Customs clearance

Customs clearance is the set of formalities without which goods cannot legally cross a customs border: lodging a declaration, calculating and paying duties and taxes, presenting documents and, when customs asks, the goods themselves for inspection. The general rules are set by the Customs Code of Ukraine, duty rates by the Law on the Customs Tariff of Ukraine, and restrictions on particular goods by special laws on certification, export control and sanitary and phytosanitary control.

The declarant can be the owner of the goods or a customs broker acting on the owner’s behalf under a contract. Customs brokerage is one of the activities supervised by the customs authorities. In practice the broker checks the documents, determines the commodity code and the customs value, prepares the electronic declaration, signs it with a qualified electronic signature and follows the shipment until release.

Declarations are lodged electronically. Customs processes them through a risk management system that decides whether a document check is enough or an inspection or sampling is needed. Documents issued by other control bodies are in many cases checked through the single window mechanism. The Customs Code sets a maximum clearance time, counted from the presentation of the goods and the lodging of the declaration with all required documents. Inspections away from the customs office, laboratory testing of samples or requests for additional documents extend that limit.

Every item on a declaration gets a ten-digit code under the Ukrainian Classification of Goods for Foreign Economic Activity (UKT ZED). It is built on the Harmonized System of the World Customs Organization and the EU Combined Nomenclature and is adopted by the Law of Ukraine on the Customs Tariff of Ukraine. The code determines the duty rate, any relief, the need for certificates and licences, and how closely customs will look at the shipment.

The code is determined under the General Interpretative Rules: first by the wording of the headings and the section and chapter notes, then by purpose, material and degree of processing. Complex equipment, sets and spare parts cause most disputes, so for repeat shipments it makes sense to obtain an advance classification ruling from customs.

Customs value is the base on which duty and VAT are calculated. The Customs Code sets several valuation methods, applied in sequence starting with the primary one:

1. primary: the transaction value of the imported goods;
2. the transaction value of identical goods;
3. the transaction value of similar goods;
4. the deductive method;
5. the computed value method;
6. the fall-back method.

Costs the buyer pays separately are added to the contract price, in particular transport and insurance up to the point of entry into Ukraine. That is why the Incoterms rule and the freight invoices affect the amount payable just as much as the commercial invoice. If the documents do not support the declared price, customs may request more documents or determine the value by another method.

Transit lets goods cross one or more countries under customs control without paying duties and taxes there. Since 1 October 2022 Ukraine has been a contracting party to the Convention on a Common Transit Procedure and uses NCTS. A single electronic T1 or T2 transit declaration covers the shipment from the office of departure to the office of destination across all contracting parties on the way.

Common transit requires a guarantee covering the duties in case the goods do not reach their destination. The procedure ends at the office of destination, and until it is discharged the guarantee stays committed. Outside the common transit area, TIR carnets or national transit procedures are used.

An ATA carnet is an international customs document for temporary admission without paying duties: exhibition goods, professional equipment, commercial samples. Ukraine has accepted ATA carnets since 1 March 2008; they are issued by the Chamber of Commerce and Industry. A carnet is valid for no more than one year, and the goods must leave before it expires, or the duties become payable.

The cost of clearance has two separate parts. The first is customs payments set by law: duty at the UKT ZED rate, VAT and excise for excise goods. The second is the fee for declaring and related work, which depends on:

• the number of tariff lines on the declaration and how hard they are to classify;
• the customs procedure and the need for permits, certificates or licences;
• how complete and accurate the shipper’s documents are;
• the need for inspection, weighing, sampling and testing;
• storage time in the temporary storage warehouse;
• arranging and guaranteeing transit.

Timing depends above all on whether the documents are ready before the cargo arrives. The law limits the time of clearance itself, but obtaining a certificate or permit, laboratory testing or a request for more documents can extend the process considerably. That is why permits are planned in parallel with transport.

• Goods and document review. Checking the invoice, specification, contract and transport documents against each other and against customs requirements.
• Classification. Determining the UKT ZED code, duty rates, non-tariff measures and permit requirements.
• Customs value. Choosing the method, checking which transport and insurance costs belong in the value, preparing supporting documents.
• Duty estimate. Preliminary calculation of duty, VAT and excise, checking eligibility for preferences.
• Declarations. Preparing and lodging electronic declarations for import, export, re-import, re-export, temporary admission and export, and customs warehousing.
• Transit. NCTS transit declarations (T1, T2), TIR carnets, monitoring discharge of the procedure.
• Origin. Preparing the application and documents for an EUR.1 certificate from customs, checking suppliers’ origin declarations.
• Temporary admission. Handling shipments under ATA carnets: exhibitions, samples, professional equipment.
• Permits. Coordinating certificates of conformity, opinions and licences before the cargo arrives.
• Customs control. Attending inspections and sampling, answering customs queries.
• Temporary storage. Arranging storage, weighing and transshipment in the customs control zone.

Declarant

• The foreign trade operator must be registered with the customs authorities.
• The declaration is signed with the qualified electronic signature of the declarant or the customs broker.
• The broker acts under a contract with the owner of the goods.

Goods

• The UKT ZED code and description must clearly match the actual goods.
• Goods subject to certification, sanitary or phytosanitary control or export control have the relevant documents before release.
• Markings and package counts match the packing list.

Transit

• An NCTS transit declaration requires a guarantee.
• The cargo must reach the office of destination within the set time limit and with seals intact.

Preferences

• The goods meet the rules of origin of the relevant agreement.
• The proof of origin (EUR.1 or origin declaration) is correctly completed and presented at the time of declaration.

Temporary admission

• The goods leave within the period set by customs or by the validity of the ATA carnet (no more than one year).
• The goods can be identified on exit: serial numbers, photos, markings.