4.6. CUSTOMS INSTITUTIONS OF UKRAINE

General information about the State Customs Service of Ukraine

On June 25, 1991, the Supreme Council of Ukraine adopted the Law "On customs activities in Ukrainian Soviet Socialistic Republic", which declared creation of Ukraine's own customs system and execution of customs activities.

Main tasks of the State Customs Service are as follows:

1) protection of economic interests of Ukraine, contribution to development of foreign economic relations;

2) control over adhererence to customs legislation of Ukraine;

3) use of customs means to regulate trade and economic relations, while considering priorities in economic development, creation of proper conditions for Ukraine to partake in international cooperation;

4) improvement of customs control, customs clearance and taxation of goods and other items, which cross customs border of Ukraine;

5) with assistance of the Ministry of Economy of Ukraine, execution of measures to protect interests of consumers of goods and observance of national interests on foreign markets by entities involved in foreign economic activities;

6) creation of favorable conditions to accelerate turnover of goods and passenger traffic across the customs border of Ukraine;

7) fight with smuggling, implementation of measures to prevent violation of customs requirements.

As of December 2000, customs structure embraced 10 regional customs-houses, 42 customs-houses, 137 customs stations, and 257 checkpoints. Out of these, there were 134 highway check-points, 43 railway check-points, 36 air check-points, and 41 marine and inland water transportation check-points that operate at the customs border of Ukraine.

Customs departments of Ukraine register over 5 ths. declarations, 1.4 mln. tons of cargo, and almost 23 ths. vehicles per one workday. Over 190 ths. citizens pass daily through customs departments.

In addition to export and import duties, customs agencies began to charge and transfer excise tax and value-added tax to the State budget starting July 3, 1996.

Measures that were introduced over the recent years have notably improved operating efficiency of all sub-departments of customs agencies of Ukraine. Back in 1995, revenues from the Service to the State Budget of Ukraine totaled UAH 340 mln. Later, the figure made UAH 1.24 bln. in 1996, UAH 2.73 bln. in 1997, UAH 3.04 bln. in 1998, and UAH 4.7 bln. in 1999. In 2000, the State budget revenues are expected at some UAH 8.5 bln.

The Central Customs Lab was created in March 1994. Besides to this Kiev-based agency, customs service system also embraces customs labs, which comprise Western, Dnepro, Eastern, Black Sea, Donbass, Crimea, and Carpathians regional customs-houses. In 2000, all customs labs were accredited under the system of the State Standard of Ukraine.

Starting September 3, 1996, the State Customs Service runs verification of certificates on origin of goods from Ukraine. The purpose is to create favorable conditions for Ukrainian products to enter European market and in compliance with the treaty between Ukraine and the EU, which grants tariff preferences to Ukrainian goods.

On November 29, 1996, the Decree of the President of Ukraine "On State Customs Service of Ukraine" was issued. The Decree liquidated the State Customs Committee of Ukraine, territorial customs departments, customs-houses, as well as other customs institutions. On the grounds of liquidated agencies, there was established the State Customs Service of Ukraine and its institutions, namely, regional customs-houses, customs-houses, specialized customs departments and organizations. The State Customs Service of Ukraine became a successor of the liquidated State Customs Committee in terms of rights and responsibilities.

On January 31, 1997, formation of Ukraine's foreign trade statistics was started. The only official data source for the statistics is the database of electronic copies of cargo customs declaration under the customs system of Ukraine.

In 1997, within the State Customs Service and customs-houses, departments for cargo delivery control were created to organize opposition to cases of under-delivery of goods to the assigned customs-houses. To guard and escort goods, which are subject to excise taxes, sub-departments of the Customs Security became engaged. As an alternative to accompanying of high-liquidity commodities, the State Customs Service also introduced the mechanism of providing customs agencies with financial guarantees via letter of commitment from a bank, cash pledge, or insurance of shipper's financial responsibility with regards to obligatory delivery of goods to customs-houses of destination. Similar mechanism of fighting with cases of under-delivery of goods to customs-houses of destination has been successfully run in most countries of Western Europe.

In compliance with the Regulation of the Cabinet of Ministers dated March 4, 1997, railway freightage of transit cargo, which is subject to excise tax, via the territory of Ukraine is only performed under provision of financial guarantees to customs-houses.

Important component of control over movement of goods is control over cargo delivery to customs-houses of destination. For more efficient identification of offenders, which use the so-called "subsinking" of cargo, since the middle of 1999 the State Customs Service began stage-by-stage introduction of fundamentally new system of control over cargo delivery to customs-houses of destination. The control system foresees registration of prior application for cargo movement by business entities involved in foreign economic activities, as well as wide application of satellite communication network (this implies almost 250 surface stations). Cargo at the border will not be permitted through before the respective checkpoint at the border obtains notification from the Unified electronic database of customs information about cargo movement.

There has already been established control over cargo delivery by motor carriers, which move under export, import, and transit conditions. The following in line is application of control system to cargo, which are conveyed by railways, and to import of vehicles by citizens for personal use or with the purpose of transit.

Implementation of three stages of the system of control over imported cargo delivery by motor carriers drove the number of under-deliveries from 7% in early 1999 down to 0.3% as of October 2000. Results of motor delivery of cargo to customs-houses of destination were the best among all customs services of the CIS countries. The next task for fulfillment is application of control system to cargo transported by railways and to movement of individual vehicles, which were removed from records in registration agencies overseas, by citizens.

In 1997 as part of regional customs-houses, and in 1998 as part of customs-houses, there were created departments on tariffs and customs charges, which intended to prevent understatement of customs cost in custom registration of imported goods. Responsibilities of departments also embrace fulfillment of continuous control over accuracy of customs value determination with regards to goods imported to Ukraine, and particularly, to goods, which are subject to excise tax.

In 1998, Central energy customs-house was established. It was granted with all control functions for observance of the established order for movement of energy carriers across the customs border of Ukraine (the order is fixed by the customs legislation), as well as functions of customs clearance of foreign economic transactions with energy carriers. On account of present staff, customs-houses organized and equipped sub-departments on customs clearance and control over oil products, which are conveyed by railways, motor carriers, as well as marine and inland water transportation.

Operation customs-house was established in 1999. Its main task is to explore and nip violations in customs operations by employees of a customs-house. The following methodologies are used: re-examination of cargo, urgent trip to the border and operation simultaneously or instead of the work shift on control and clearance of cargo in checkpoints.

At the beginning of 1998, the largest in Eastern Europe international checkpoint Krakovets was established at the border with Poland. Its daily traffic capacity makes up to 5 ths. cars. The first stage of cargo motor complex Avtoport Yagodin was upgraded and commissioned. Fulfilling the Intergovernmental Agreement between Russia and Ukraine, checkpoint Goptivka, which was built under the European standards, was opened in March 1998. Its daily carrying capacity averages 7 ths. cars.

The State Customs Service gradually implements such an advanced type of arrangement of customs clearance and cargo control, as operations in specially equipped motor terminals (autoports), which are located on approach to the border. Operating terminals in checkpoints Chop and Yagodin reduced lines of cargo vehicles and created favorable conditions for cargo shippers. Considering positive performance of autoports, the State Customs Service adopted decision to apply such practice not only to checkpoints at the border, but also to interior customs-houses. Such terminals were created in Kiev, Odessa, Dnepropetrovsk, and Simferopol.

In late January 2000, there was commissioned new high-capacity customs complex in Kiev, which is unique not only for Ukraine, but also for the entire Europe.

Simplified customs control by the treatment of "green" and "red" corridors was first introduced in airports (Borispol, Simpheropol, Odessa, Kharkov, and Dnepropetrovsk), and then in motor crossings Rava-Russkaya, Krakovets, Shegini, Yagodin, Ustilug, Chop, and others.

Starting late 1999, the treatment of "green" corridor was also applied to honest business entities. The State Customs Service does not apply certain measures of non-tariff regulation to good that proceed to the enterprises, which yield profit, do not have arrears regarding foreign economic operations, taxes, and budget proceeds, lack violations of customs and tax legislation. Criteria and the order of identifying such enterprises are fixed. The first enterprises have already been named.

In the end of 1998, the State Customs Service elaborated standard technology for registration of cargo and vehicles via no-contact method using stage-by-stage procedure of control and clearance. This technology is widely accepted in world practice and gives the opportunity to run clearance and control without contact between shipper and customs officers. All customs-houses have already been operating under this technology.

On May 23, 2000, the President of Ukraine has signed the draft of the Decree "On joining the International convention on mutual administrative assistance in prevention, investigation, and cessation of violations of customs legislation of June 9, 1977" (Nairobi Convention). The Decree was drafted by the State Customs Service of Ukraine. Affiliation to this Convention will contribute to coordination of actions, which suggest opposition to offence of customs legislation. It also will unite efforts with more than forty countries, which are members of the Convention, in fighting with crime, and will notable raise quality of operations in the field of fighting with smuggling and violations of customs provisions.

The Regulation of the Cabinet of Ministers of Ukraine No.1608 of October 26, 2000 has approved the Program for opposition to sales of illegally imported goods on the domestic market, which was elaborated with assistance of the State Customs Service. Main tasks of the Program are identification of measures, which are required for creation of effective mechanism to fight with smuggling, as well as of conditions, which will make it impossible to sell illegally imported goods on the domestic market, including such means as activation of state bodies to cease smuggling.

Particular attention is paid to unification and harmonization of customs legislation and practice with advanced world standards. New Customs Code of Ukraine is to become the ground for such legislation. Even before official presentation in the Supreme Council, the project was highly evaluated by specialists of the World Customs Organization, the World Trade Organization, and General Directorate of the European Union. The project was thoroughly examined, and several CIS countries already apply it as a basis for building of customs legislation. It became a fiducial part and was put to action long time ago, being translated to national languages.

New Customs Code is created on the grounds of international conventions, to which Ukraine has already joined. Even the provisions of International convention on simplifying and harmonizing of customs procedures (Kioto Convention), to which Ukraine only prepares to join, were considered.

The project has united all provisions on customs activity, which are presently effective in Ukraine. One of the primary tasks of the projects is humanization and unification of procedures of customs control, customs clearance of goods, which belong to enterprises, organizations, and institutions of all ownership forms as well as to individuals. Legislation is elaborated to introduce technological schemes of control, which meet modern international standards. Types of customs treatment, which are defined in the project, embrace virtually all options that occur when goods cross the customs border of Ukraine.

CODES, SERVICE AREA, AND ADDRESSES OF CUSTOMS BODIES OF UKRAINE

SPECIALIZED CUSTOMS OFFICES
AND ORGANIZATIONS OF STATE CUSTOM SERVICE OF UKRAINE

[12.12.2000]

Official date the site was started

...