The Verkhovna Rada has passed the Ministry of Finance’s draft law that brings Ukraine closer to fully adopting EU customs legislation (No. 10411).

Today, on August 22, the Verkhovna Rada passed the draft Law of Ukraine “On Amendments to the Customs Code of Ukraine Regarding the Implementation of Certain Provisions of the European Union Customs Code” (Reg. No. 10411, dated January 16, 2024).

The adopted changes are substantial in scope, with the draft law comprising approximately 150 pages. This law brings Ukraine closer to the full application of European Union customs legislation and effectively completes the integration of the main part of EU customs law (EU acquis) into Ukrainian legislation. This is crucial for our country at this stage of negotiations on Ukraine’s accession to the European Union. The next major changes to Ukraine’s customs legislation are expected to include the adoption of a new Customs Code of Ukraine, which will be fully based on the EU Customs Code.

“The amendments to the Customs Code approved by the Verkhovna Rada today are the result of consolidated cooperation between the government, members of parliament, businesses, experts, and international partners. The adoption of the draft law aims to enable domestic businesses to adapt to the updated rules in the field of foreign economic activity in a timely manner and to facilitate a ‘soft’ transition from the current Customs Code of Ukraine to a new one that will fully comply with the EU Customs Code,” said Yurii Draganchuk, Deputy Minister of Finance of Ukraine for European Integration.

“The provisions of this law largely align with the EU Customs Code, the relevant provisions of the Commission Delegated Regulation 2015/2446, and the Commission Implementing Regulation 2015/2447. The adoption of this law is a significant step toward fully aligning Ukraine’s customs legislation with the EU acquis. On the other hand, the strategic goal is to develop an entirely new Customs Code of Ukraine based on the translation of the Union Customs Code and its implementing provisions,” noted Vytianis Ališauskas, EU4PFM International Expert on Customs.

The draft law was developed through the joint efforts of the Ministry of Finance, the State Customs Service, in cooperation with the Reform Support Office, EU4PFM project, the relevant committee of the Verkhovna Rada, businesses, and the public. Over the past six months, intensive work has taken place in the parliamentary Committee on Finance, Taxation, and Customs Policy. In addition to working meetings of the developers, more than 80 working groups, meetings, and consultations were held with businesses, international experts, and representatives of Ukrainian higher education institutions. These meetings were open, and the community showed interest in the draft law, with over 100 representatives from various state and non-state institutions, businesses, and academia participating in some of the groups.

The main changes proposed by the draft law include:

● Introducing the concept of customs representation similar to that in EU countries, with the division of types of representation into direct and indirect, and the delineation of duties and responsibilities between the foreign economic activity entity and its customs representative.

● Implementing a gradual, 18-month transition of enterprises engaged in activities under customs control to an authorization system similar to that in the EU: introducing a unified system of criteria and conditions for all customs authorizations (permits) for customs brokers, warehouse keepers, temporary storage warehouse keepers, and others, with greater opportunities for cross-recognition of customs-verified criteria for obtaining subsequent authorizations, including AEOs.

● Introducing a European model for types of customs warehouses and expanding the list of permitted operations in them, allowing customs warehouses to broaden their service offerings, including combining them with customs representation and several authorizations for customs simplifications and customs regimes.

● Expanding opportunities for AEOs to demonstrate the sufficiency of their financial condition, including in cases of negative net assets.

● Introducing a European approach to the application of customs regimes, including:

• Using authorizations for placing goods under specific customs regimes, namely: temporary admission, processing on customs territory, processing outside customs territory, import (in terms of the end-use procedure).
• Introducing requirements for document storage and record-keeping.
• Implementing a mechanism for transferring rights and obligations of the authorization holder (procedure holder).
• Expanding opportunities for the processing industry: broader use of equivalent goods, introducing the possibility of exporting goods or their components, which are under the processing regime on the customs territory of Ukraine, for specific processing operations outside Ukraine.
• Expanding the list of permitted operations with goods under customs control and clearly regulating the requirements for their execution.
• Completing and terminating customs regimes, reporting on the completion of the customs regime, and monitoring compliance with the conditions of the authorization for placing goods under a specific customs regime.

● Aligning the provisions of the Customs Code of Ukraine regarding the delivery and presentation of goods, as well as their storage under customs control, with EU regulations.

● Abolishing the need to summon a customs officer to move goods between the company’s facilities that have different authorizations (e.g., between a customs warehouse and an authorized consignor or consignee within one facility).

● Developing post-clearance control and integrating it with customs audit measures: introducing the possibility of electronic exchange of requests and documents, generating acts and reports based on the results, including through the “Single Window for International Trade,” and enhancing risk analysis at the post-clearance stage.

● Improving the provisions on protecting intellectual property rights during the movement of goods across Ukraine’s customs border in accordance with the State Anti-Corruption Program for 2023–2025.

In addition, to strengthen the anti-corruption component within the customs authorities, the following will be implemented:

● Publication of anonymized decisions on complaints on the official website of the State Customs Service within three days of their adoption.

● The right of customs authorities to exchange information on the customs value of goods in electronic form according to international standards for the exchange of electronic information with foreign customs authorities.

During the preparation of the draft law for the second reading, several initiatives and clarifications were added in consultation with businesses and the public, including:

● Prioritizing enterprises with AEO status for priority arrival and border crossing, including using electronic queue information systems; defining the terms “accounting records,” “declarant,” “goods holder,” etc.

● Delineating the responsibilities of the declarant, customs regime holder, and the person responsible for customs payments, and combining these provisions with the provisions of the Tax Code of Ukraine.

● A European concept of requirements for the storage of goods under customs control: replacing the provision for a permanent customs control zone at customs warehouses with a requirement for financial guarantees for their preservation.

● Clarifying the list of permitted operations with goods under customs control.

● Improving provisions on granting authorizations for customs regimes.

● Clarifying provisions on the use of equivalent goods.