Ukraine is preparing a major revision of customs codes for imported and exported goods. The relevant bill has been put up for public discussion on the official website of the Ministry of Economic Development and Trade. As its authors explain, it is not a question of changing the rates of import duties, but only of adjusting the classification of goods.
Now the Ukrainian classification of goods of foreign economic activity (UKTVED) is built on the Harmonized system of the description and coding of the goods (GS) of a sample of 2012. Meanwhile, since the beginning of this year, most countries are already working on the new GS-2017 system.
"The project envisages a new version of UKVED, based on the principles of GS-2017 and the combined nomenclature of the European Union (EU CN), which in general should improve the business climate in Ukraine," - told UBR.ua managing partner of Patriot Denis Bondar.
Will issue in a new way
According to Svyatoslav Bartosh, a partner at BARGEN Law Firm, in 2015 the WTO amended the Harmonized System, which came into force on January 1, 2017. Ukraine, as a member of the Trade Club, is obliged to bring its classification system (UKT FEA) in line with the HS.
According to lawyers, the transfer of the Customs Tariff of Ukraine to the UKVED database of the new version will eliminate discrepancies in the execution of documents and speed up customs procedures for the import of goods into Ukraine.
In particular, the differences in the product codes of the exporting country and Ukraine during the customs clearance of imported products do not allow to correctly compare the data in the exchange of statistical information between countries.
In addition, in the presence of disagreements, importers together with customs officers are forced to look for Ukrainian analogues of new foreign codes in order to draw up documents under current legislation.
In total, there are as many as 233 such differences from the old version of the HS, and most of them relate to agricultural products (85 units) and chemical products (45 changes).
“Actual changes in the Ukrainian coding concern the classification of individual goods. Also, some of the codes have been added, renumbered or removed altogether due to the low volume of trade in these goods (up to $50 million per year) - says Denis Bondar.
These innovations are expected to reduce business costs for re-inventory, classification and coding of goods from one system to another.
However, according to experts, the new classification will still affect the cost of importing certain goods, which will be subject to the new codes from January 1, 2018.
Goods from the risk zone
According to Svyatoslav Bartosz, the last time the classification system was changed was in 2012 (Ukraine changed its Customs Tariff in 2014). Since then, new products have appeared that are difficult to fit into the old classification. The new system already takes into account these products. For example, it included goods such as LED lamps, split hybrid and electric cars, and more.
"The adoption of this bill as a whole will have a positive impact on the interests of business, will simplify the classification of goods, as a reference can be used as a code from the declaration of the country of dispatch," - says Svyatoslav Bartosz.
According to him, many changes concern seafood and wood. This is due to the need to strengthen control over the movement across the border of endangered species.
“In this regard, we should pay attention to the amount of information that companies indicate in the accompanying documents. For example, it is necessary to specify from what wood these or those goods are made, or to specify what seafood are a part of this or that product », - note in BARGEN law firm.
Changes in the classification system in most cases will not affect the rates of customs duties. But there are exceptions. Due to the specification of the provisions of the UKT FEA and the unification of commodity positions, customs duty rates may change.
This can be seen in the example of salted cod fillets. In the new provisions of the UKT FEA, one note has been added, according to which frozen salted cod fillets fall under heading with duty rate 0%, although it was previously classified under heading with rate 10%.
Also changes of UKT FEA introduce new rules of definition: quality of oil; composition of some oil products; the amount of starch or sugar in foods. In this case, the UKT FEA directly refers to the norms of European legislation. This will also accelerate the harmonization of domestic Ukrainian procedures with European ones.
“For example, olive oil is divided into categories depending on the level of acidity. Until now, customs officers are guided by internal Ukrainian acts, and after January 1, 2018, when the law on the Customs Tariff should come into force, the quality of oil in the laboratory will have to be checked according to European procedures, "Bartosh explained.
It is necessary to take into account that in addition to the Law itself, the explanations to the UKT FEA (adopted by the State Fiscal Service) will also change. The whole practice of using UKT FEA also largely depends on them.