Conditions for the application of preferences for the import of goods from the EU to Ukraine

Foreign economic activity for Ukrainian entrepreneurs is a very broad notion. Rules of import and export of goods from Ukraine, as well as rules of storage of goods in Ukraine imply a number of obligations and restrictions, which must be observed by entrepreneurs.

In case of violation of the established rules and prohibitions by businessmen, they are subject to penalties provided by the Law. On the other hand, the legislator has established incentives and benefits for bona fide businessmen who officially import goods into the customs territory of Ukraine.

Such incentives for businessmen include preference, a system of international norms, which allow paying “zero duty” for goods imported from the territory of EU countries.

Today, we will elaborate on the “preference” notion, goods it can be used for, and benefits for Ukrainian entrepreneurs.

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What are preferential rates for importing goods into Ukraine?

Preferential rates may be used for importing goods from the EU countries and preparation of relevant documents: a movement certificate EUR1 and other shipping documents for goods.

Duties on goods are set in accordance with the Law of Ukraine “On Customs Tariff of Ukraine” according to the selected code from the Ukrainian Classification of Goods for Foreign Economic Activity (UCGFEA). When the preferential origin of goods from the EU countries is applied, the duty on goods is imposed conditionally (case 06) and is calculated for correct calculation of value added tax. However, the duty is not payable, and only VAT is paid for the customs clearance of goods, which is subsequently returned to the entrepreneur.

The basis for the application of preferential origin rules is the document of origin of the goods of the form EUR1, which is provided by the counterparty, the manufacturer of the purchased goods, together with other shipping documents for the goods.

The EUR1 certificate can be drawn up by the carrier at the border on behalf of the manufacturer. The fee for obtaining the EUR1 certificate in the EU countries is approximately EUR 50-60.

Why is it advantageous to use preferential rates for EU goods?

The key advantages of the preferential rates are as follows:

  • this procedure applies at the time of customs clearance;
  • the duty for the goods is not payable, which allows the entrepreneur to save the established duty for the goods at customs clearance.

However, in order to correctly use the preferential rates, one must, first of all, properly prepare documents and ensure their full compliance with each other, eliminating any disagreements and contradictions. Only after meeting this condition, one may apply for a preferential origin of goods.

Another lever to influence the clarity of the documents at the customs clearance is the possibility for the customs authorities to check the validity of the movement certificate EUR1 within three years.

Please note! In case of non-confirmation and revocation of the EUR1 certificate, the customs authority will issue a tax notification-decision about the entrepreneur’s obligation to pay additional duty, on which the preferential tariff was applied.

Therefore, accuracy and correctness of documents for customs clearance of goods is a key factor for application of preferences for goods and avoidance of responsibility for inaccuracy of submitted data.

What are the conditions for using preferential rates at Ukrainian customs?

For unproblematic customs clearance the goods must properly pass the customs border. In particular, the cargo owner must fulfill all the conditions at the border:

  • the goods were pre-declared, a general declaration of arrival was submitted;
  • the goods arrived at the checkpoint indicated in the previous customs declaration and was submitted for declaration;
  • the driver of the vehicle has all the necessary documents (CMR, invoice, packing list, certificate of origin, export declaration, preliminary customs declaration).

Please note! The invoice and the CMR must be stamped by the customs (from this point on, the documents cannot be changed). All information about the goods contained in these documents must be the same. The customs will not check the rest of the documents at the border.

Therefore, when the cargo arrives for customs clearance, there may be various “nuances”, for example:

  • The number or date of the invoice is incorrect in the certificate of origin;
  • The description of the product is incorrect;
  • There is a mistake in the serial number or article number;
  • The certificate was issued for pro forma and the invoice went through the border.

The preferential rates will not be applied in any of the above mentioned cases. Of course, you may clear the goods without preferences. There are mechanisms for issuing a certificate of origin after the goods cross the border, cancellation of the certificate of origin and issuing a new one. But these are separate mechanisms that require you to agree upon with the exporter, who sent the goods and forgot about them. It takes more than one day.

Additionally, it should be noted that the preferential rates apply to the original documents, and the Client will have to wait until he gets the correct certificate of origin. And all these days he will have to pay for idle time of the car, customs control zone, or customs warehouse, which will all constitute a part of the cost of goods.

We offer assistance in the preparation of documents for the customs clearance of goods and provide advice on the correctness of their application. This will help businessmen to optimize taxes for customs clearance of the goods imported on the customs territory of Ukraine without extra expenses.

The cost and conditions of providing legal advice.

Everything about import quotas and import of goods here.

Publication date: 22/04/2022

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