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The struggle for customs value, or how customs fills the budget

Most companies that import goods from abroad are familiar with the problem of adjusting the customs value. Plans for filling the budget are set before the customs. This can be done either by increasing tax rates due to changes in the classification of goods, or by increasing the tax base itself by adjusting the customs value. Changing the classification of goods can be quite difficult, and the procedure for adjusting the customs value performed by customs looks very simple. Initially, the inspector finds discrepancies in the importer's documents. This is really easy, because a lot of people are involved in the process of compiling documents, and someone can describe or use a template of a document that is not suitable for others. The customs use such discrepancies as a basis for requesting additional documents. The importer either hurries to pick up the goods and refuses to look for additional documents, or simply can not provide them, because he has already added everything to the customs declaration. All this ends with the decision of the customs to adjust the customs value. The cost of goods can be increased several times. Accordingly, the amount of VAT and duties to be paid will also increase significantly. This is what the adjustment procedure looks like. In practice, we hear more and more from importing customers that customs simply compares the customer's price with the price of similar goods. If the client has a lower price, the customs will almost always decide to adjust the customs value, no matter what documents the client provides.

The biggest problem here is in similar products and units of measurement. Strange as it may sound, but customs uses the cost of 1 kg of goods to compare the cost. This compares products that are simply classified by the same code. The most absurd example in our practice was adjusting the cost of sofas. Customs seriously compared the cost of 1 kg of folding sofa, which was in the customs base, with the cost of 1 kg of sofas imported by the customer. Of course, neither the material, nor the size, nor other characteristics were taken into account by the customs. Another example with furniture fittings. The customer imports furniture fittings made of thick heavy plates of ferrous metal, so the cost of 1 kg of customer fittings and 1 kg of small fittings made of light metals differ significantly. However, the customs are not interested in the difference in the material in any way, for contrived reasons it has doubled the cost of two consignments of goods.

The absolute absurdity of this approach is recognized even in the central office of the State Customs Service. The decision of the local customs to adjust the cost of fittings after our long struggle was overturned by the State Customs Service even without going to court. The situation is similar in the courts. Most disputes they resolve in favor of the importer. Importers who are ill-prepared before submitting to customs or who ignore their requests are usually at risk of receiving a negative decision. When we start accompanying the importer from the moment we receive a request from the customs to provide documents, we are sure of a positive result for the customer. It is only a matter of time, because due to the heavy workload of the courts, customs disputes are often considered for years. This deters many importers from going to court.

The Verkhovna Rada has decided to help customs solve the problem of filling the budget. Back in 2020, they registered a draft law amending the Customs Code of Ukraine (on the procedure for controlling the correctness of determining the customs value of goods) №3562 and an alternative bill from the opposition. It is alarming that both the government and the opposition deputies want to actually legalize the possibility of adjusting the customs value solely due to differences in the value of the importer's goods with the value of similar goods. The business community has been active in criticizing the bill, and it remains on the committees. But there is no guarantee that one day it will not get out of the drawer. Therefore, we will continue to closely monitor its movement in the profile committee.

So far, importers are winning in the fight for customs value, but they are not active enough in this fight. Some businesses are hampered by the fact that while they are collecting additional documents, the goods are idle with the transport, which is extra time and money. The rest do not want to get involved in lengthy litigation. But whoever dares to argue wins in most cases. So fight - win!

Article by Sviatoslav Bartosz for publication Legal newspaper.


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