Business news from Ukraine

Ukraine is carrying out customs reform, one of the directions of which is the introduction of principles and instruments used in the EU countries. The EU, in turn, assists Ukraine in the development and implementation of such customs instruments. This was emphasized by the participants in the round table “Implementation of customs procedures in accordance with European practice: what changes should Ukrainian business expect? Practical aspects,” which took place at the press center of the Interfax-Ukraine news agency on September 21, 2021.

The event was attended by President of the Exporters’ Club of Ukraine Yevhenia Litvinova, President of the Ukrainian Chamber of Commerce and Industry Hennadiy Chizhikov, representatives of business associations, Director of the Customs Policy Department of the Finance Ministry of Ukraine Oleksandr Moskalenko, Director of the International Transit System Implementation Department of the State Customs Service of Ukraine Serhiy Demchenko, Director of the Department for Customs Audit and Registration of Persons of the State Customs Service Svitlana Anischenko, Head of the AEO Support Department of the Customs Control and Customs Clearance Organization Department of the State Customs Service Andriy Teply, the EU4PFM international expert on customs issues, ex-deputy head of customs of the Republic of Lithuania Vytenis Alisauskas.

Organizer and moderator of the round table Maksim Urakin noted that now the State Customs Service provides 35-40% of revenues to the state budget, and these figures have remained stable over the past years.

“In general, in January-August 2021, the State Customs Service fulfilled the revenue plan by 107% and transferred UAH 291 billion to the state budget (against the planned figure of UAH 272 billion). At the same time, in the eight months of this year, compared to the same period last year, receipts from customs payments increased by UAH 76 billion, or 36%,” Urakin emphasized.

In addition, the organizer noted that, based on the monitoring of data of Ukraine’s foreign economic activity in 2021, conducted by the Experts Club analytical center, the state budget revenues will continue to grow, as the country continues to increase the volume of international trade.

“Thus, exports to the EU countries in the first half of 2021 grew by 43.9% compared to the same period last year, imports – by 26.3%. The total volume of trade with the EU countries for the six months amounted to almost $ 25 billion, with China – about $ 9 billion. These data indicate that the stimulation of foreign trade through the harmonization of customs legislation is a key factor in the financial stability of the state, ensures budget replenishment and economic growth,” the speaker said.

The speakers provided an overview of the principles laid down in the EU Customs Code and the instruments used by EU countries to implement these principles; what of them should be expected in Ukraine (including thanks to the support of European partners), and which of these customs instruments are already being introduced or are close to being introduced in Ukraine – in particular, the common transit regime (NCTS), the Authorized Economic Operator Program (AEO) and customs audit.

Of particular interest to business representatives was the system of customs simplifications, which is used in the EU countries and is now being implemented in Ukraine – in particular, as part of implementation of the Association Agreement between Ukraine and the EU.

Yevhenia Litvinova, the President of the Exporters Club of Ukraine, in turn, emphasized that it is important for business to know what changes await us.

“Do opportunities or additional costs await us? The round table will give an impetus to better understand the expected changes, to prepare for them, so that our exports after 2022 are painless, efficient and active,” she stressed.

“We want everything to be good at once, but the customs reform is not an easy process. But what we see now gives a large share of positive. And above all, we are moving towards the EU, including mentally,” Hennadiy Chizhikov, the President of the Ukrainian Chamber of Commerce and Industry, said.

According to Vytenis Alisauskas, the EU4PFM international expert on customs issues, the ex-deputy head of the customs of the Republic of Lithuania, the changes to the EU Customs Code fixed the new mission of the European customs. If earlier the customs had to protect the local market and collect customs duties, now it is becoming part of the international trade chain. And the competitiveness of local exporters depends on how it works.

The international expert focused on the tasks that must be solved with the help of the EU Customs Code – so that it would be profitable for an entrepreneur to be honest, so that a conscientious business could save his time and money, so that some of the processes that are (as a rule) performed at customs could be carried out by such a business on its own.

“An authorized economic operator (AEO) is a symbol of a conscientious entrepreneur who is trusted by customs and who has significant advantages in customs clearance,” he said.

Alisauskas highlighted the key tools used by European customs to save time for fair business – in addition to the simplification system (the AEO program and simplification in the general transit regime), this is a customs audit system (post-audit) and a customs risk management system.

International partners help create and implement these principles and tools in Ukraine.

Oleksandr Moskalenko, the Director of the Customs Policy Department of the Finance Ministry of Ukraine, stressed that the country is now working in the vector defined by the Constitution – European integration. Europe is our largest trading partner, and therefore, it is important to approximate, introduce the best European practices – so that European and Ukrainian customs work according to the same rules.

“We have completed a large layer of legislative changes. Now both the customs and the business must deploy all this. We need training, enlightenment, promotion. Therefore, I would like international partners to help us also conduct business training. So that all participants in the process not only have the rights, but also know how to use them,” he said.

In his opinion, the acceleration of customs clearance should be achieved not at the expense of a command to customs officers to “work quickly,” but at the expense of an efficiently built system.

“We are moving towards building partnerships between business and customs. It will take some time,” he concluded.

Serhiy Demchenko, the Director of the Department for the Implementation of the International Transit System of the State Customs Service, said that in the second quarter of 2022 Ukraine is expected to join the Convention on the Common Transit Procedure, and already in the third quarter of 2022 – the stage of Ukraine’s international application of the NCTS system.

“In a year, Ukrainian enterprises will be able to transit with 35 countries (including all EU countries, EFTA, Turkey, Great Britain) on the principle of “one vehicle – one transit declaration, one financial guarantee”,” Demchenko said.

He also informed about the main four special transit simplifications that the general transit system provides: an authorized consignor, an authorized consignee, self-sealing of a special type, a common financial guarantee. Regarding the guarantee, the Customs Service representative emphasized that new approaches are being applied that make it possible to reduce the amount of security for the base amount of the guarantee when it is used – by 50%, 70%, or 100%.

“As you know, now NCTS is used on a national scale, however, enterprises using this system (having issued 50 declarations or more) can apply for simplifications, which will also be valid for the international application of the system. Currently, the system has registered more than 3,000 officials of customs authorities, more than 180 companies gained access to the Trader Portal, about 300 T1UA declarations were submitted, three companies received the status of a financial guarantor, Helpdesk works, seven seminars were held with subjects of foreign economic activity,” the expert summed up.

According to Andriy Teply, the head of the AEO support department of Customs Control and Customs Clearance Organization at the State Customs Service, the full implementation of the functioning of the Authorized Economic Operator (AEO) Program is a priority of the State Customs Service for the next 2-3 years. Among the main challenges, he named the transformation of customs-business relations: such relations today are built on the distrust of business in customs, but should be open and partnership.

As you know, the Authorized Economic Operator Program has been operating in Ukraine since August 2020. Its implementation is stipulated by the Association Agreement between Ukraine and the EU. It provides a number of simplifications and advantages in customs clearance. To obtain the status, it is necessary to go through a rather difficult and lengthy authorization procedure.

“As of September 2021, the State Customs Service received five applications for authorization of the AEO. Of these, one enterprise was granted authorization as the AEO, two were denied an assessment, while two applications are under preliminary consideration,” the expert said.

Svitlana Anischenko, the Director of the Department for Customs Audit and Personnel Registration of the State Customs Service, stressed that customs audit in Europe is more focused on foreign economic activity and acts as a system that allows speeding up the process of customs clearance.

“We feel the need to create a high-quality IT tool – with the support of European partners, the first version of the Customs Audit information system was created, in August-September it is tested by customs. A month ago, an agreement was reached with European partners to support the creation of the second version. Also, the development of a risk management system for the selection of enterprises for customs audit has begun,” she said.

The event record can be viewed here: https://www.youtube.com/watch?v=4VBpReShdr8.

The organizers of the event are the European Union Project EU4PFM “Public Finance Management Support Program in Ukraine,” the Ukrainian Chamber of Commerce and Industry, the Exporters’ Club of Ukraine, and the Interfax-Ukraine news agency.