Thursday, October 1, 2015

American Chamber of Commerce in Ukraine asking cabinet to suspend resolution No. 724

The American Chamber of Commerce in Ukraine has asked Ukrainian Prime Minister Arseniy Yatseniuk and Finance Minister of Ukraine Natalie Jaresko to suspend cabinet resolution No. 724 on the benchmarks of the customs value of imported goods, the chamber said in a statement forwarded to Interfax-Ukraine.

The chamber said that the concept of “the benchmarks of the customs value during customs clearance” of imported goods. According to this resolution, the customs authorities have grounds to apply the benchmarks of the customs value within the risks management system. That is, these benchmarks should be used to identify and assess the risks of incorrect determination of customs value (for example, its understatement) while controlling the correctness of its determination.


The Chamber said that the resolution does not provide for application of the benchmarks instead of the declared customs value as the tax base. Availability of price information for fiscal authorities including the customs value and other information on previously imported goods is foreseen by the documents of the World Customs Organization, whereof Ukraine is a member. Such information may be used by fiscal authorities to only assess the risks, but not to determine the customs value of imported goods.

In terms of risks management system this regulation has introduced nothing new. The issue consists in how the benchmarks, approved by the Resolution, will be applying. Before the Resolution was adopted the customs authorities also used certain indicators from their internal pricing base in order to assess risks under the control of correctness of determining the customs value. But in most cases such control procedures were accomplished by determination of the declared customs value at a higher level. Thus the pricing base used to substitute the declared customs value. In such cases the declarant was unable to ascertain how correctly the customs used its pricing base, because this information is only available for fiscal authorities.

The Chamber proposed to develop the procedures of use by fiscal and customs authorities of pricing information, available to them, within risks management system during the customs clearance of goods. Nontransparent rules of use of benchmarks by fiscal and customs authorities create the problem. The Procedures should determine the range of officials responsible for maintaining the domestic pricing base, mechanism of calculation of the benchmarks, audits of the correct application of benchmarks during the customs control including responsibility of officials for the violations, which were found, reforming the control of correctness of the customs value.


"If fiscal authorities continue the practice of applying the benchmarks during the determination of customs value, that usually occurs in direction of their increase, - it will be a gross violation of GATT / WTO rules. There are tangible grounds for such fears, judging from the sad experience of fiscal authorities in practice. If fiscal authorities operate in strict accordance with the legislation, the introduction of benchmarks would not cause such concern to the business community”, - stated Igor Dankov, Co-Chair of Customs Committee of the American Chamber of Commerce in Ukraine, the Leader of EY Ukraine's Customs and International Trade Practice.

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