European customs expert: “The competitiveness of national business depends on the transparency of customs”
Vytenis Ališauskas on tackling corruption risks, the new Customs Code of Ukraine, EU requirements, and Lithuania’s experience.
The EU Public Finance Management Support Programme for Ukraine (EU4PFM) is a large-scale European Union initiative aimed at strengthening public finance management in Ukraine. One of its key areas is customs reform — specifically, reforming the State Customs Service, modernising its IT systems in line with EU requirements (including the New Computerised Transit System, NCTS, for customs data exchange, and risk management systems), and combating corruption within the institution. Accordingly, the Programme focuses on developing a new Customs Code of Ukraine based on the EU model and introducing European practices into the Ukrainian context.
As part of the special project “Control Zone: Customs”, Mind spoke with a Key International Expert on Customs under EU4PFM — Vytenis Ališauskas, who visited Kyiv for just a few days to participate in the forum “Customs Platform – 2026. The Authorised Economic Operator institution and NCTS as tools for European integration.”
The main focus of the discussion was the draft of the new Customs Code — in particular, the extent to which the Ukrainian side (the Ministry of Finance and the State Customs Service) has taken into account the comments and recommendations of their European counterparts. The conversation also covered whether it is appropriate at this stage to grant Ukraine’s customs authorities investigative powers, and how this could affect efforts to combat smuggling within the customs system. In this context, Lithuania’s experience — having previously faced similar challenges — offers a particularly relevant example.
ON THE DEVELOPMENT OF UKRAINE’S NEW CUSTOMS CODE IN ACCORDANCE WITH EU STANDARDS
In January this year, the European Commission (EC) provided the Ukrainian side with its assessment of the draft of Ukraine’s new Customs Code, which is being developed based on the EU Customs Code (hereinafter – CC). Experts from the EU4PFM programme also participated in this assessment. Can you already say which of the EC’s recommendations were incorporated by the Ukrainian Ministry of Finance and the State Customs Service, and which were not?
When Ukraine became a candidate for EU membership, it assumed an obligation to transform its national legislation in line with European standards, including customs regulations. The purpose of this assessment was to examine whether all provisions of EU legislation were transferred into Ukrainian law. For this, for each article of EU law, we sought corresponding provisions in Ukrainian legislation.
I should note that European legislation is not very voluminous, and the EU Customs Code itself is only about 145 pages. However, Ukraine decided to include much more in its new CC – the number of pages has increased four to five times. Therefore, we also evaluated the draft to ensure that the additional provisions introduced by Ukraine do not contradict EU legislation or established EU practices.
Furthermore, a separate group of provisions was identified as relevant only for EU member states—for example, data exchange between EU member states, etc. Their implementation should be postponed until Ukraine joins the European Union. Additionally, some provisions were identified that do not fully align with the EU CC but are necessary in national legislation until Ukraine joins and European rules take effect.
To explain our position and provide relevant recommendations for refinement, we organized several consultations with international experts recognized among the best in European legislation.
Ukrainian partners expressed their intention to adopt all our amendments and proposals so that the final Ukrainian CC fully aligns with EU law. However, the final assessment of the document will only take place after the law is passed by parliament and signed by the President of Ukraine.
Which provisions of the CC do you propose to change, and why?
We do not have any radical proposals because, over the last few years (especially the past 2–3 years), the Ukrainian CC has been gradually and consistently updated in accordance with EU legislation—for example, in implementing the Authorized Economic Operator (AEO) programme, NCTS, and transit simplifications.
We hope the new CC will be adopted soon, as it represents the first step in creating a legal framework for real customs reform in Ukraine. However, for the CC to be fully integrated into Ukrainian realities, adopting the law alone is not enough – two other challenging tasks must also be completed.
ON BUSINESS CONCERNS AND WHETHER THE NEW CUSTOMS CODE WILL ADDRESS THEM
Currently, most business complaints about the Customs Service concern the application of the presumption of guilt. Customs officers have powers allowing them to challenge customs operations (increase customs value, change classification, influence origin, deny clearance). For example, in the EU, Customs must first assess the risk of operations before raising claims. How are these issues addressed in the draft of the new CC?
Some European norms have already been incorporated into Ukrainian law – in particular, provisions guaranteeing the right to be heard before an adverse decision is made, as well as the right to benefit from simplifications available only to authorized, trustworthy economic operators (AEO status, specific simplifications applicable even without this status, transit simplifications). Moreover, authorized operators enjoy a higher level of trust, are considered lower risk, and are inspected less frequently.
All these principles will be enshrined in the new Customs Code.
However, it should be noted that introducing a legal norm is only the first step; its full practical implementation may take a long time. Even in EU member states, it took time for businesses to recognize the benefits of authorization for customs simplifications.
All the mentioned problems are addressed in the new CC. In EU member states (especially former Soviet bloc countries), before the adoption of the current UCC (which now serves as the basis for Ukraine’s customs legislation changes), the situation was similar: customs procedures were not always fully understood, decisions were not always based on risk assessment, and other criteria were sometimes applied. In the EU, “white” businesses demanded expedited customs procedures, which required minimizing the range of inspections. After all, the way customs controls and oversees international trade directly affects the competitiveness of national businesses.
Implementing the new CC in Ukraine will address these issues by legalizing the same rules applied in EU member states. But this will only happen after three main steps: First, the new CC must be adopted, fully aligned with EU legislation. Second, by Cabinet resolutions, the relevant subordinate regulations must be developed and adopted. Third – without which implementation is impossible – full IT support of all processes must be ensured, using systems developed to EU standards. There are more than 20 such systems. It should be noted that EU countries spent many years developing and implementing them – Ukraine has about two years left until the new CC, which critically requires at least some of these systems, comes into force.
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There is already criticism that procedural provisions regulating customs officers’ ability to adjust the customs value of goods have been removed from the new CC. It is clear that these provisions are imperfect in Ukrainian law. But completely abolishing them – without introducing a compendium (a collection of norms based on the EU model) to regulate classification, origin, and customs value – would provide more opportunities for unjustified duties to be imposed on “white” businesses. This is one of the main problems: according to EBA research, 60% of respondents experience these issues, and the number is growing. How do you comment?
You are right: this is a problem, and we have provided corresponding comments. Whether Ukrainian partners will adopt changes will be seen in the CC draft submitted to parliament.
In EU law, customs authorities are not empowered to correct (adjust) customs declaration data, including customs value – regardless of whether there is a basis. Any declaration data can only be modified upon the declarant’s request, by the declarant themselves. That is, if customs indicate that the declaration contains inaccurate data, the next step is up to the declarant: do they consider the remarks justified and need to amend the declaration accordingly?
At the same time, this approach does not prevent customs from performing control and making decisions based on its results. Customs’ duty is to verify the accuracy of the information provided by the business, detect “dishonest” operators, and mitigate associated risks. If violations are found during inspection, customs may take measures, including imposing duties. But even then, the declarant must have the right to explain their position and challenge the customs decision (the right to be heard, already enshrined in Ukraine’s current CC).
The adoption of the CC by parliament is scheduled for this year, with entry into force in 2027. Do you think this will happen?
We hope so. Ukraine is already behind schedule. It is important to submit the draft to parliament no later than April, because there is another nuance. If the new CC is adopted by the Verkhovna Rada before the end of August, there is a chance that the EC’s annual report on Ukraine, evaluating progress in EU integration, will reflect a positive assessment in this important area.
ON WHETHER CUSTOMS SHOULD BE ENTRUSTED WITH INVESTIGATING SMUGGLING CASES
In the National Revenue Strategy, granting Customs the authority to investigate smuggling crimes is linked to increased trust in Customs and strengthening employee integrity in 2024–26. But most studies indicate a high level of corruption within the agency and low trust (according to NACP, Customs leads in corruption prevalence). In your view, does the current level of trust in customs officers allow the creation of such an investigative body within Customs?
Trust is not the key issue here. Customs must perform its functions. The EU expects that Ukrainian Customs, as a future partner, will have all necessary competences and powers to fulfill the main functions of an EU Customs Union authority. EU member states want to see a reliable partner with appropriate powers to coordinate criminal investigations – and one that is not corrupt.
Corruption in customs is nothing new. It is a challenge for all institutions, especially where conditions and risks exist. All post-Soviet countries faced such situations. Lithuania had similar problems, which is why its law enforcement function was removed from Customs in 1996. Powers were transferred to the Interior Ministry, but corruption persisted there as well. Before joining the EU, the law enforcement function was returned to Customs, with minimized corruption risks.
We have positive experience in this area and provide support through the Program.
When Customs has law enforcement functions, the ability to investigate crimes, and the technical conditions to carry out these tasks, it can fight corruption internally.
In 2024–25, two CIPS surveys were conducted to assess integrity at Customs among business representatives. Which data from these surveys serve as KPIs indicating sufficient trust in Customs personnel and their integrity to grant investigative powers?
Another expert in our program, Jacek Kapica (former head of Polish Customs), specializes in anti-corruption. He analyzed the results of the two CIPS surveys; I will refer to his conclusions: link.
Comparing results for 2024–25, he notes a general trend of increased trust in customs authorities, as well as a positive, though modest, shift in business perceptions of corruption at Customs.
The survey does not indicate the specific factors driving this change. However, it is well-known that one of the key sources of corruption risk is the human factor, so reducing it in customs will also reduce corruption. The EU Customs Code introduces norms to reduce the human factor, which Ukraine is also implementing.
For example, the NCTS system and transit simplifications, and the AEO programme create a “club of trustworthy business.” Entrepreneurs in this club face fewer inspections due to prior authorizations. This is just one aspect, but progress is being made step by step.
ON THE NEED TO ESTABLISH A LAW ENFORCEMENT UNIT WITHIN CUSTOMS
The new CC draft provides for the creation of a “Special Unit authorized to implement measures to prevent, detect, suppress, and investigate criminal offenses falling under the jurisdiction of the central executive body implementing state customs policy.” What does EU legislation say about this?
Such special units are not mentioned in EU legislation. But certain provisions of the Ukrainian CC may be exclusively national. This is a national competence that does not contradict EU practice. I believe this step will be effective.
For example, in Lithuania, Customs established a new Anti-Corruption Unit – the Immunity Service – and a Customs Criminal Service to combat smuggling. Both can act as law enforcement authorities and investigate crimes. They worked effectively, uncovering officials involved in smuggling and rooting out corruption internally.
The Anti-Corruption Immunity Service reported only to the Customs head but coordinated with Lithuania’s central anti-corruption body – the Special Investigation Service (SIS), responsible for investigating corruption, developing anti-corruption policy, and prevention.
Essentially, the Immunity Service had dual subordination, also acting as an SIS branch. This tandem achieved very good results in fighting customs corruption. In some cases, nearly an entire shift at a border checkpoint was arrested on corruption charges.
Customs must have a unit with investigative authority and law enforcement functions, coordinated with the country’s central anti-corruption body.
How do you think granting investigative powers to the current State Customs Service will help combat smuggling effectively, given that customs officers themselves are sometimes involved? Will it not simply create more problems for responsible businesses?
For instance, in Lithuania, some officers in the Anti-Smuggling Unit were involved in corruption schemes. Other EU countries’ customs units refused to cooperate with them. Radical measures were taken: all were dismissed, and law enforcement functions removed.
However, it became clear that other law enforcement and anti-corruption institutions lacked the necessary expertise to detect customs violations. Therefore, in the early 2000s, before Lithuania joined the EU, the investigative function was returned to Customs – but with a major change. A new Customs Criminal Service was formed from scratch.
First, new personnel: young people from universities and other law enforcement agencies (e.g., patrol police) with no prior customs experience, and thus no negative history or corrupt ties.
Second, new working conditions: higher salaries, official ranks, pension and social benefits like other law enforcement agencies. The Customs Criminal Service now works effectively. This is the experience we share in the Program.
I understand your skepticism, but I will offer two arguments.
Imagine you want to secure the land around your house. You hire a guard but do not give them weapons or the right to act against intruders. At the same time, there is a guard responsible for the entire neighborhood and one for the city, both armed and authorized to act. If a criminal comes, who is more effective – the local guard who knows every inch of the property, or the distant city guard overseeing dozens of buildings?
Clearly, the local customs officer knows the “customs territory” best and can respond faster and more effectively than another agency. The question remains whether they are motivated to act.
Let’s be honest: we cannot wait until corruption disappears overnight. We must move step by step: minimize corruption risks while providing Customs with the necessary additional functions.
Estimate the losses to Ukraine’s budget from “gray” imports and smuggling: what share is due to Customs’ inefficiency and corruption?
I do not have sufficient data to assess this in Ukraine, but similar calculations are made in Lithuania. For example, the methodology estimates the share of contraband cigarettes in the market. In Lithuania, it is 26.7%. Based on this, one can calculate the loss to the state budget. In Ukraine, as you know, this problem is externalized – contraband cigarettes leave for EU countries.
The EU Customs Code does not require customs to have investigative powers. In EU countries with much lower corruption than Ukraine, these powers are implemented differently: either within customs or split among law enforcement agencies. Would it not have been better in Ukraine to assign this to the BEE or combine powers among agencies?
Indeed, the EU CC does not explicitly state that customs should have investigative functions. In some EU countries, customs is part of the Finance Ministry or Tax Service. Yet, most EU customs authorities have such powers. This is also reflected in EC recommendations for Ukraine. Almost all EU customs authorities have specialized units performing full law enforcement functions, including pre-trial investigation and intelligence-gathering rights.
The EC document Customs Blueprints (link (https://taxation-customs.ec.europa.eu/taxation/eu-training/customs-blueprints_en)) is designed to help customs administrations improve operational capacity.
It emphasizes that effective enforcement requires customs to perform investigative functions, and the EC strongly recommends codifying this legally.
The EC’s second opinion on Ukraine’s EU membership application (Ukraine Report 2024) also states that the Commission considers it necessary to grant Ukrainian customs adequate enforcement powers, including direct participation in intelligence-gathering in smuggling cases.
ON ASSESSING CUSTOMS OFFICERS’ INTEGRITY AND LITHUANIAN EXPERIENCE
Rules for integrity and lifestyle checks of customs officers are set out in Ukrainian Government Resolution No. 487, under which customs officers complete an integrity declaration, then it is checked by Customs authorities. While external competent bodies exist – NAPK, NABU – it is unclear how polygraph testing, as promised in the National Revenue Strategy, fits into this process. What is the European practice?
This is a national matter, and countries handle it differently.
About 15 years ago, in Lithuania, the process was similar to Ukraine: customs reviewed all declarations. Now, declarations from all civil servants, ministers, and parliament members are submitted to the central authority – the Chief Commission of Civil Service Ethics – which evaluates them and centrally makes decisions. In cases of violations, the Commission orders the Customs Immunity Service or HR Service to investigate. There is also a Special Investigation Service (like NABU in Ukraine) that collaborates closely.
Polygraph testing is not used in Lithuania – only rarely and in exceptional cases.
It is also cheaper to prevent corruption by creating unfavorable conditions for it. One element is the Customs Immunity Service, which assesses all draft customs legal acts for corruption risk, monitors procurement processes, and surveys foreign trade participants.
To ensure effective Customs operations, authorities must provide sufficient powers, salaries, and technical capabilities (e.g., criminal intelligence). Multiple anti-corruption methods must be implemented in parallel with providing Customs with authority. Lithuania’s Customs and Police followed this approach, and our experience shows that it works.