According to the official, "when all medicines pass through a single control point, it is easier to control the process and to learn real prices. Besides, it is easy to establish the country of import. If, for example, a medicine X comes from a country Y, where there is no official production of such medicine, it becomes obvious that such medicines may be counterfeited." 

The basic social role of the State Customs Service is to prevent import of poor-quality medicines. Kaletnik says that the Service closely monitors the quality of imported goods, especially foodstuff. "Health of our citizens is a priory. We also closely monitor and inspect goods of chemical industry, including pesticide chemicals for agricultural complex," the official says.

The optimized methods, introduced by the Customs service, increased budget contributions by 34% up to 114.8 billion hryvnias in 2011. "The increase of contributions is also attributable to the legalization of business activities - less and less entities work through offshore now," the official informed. According to him, all this also has social significance - the state has more means to develop and implement social programs. 

For the four months of 2012 the inflow of customs duties has reached the amount of 38.1 billion hrynias, which is by 24% more than for the similar period of the last year. "Within this year we intend to carry out and overfulfil the plan on budget contributions. In 2012 we need to earn for the country 137 billion hryvnais, and we intend to do so bringing import out of shadow," Kaletnik stressed.

To be effective and invisible

The reform has also changed the very structure of the Customs service, cutting the staff and redistributing functions and authorities. As a result, 500 executive positions have been cut and 1500 officials have been dismissed for their corruption. For the moment the leadership of the service makes 8% of the total number of service officials.

In addition, the State Customs Service and the State Tax Service signed an agreement on information cooperation. According to Kaletkin, the Customs has unique information database, formed in the process of controlling operations over external economic activity. Hence, the exchange of data is mutually beneficial and aimed at the improvement of work of both agencies. In his turn, Tax Service head Klymenko believes the realization of the agreement on cooperation will serve to reveal and investigate crimes on money laundering and embezzlement, illegal financial operations, smuggling and violation of customs regulations.

The Customs service also cooperates within CIS. Last autumn Ukraine signed a free trade agreement within CIS, and though the ratification process goes slowly Kaletnik assures that Ukraine's Customs house is fully ready to launch the FTA regime.

But for now the major task for the Customs Service is to provide proper holding of Euro-2012. The Service reminds that all Ukrainian customs check points open special corridors for fans and sport officials to simplify the entering procedure. In addition, as of June 80% of customs official speak at least one foreign language.

"Our task is to be effective but invisible, so fans, businessmen or ordinary citizens do not suffer from our activity. This is the world level and world standards and we are quite capable to follow them," Kaletnik summed up.

Well, Godspeed...At least there are all conditions for success.


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