Ukraine Resets Customs and Harmonizes Customs Legislation with EU Standards

04.11.2024

On October 17 2024, the President of Ukraine signed the Law of Ukraine «On Amendments to the Customs Code of Ukraine Concerning the Implementation of Certain Provisions of the European Union Customs Code» (formerly Draft Law No. 10411 dated January 16 2024), as well as the Law of Ukraine «On Amendments to the Customs Code of Ukraine Regarding the Specifics of Service in Customs Bodies and Certification of Customs Officials» (formerly Bill No. 6490-d dated April 6 2023). The official publication of these laws took place the very next day.

The Law 10411 introduces:

1.1 / Introduction of the concept of customs representation, similar to that in the EU
1.2 / Changes regarding Authorized Economic Operator
1.3 / Changes have been made regarding the conduct of activities, the control over which is carried out by customs authorities
1.4 / Changes regarding customs regimes
1.5 / Changes regarding customs warehouses and the procedure for the temporary storage of goods under customs control
1.6 / Changes regarding the movement of goods across the customs border of Ukraine, customs clearance of goods, and payment/ensuring payment of customs duties
1.7 / Changes regarding the procedure for conducting post-customs control
1.8 / Changes regarding the facilitation of intellectual property rights protection during the movement of goods across the customs border of Ukraine

The Law 6490-d provides for innovations in the following:

2.1 / Appointment and dismissal of the leadership of the customs offices
2.2 / Updated list of requirements for candidates
2.3 / Signing of a contract for service in customs authorities
2.4 / Appointment and dismissal of the head of the State Customs Service
2.5 / Periodic external independent audits of the effectiveness of the SCS's activities
2.6 / Salary level and other features

 

Law 10411

On August 22 2024, the Law of Ukraine «On Amendments to the Customs Code of Ukraine Concerning the Implementation of Certain Provisions of the European Union Customs Code» (hereinafter – «Law 10411») was adopted. 

This law aims to bring Ukraine closer to the full application of EU customs legislation and to reflect certain provisions of it within the Customs Code of Ukraine («CCU»). It is expected that the adoption of Law 10411 will be an important step toward the implementation of a new Ukrainian Customs Code, whose provisions will be fully based on the EU Customs Code. 

This law will come into effect six months after the day following its publication, i.e., on April 19 2025. However, certain provisions took effect immediately upon publication and are already in force.

Law 10411 introduces, among other things, the following innovations:

 

1.1 / Introduction of the concept of customs representation, similar to that in the EU

A customs representative is a person authorized by another person to perform necessary actions and customs formalities defined by Ukraine’s customs legislation within the scope of that person’s relations with customs authorities. Customs representation can be either direct or indirect.

  • Direct representation – actions are performed in the interest and on behalf of the person being represented.
  • Indirect representation – actions are performed in the interest of the person being represented but in the representative’s own name.

A customs representative has the right to declare goods on behalf of another person, provided they have authorization to conduct customs brokerage activities.

 

1.2 / Changes regarding AEO (Authorized Economic Operator) authorizations

Enterprises granted AEO-C / AEO-B authorization will be able to take advantage of priority passage through the customs border, conducting customs control, and/or performing customs formalities for goods and commercial vehicles, including through the use of information and communication systems that regulate the order of arrival at the state border and/or its crossing.

This change took effect immediately after the publication of Law 10411, meaning it is already valid

There are certain changes regarding the conditions that enterprises must meet to confirm compliance with specific criteria for obtaining AEO authorizations. For example, new conditions have been added:

  • Non-application of sanctions to the enterprise, as well as measures taken by the enterprise to prevent operations with goods and enterprises subject to sanctions.
    - Criterion: compliance with the requirement of customs and tax legislation of Ukraine, as well as the absence of facts establishing criminal liability
  • Ensuring integration of the enterprise's accounting system records kept for customs purposes into the enterprise’s accounting records*, or the possibility of cross-checking information from records with accounting data, as well as ensuring access for customs officials to such records.
    - Criterion: compliance with the criterion of demonstrating a high level of control over operations and goods flows based on accounting, commercial records management, and, where appropriate, transport documentation, which enable proper customs control**

* Records are entries (data) reflected in accounting documents (registers) (including primary documents) and/or documents (registers) of managerial (including operational) accounting, and/or other documents used for purposes provided by the legislation of Ukraine on customs matters, in particular for monitoring, observing, verifying, and/or controlling business operations (processes)

** This is an updated wording of the criterion «proper system of accounting, commercial, and transport documentation»

  • The enterprise must prove that the data from its accounting records and financial statements confirm that during the calendar year in which its compliance with the specified criterion is assessed, and the previous three calendar years, its financial condition is sufficient to fulfil its obligations, considering the type and volume of commercial activity. It is also necessary to confirm the absence of negative net assets, except in cases where such negative net assets can be secured.
    - Criterion: stable financial condition

    For this purpose, the Cabinet of Ministers of Ukraine (hereinafter – «Cabinet») must approve (by amending the current Resolution dated September 27 2022, No. 1092 «Some Issues of Implementing Provisions of the Customs Code of Ukraine Regarding the Granting of Authorizations», or by adopting a new regulatory act) the procedure for assessing compliance with the criterion of a stable financial condition, depending on the type of authorization applied for, as well as the methods of securing negative net assets.

    At the same time, even after the approval of the specified procedure for assessing compliance with the criterion of a stable financial condition, the enterprise, during the period of martial law in Ukraine and for one year from the date of its termination or cancellation, will be able to alternatively apply, for the purposes of obtaining AEO authorization, the calculated indicators (coverage ratio, solvency (autonomy) ratio, and financing ratio) provided in the transitional provisions of the CCU.

 

1.3 / Changes have been made regarding the conduct of activities, the control over which is carried out by customs authorities

From the list of such activities, the opening and operation of a freight customs complex is excluded. As well, the entire chapter, the provisions of which regulated the conduct of this activity, has been removed. That is, this type of activity will no longer exist in the CCU.

Customs brokerage activity, operation of a customs warehouse, and operation of a temporary storage warehouse will require authorization instead of obtaining permits.

A separate authorization or permit will be provided for each duty-free shop, customs warehouse, free customs zone of a commercial or service type, temporary storage warehouse.

However, customs authorities may grant a single authorization or permit for several such enterprise facilities if they are located in an area used exclusively for the purpose of conducting a separate type of activity (in the case of operating a temporary storage warehouse or customs warehouse – for the purpose of a separate type of warehouse).

Permits that will be valid on April 19 2025 (the effective date of Law 11411) will continue to be valid for another 12 months and then will be cancelled. During this period, enterprises must obtain authorizations or new permits, depending on the relevant type of activity.

 

1.4 / Changes regarding customs regimes

Placement of goods in the customs regimes of import (in terms of the end-use procedure), temporary importation, processing within the customs territory, and processing outside the customs territory will be carried out based on authorizations for placing goods in the relevant customs regimes.

The decision to grant such authorization to an enterprise will be made by customs authorities based on an enterprise’s application or based on a customs declaration. 

To obtain authorization for placing goods in a customs regime, a customs declaration, as a general rule, will be submitted exclusively in electronic form. Its preliminary review will last for four hours, and the review will last for one working day.  

The term of validity of the authorization will be no more than:

  • five years – if the authorization is granted based on an application;  
  • three years – if the authorization is granted based on a customs declaration for placing goods in the temporary importation customs regime; 
  • 180 days – if the authorization is granted based on a customs declaration for placing goods in other customs regimes

The enterprise will be able to transfer the rights and obligations specified in the authorization for placing goods in a customs regime, fully or partially, to another enterprise or enterprises.  

Granting authorization for placing goods in a customs regime based on a customs declaration is prohibited in cases of transferring rights and obligations to another enterprise, using equivalent goods, applying the simplifications, «release procedure at location» and «simplified declaration procedure», and in other cases provided by the CCU.

Depending on the customs regime, enterprises that receive authorizations will have to pay or ensure payment of customs duties when placing goods in the relevant customs regimes.

Rules for moving goods within the customs territory of Ukraine without placing them under the customs transit regime have been introduced.

With the permission of the customs authority, an enterprise has the right to move goods placed under the customs regime of import (in terms of the end-use procedure), temporary importation, temporary exportation, customs warehouse, processing within the customs territory, processing outside the customs territory, from one place to another within the customs territory of Ukraine.  

Moving goods placed under the customs regime of import (in terms of the end-use procedure), temporary importation, and processing within the customs territory may be carried out within the customs territory of Ukraine without applying customs formalities, except those related to document storage and maintaining enterprise records.  

Moving goods placed under the customs warehouse regime may also be carried out without applying customs formalities for no more than 30 days from the day the goods are removed from the customs warehouse if the movement takes place:

  • between different storage locations specified in a single authorization;
  • from the customs authority that released the goods under the customs regime to storage locations;
  • from storage locations to a checkpoint at the state border of Ukraine or to any customs authority specified in the authorization.

Moving goods placed under the customs regime of the free customs zone may be carried out within the respective free customs zone.

Relaxed customs regimes have been introduced for temporary importation and transit during the period of martial law in Ukraine.  

During martial law, goods under the customs regime of temporary importation that were removed from the customs territory of Ukraine without being placed under the re-export regime may be placed under the re-export regime if they are identified. The waiting time for commercial vehicles transporting goods out of the customs territory of Ukraine at the border is not included in the transit period (provided the customs authority overseeing the movement of goods is informed).

These changes took effect immediately after the publication of Law 10411 and are already in force.

Enterprises that have received authorization for processing within the customs territory are granted the right to export goods placed under the customs regime of processing within the customs territory and/or products of their processing in the customs regime of re-export outside the customs territory of Ukraine, provided the possibility of identifying such goods or products of their processing for further processing outside the customs territory:

  • with the subsequent return of all or part of the goods and/or products of their processing to complete processing within the customs territory of Ukraine based on the previously granted authorization; or 
  • without the return of the goods and/or products of their processing, thereby completing the customs regime of processing within the customs territory.

The rules for conducting ordinary operations with goods have been updated, meaning operations that may be conducted with goods placed in specific customs regimes for preserving goods, improving their appearance or commercial quality, or preparing them for distribution or sale.  

Additionally, the list of such possible ordinary operations has been expanded, and provisions regarding the regulation of the use of equivalent and substitute goods in different customs regimes have been updated.

 

1.5 / Changes regarding customs warehouses and the procedure for the temporary storage of goods under customs control

A European model of dividing open-type customs warehouses into three categories (types) is introduced, namely:

Type I – if the responsibilities for storing and declaring goods under the customs warehouse regime are assigned to the warehouse holder and the holder of the customs regime;
Type II – if the responsibilities for storing and declaring goods under the customs warehouse regime are assigned solely to the holder of the customs regime;
Type III – if the warehouse holder is the customs authority (customs authority warehouse).

The provision of customs payment guarantees for relevant goods placed under the customs warehouse regime is made by:

  • The warehouse holder – for goods placed in a closed-type customs warehouse or an open-type customs warehouse Type I;
  • The holder of the customs regime –for goods placed in an open-type customs warehouse Type II.

When goods are placed under the customs warehouse regime in an open-type customs warehouse Type III (i.e., in a customs authority warehouse), the provision of customs payment guarantees is not required.

For goods that, as of April 19 2025 (the effective date of Law 10411), are stored under customs control in customs warehouses, the above-mentioned persons will be required to provide customs payment guarantees within three months, or such goods must be placed under another customs regime.

In all customs warehouses, except open-type customs warehouses Type III (customs authority warehouses), the operation of permanent customs control zones will be terminated. For the duration of customs formalities that require access by customs officials to the customs warehouse territory, the part of the warehouse area where goods under customs control are located, for which customs formalities are performed, will constitute a temporary customs control zone. Permanent customs control zones in customs warehouses will remain in effect for three months from the effective date of Law 10411.

It is expected that all these changes, considering the expanded list of permitted operations in customs warehouses, will allow customs warehouses to expand their range of services, particularly by combining them with customs representation and authorizations for customs simplifications and customs regimes.

The procedure for placing goods in temporary storage under customs control has been updated. 

From this point on, such placement will occur based on a temporary storage declaration. Instead of a temporary storage declaration, a preliminary customs declaration or data from the customs declaration by which goods were moved across the customs territory of Ukraine under the customs transit regime may also be used.

A temporary storage declaration is not submitted if, before presenting the goods to the customs authority or during the presentation of the goods, the customs status of Ukrainian goods is confirmed. Ukrainian goods may be stored in a temporary storage warehouse, but such goods do not require placement in temporary storage and are not subject to declaration.

The same provisions as for customs warehouses regarding the termination of permanent customs control zones and their replacement with temporary ones, as well as the mandatory provision of customs payment guarantees within three months from the effective date of Law 10411 for goods stored under customs control in temporary storage warehouses, or their placement under the appropriate customs regime, will apply to the storage of goods in temporary storage warehouses.

 

1.6 / Changes regarding the movement of goods across the customs border of Ukraine, customs clearance of goods, and payment/ensuring payment of customs duties

The ability to move goods and commercial vehicles across the customs border of Ukraine outside checkpoints or at checkpoints during non-working hours is provided during martial law, as well as in cases of special humanitarian needs, urgent circumstances related to the elimination of emergencies of a technogenic or natural nature and their consequences, and life-threatening situations, provided there is no threat to the national security of Ukraine.

The decision on such movement is made by the head of the customs office in the area of whose activity the section of the state border where the planned movement is located, in coordination with the head of the relevant border guard authority.

This change took effect immediately after the publication of Law 10411 and is already valid.

Temporarily, until January 1 2027, declaration of goods and commercial vehicles by an indirect customs representative on behalf of a non-resident is prohibited.

Consideration of an application by the customs authority for granting authorization for placing goods in a customs regime based on a customs declaration may be grounds for exceeding the customs clearance time limit.

Submission of an additional declaration for the release of goods to the declared customs regime after processing a preliminary customs declaration, importation of goods and commercial vehicles into the customs territory of Ukraine, and ensuring their presentation to the customs authority, is mandatory.

The right to submit a simplified customs declaration on behalf of another enterprise is granted to an enterprise authorized to conduct customs brokerage activities without requiring an AEO-B authorization.

Presentation of goods during the use of the release procedure at the location will take place at the enterprise's facility specified in the authorization for the use of the «release at location» simplification. The declarant within the procedure may be:

  • the enterprise specified in the authorization** for the application of this simplification, for the declaration of its goods;
  • a direct customs representative of the enterprise authorized to apply this simplification, acting in the interest and on behalf of the enterprise specified in the authorization;
  • an indirect customs representative, acting in the interest of an enterprise that does not have authorization for the application of this simplification, provided that such customs representative has this authorization – in compliance with the conditions specified in the CCU.

The right to pay customs duties on behalf of the duty payer is also granted to an indirect customs representative.

In case of non-payment or partial payment of customs duties, the unpaid amount is considered a tax debt of the person responsible for the payment and is collected in accordance with the provisions of the Tax Code of Ukraine.

Return of a cash deposit after its release is carried out by transferring the funds to the account specified in the application of the person who made the cash deposit, within a period not exceeding three working days from the date of registration of the respective application.

Suspension of the guarantor's registration is grounds for refusal to use the corresponding guarantee as a method of securing payment of customs duties.

A financial institution seeking guarantor status must not have been subject to sanctions by foreign states (except for states that have carried out or are carrying out armed aggression against Ukraine), interstate associations, or international organizations, and/or have sanctions applied to it in accordance with the Law of Ukraine «On Sanctions» within the last 12 months.

 

1.7 / Changes regarding the procedure for conducting post-customs control

The procedure for conducting post-customs control is updated. Post-customs control will be carried out through:

  • Pre-audit analysis of customs declarations whose customs clearance has been completed;
  • Documentary checks of compliance with Ukraine’s customs legislation requirements, including timeliness, accuracy, completeness of calculation, and payment of customs duties.

Pre-audit analysis of customs declarations whose customs clearance has been completed is conducted based on the results of the risk management system application and may be initiated considering the results of an analysis of information on the enterprise's economic activities, including its foreign economic operations, analysis of available data on the accuracy, completeness, and reliability of customs declarations, and the execution of other customs formalities, as well as the results of information exchange with state authorities of Ukraine and foreign states.

In the event that discrepancies are detected based on the results of a pre-audit analysis of customs declarations whose customs clearance has been completed, the results of the pre-audit analysis will be considered in the risk management system, after which a decision may be made to conduct a documentary check if there are grounds provided for this.

Quarterly schedules of documentary planned on-site inspections will be published on the official website of the State Customs Service of Ukraine (hereinafter – «State Customs Service», «SCS») by the 15th day of the last month of the quarter preceding the quarter in which such inspections will be conducted.

 

1.8 / Changes regarding the facilitation of intellectual property rights protection during the movement of goods across the customs border of Ukraine

Measures to facilitate the protection of intellectual property rights will not apply to goods placed under the import customs regime (in terms of the end-use procedure).

The right holder is granted the right to provide customs authorities with a conclusion regarding the presence or absence of intellectual property rights violations in goods that are subjects of customs offenses, and to provide oral and/or written explanations on relevant issues.  

This conclusion of the right holder regarding the presence or absence of an intellectual property rights violation may only be provided by a person whose information is entered in the customs register of intellectual property rights objects.  

The right holder’s conclusion regarding the presence or absence of an intellectual property rights violation is equated to an expert’s opinion and may serve to establish facts regarding the presence or absence of customs rules violations, the guilt of a person in committing them, and other circumstances significant for the proper resolution of the case, i.e., facts that are evidence in the case of a customs rule violation.

For conducting research to compile and provide a conclusion on the presence or absence of an intellectual property rights violation, and/or conducting necessary expert studies and/or examinations, the right holder may, with the permission of the customs authority, take samples (specimens) of goods for which a decision to suspend customs clearance has been made.

These goods samples, along with a copy of the right holder’s conclusion on the presence or absence of an intellectual property rights violation or the result of an expert study and/or examination, must be returned to the customs authority, except in cases where the research was conducted by a method involving complete or partial destruction of the sample, as indicated by the expert, subject of expert activity, or the right holder in their conclusion.

Customs authorities, with the right holder’s consent, have the right to select samples and specimens of goods for which the right holder has provided a conclusion on the presence of an intellectual property rights violation to increase awareness, training, and education of customs officers.

Regarding goods stored in customs authority warehouses and subject to disposition (sale, free transfer for ownership and use, etc.) due to the expiration of storage, if such goods contain intellectual property rights objects registered in the customs register of intellectual property rights objects, customs authorities must ensure control over compliance with intellectual property rights. 

In such cases, customs authorities must inform the right holder about the available goods. The right holder has the right to conduct necessary research, with the permission of customs authorities, to inspect the goods and/or obtain samples (specimens), and provide the customs authority with a conclusion on the presence or absence of an intellectual property rights violation within a period not exceeding 30 working days.

Customs ʼResetʼ

The Law of Ukraine «On Amendments to the Customs Code of Ukraine Regarding the Establishment of Specifics of Service in Customs Authorities and the Certification of Customs Officials» (hereinafter – «Law 6490-d») has been called the «Customs Reset (Reform) Law» as it contains provisions aimed at improving the procedure for selecting personnel for appointment to positions, including leadership positions within the structure of Ukraine's customs authorities, ensuring guarantees of transparency in their work, and improving the procedure for evaluating the effectiveness of customs activities.

Law 6490-d took effect on October 31 2024, and provides for the following innovations.

Appointment to positions and dismissal from positions of customs heads, their first deputies, and deputies by the head of the State Customs Service without approval from other state or local authorities.  

At the same time, before appointing a customs head, the head of the State Customs Service must inform the minister who directs and coordinates the activities of the State Customs Service about the selected candidate. The minister, within one month from the date of receiving such information, may conduct an interview with the candidate and inform the head of the State Customs Service of their position regarding the candidate. However, the holding of such an interview and its results do not suspend the appointment of the candidate to the position of customs head and are not grounds for their dismissal.

An updated list of requirements for individuals applying for civil service positions in customs authorities.

Mandatory signing of a contract for service in customs authorities with individuals accepted for civil service positions in categories «B» and «C», and a list of essential conditions of such a contract is established.

A procedure is established for the appointment of the head of the State Customs Service, grounds and procedure for dismissal from the position, as well as requirements for candidates for the position of the head of the State Customs Service. In particular:

  • the head of the SCS is appointed based on the results of a competitive selection for a term of five years;  
  • he/she cannot hold this position for more than two consecutive terms;  
  • half of the composition of the selection committee must consist of persons included based on proposals from international and foreign organizations, which, in accordance with international or intergovernmental agreements, have provided Ukraine with international technical assistance in the fields of structural reforms, financial and technical support for Ukraine, prevention, and corruption counteraction over the past three years.

Periodic external independent audits of the effectiveness of the SCS's activities are provided, conducted by a commission of three persons appointed based on proposals from the above-mentioned international and foreign organizations.

A minimum salary level is established for positions in the SCS and its territorial bodies, as well as the amounts of other remuneration payments to which customs officials are entitled.

Other service-specific features are established for customs officials (formation of an individual professional development program, establishment of the possibility for employee rotations, conducting checks using a polygraph, etc.).

 

The overview prepared by INTEGRITES Tax and Customs team.

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