CUSTOMS BUSINESS:

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MINISTRY OF EDUCATION AND SCIENCE OF UKRAINE NATIONAL TECHNICAL UNIVERSITY OF UKRAINE

“IGOR SIKORSKY KYIV POLYTECHNIC INSTITUTE”

T. V. Ivanova

CUSTOMS BUSINESS:

LECTURE NOTES

Recommended by the Methodical Council of Igor Sikorsky Kyiv Polytechnic Institute as a textbook for foreign students studying in the specialty 051 «Economy»

Kyiv

Igor Sikorsky Kyiv Polytechnic institute 2021

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Reviewer Shkrobot, M.V., Candidate of Economics, associate professor, Associate Professor at the Department of of Management, Igor Sikorsky Kyiv Polytechnic Institute

Responsible editor

Vojtko, S.V., Doctor of Economics, professor, professor at the Department of international economy, Igor Sikorsky Kyiv Polytechnic institute

The Grief is provided by the Methodical Council of Igor Sikorsky Kyiv Polytechnic Institute (protocol number 6 from 25.02.2021 year)

on submission of the Academic Council of the Faculty of Management and Marketing (protocol number 6 from 25.01.2021 year).

Elect ron ic network educati onal edi tion Ivanova Tetyana Valeriyivna, PhD, assistant professor

CUSTOMS BUSINESS:

LECTURE NOTES

Customs business: lecture notes [Electronic Resource] : Teaching manual for the students Specialty 051 "Economics" / T. V. Ivanova; Igor Sikorsky Kyiv Polytechnic institute. – Electronic text data (1 file: 2,7 МB). – Kyiv : Igor Sikorsky Kyiv Polytechnic institute, 2021. – 160 p.

The textbook contains the main materials related to the course of the lecture on the subject

"Customs business ". The purpose of this synopsis is to help students master the basic aspects of customs taxation, customs control, etc. It is intended for students majoring in 051 "Economics"

in the specialty "International Economics", bachelor's degree in full-time Kyiv Polytechnic Institute named after Igor Sikorsky. Designed for all higher education institutions, as well as teachers, graduate students and specialists dealing with customs taxation and control, as well as entrepreneurs and citizens operating in Ukraine and abroad.

 T. V. Ivanova, 2021

 Igor Sikorsky Kyiv Polytechnic institute, 2021

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CONTENT

Introduction ... 5

Topic 1. CUSTOMS BUSINESS, SOURCES OF CUSTOMS, CUSTOMS POLICY ... 7

1.1. Basic concepts of customs. ... 7

1.2. Sources of customs. ... 8

1.3. Customs policy. ... 9

1.4. Tariff and non-tariff regulation. ... 10

Topic 2. THE CONCEPT, CONTENT AND STRUCTURE OF THE CUSTOMS REGIME. CHARACTERISTICS OF CUSTOMS REGIMES. ... 18

2.1. The concept of customs regimes. ... 18

2.2. The essence and procedure for applying certain customs regimes. ... 20

Topic 3. CUSTOMS CLEARANCE OF FOREIGN ECONOMIC TRANSACTIONS ... 31

3.1 Foreign economic agreements. Contract. ... 31

3.2 International rules "INCOTERMS 2020". ... 32

Topic 4. CUSTOMS PAYMENTS ... 56

4.1. The essence of customs taxation, classification of customs payments. ... 56

4.2. Duty ... 57

4.3. Excise tax ... 60

4.4. Value added tax ... 61

Topic 5. THE HARMONIZED COMMODITY DESCRIPTION AND CODING SYSTEM ... 70

5.1. History ... 70

5.2. About Harmonized System ... 71

5.3. General Interpretative Rules (GIRs) ... 75

Topic 6. INTERNATIONAL STATE TRANSPORTATION OF GOODS UNDER CUSTOMS CONTROL. GOODS PROHIBITED FOR IMPORT, EXPORT AND TRANSIT ACROSS THE CUSTOMS BORDER. EXPERTISE IN THE CUSTOMS CONTROL SYSTEM. ... 85

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6.1. International state transportation of customs loads... 85

6.2. Goods that are not subject to passage through the customs border ... 86

6.3. Expertise in the customs control system ... 88

6.4. General provisions of customs laboratories. Legal status of the expert ... 89

6.5. Scheme of research in customs laboratories ... 92

6.6. Declaration of goods. Customs broker ... 94

Topic 7. THE WORLD CUSTOMS ORGANIZATION (WCO) ... 99

7.1. History ... 99

7.2. Customs Role ... 101

7.3. Membership... 102

7.4. Mission ... 102

7.5. Structure ... 103

7.6. The Secretariat ... 104

7.7. Key Activities... 107

7.8. Tools and Instruments ... 108

Topic 8. CUSTOMS OFFENSES. SMUGGLING ... 114

8.1. The concept of smuggling ... 114

8.2. Practical aspects of combating customs offenses ... 119

Topic 9. FOREIGN EXPERIENCE IN CUSTOMS CLEARANCE ... 125

9.1 Customs policy of the European Union ... 125

9.2. Polish customs system ... 127

9.3. Basics of customs in Georgia ... 130

9.4. China's customs business ... 132

9.5. Japan's customs system ... 134

9.6. Customs policy in Saudi Arabia ... 136

9.7. US customs policy ... 137

Annexs ... 148

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Introduction

Today, the study of the basics of customs, as a tool for foreign economic activity, is an important aspect, as it helps to identify regulators and means of forming new economic relations and ties. With the development of the customs service, customs and other structural units that carry out customs clearance, foreign trade operations and control over the movement of goods, there is an urgent need for specialists in customs.

The purpose of this textbook is to develop students' skills in finding educational material and its application in solving practical problems related to the basic provisions of customs control and customs clearance of goods moving across the customs border of countries; rights and obligations of customs declarants;

determination of the necessary permits of the state bodies of the countries concerning observance of safety of the food and non-food goods which are imported and exported; appointment and documentation of customs examinations of goods moving across the customs border of the country. This will consolidate the acquired set of knowledge, skills and abilities that are necessary for professional work in market conditions in various sectors of the economy at the international level.

Credit module "Customs business" provides a thorough study of theoretical and applied aspects of the organization of customs operations, customs regulation, customs clearance of goods and vehicles moving across the customs border, the stages of customs control, customs clearance of goods and vehicles using cargo customs declaration , features of control operations at each stage, and also gives the chance to students to get acquainted with the customs and tariff policy of the states.

The purpose of the credit module is to form a system of theoretical knowledge and acquisition of skills in carrying out operations on foreign economic activity at enterprises; carrying out professional work in customs, law enforcement, tax authorities. The purpose of the credit module is to form students' abilities:

- calculate the customs value of goods;

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- identify and analyze the key characteristics of the customs system, assess their relationship with the national and world economies;

- select and apply economic-mathematical and statistical methods for analysis, forecasting and optimization of phenomena and processes in the customs system;

- apply methods of calculating taxes and mandatory payments and the procedure for their payment by enterprises of all forms of ownership and individuals;

- demonstrate skills in compiling customs reports.

According to the requirements of the curriculum, students after mastering the credit module must demonstrate the following learning outcomes:

knowledge:

- the essence of foreign economic activity of enterprises, the content and scope of activities in customs, law enforcement, tax authorities;

- the essence and significance of the customs case, the unified system of customs authorities, their functions, rights and responsibilities, forms and methods of activity;

- methods of research of customs activity.

skills:

- have the basic categories and concepts;

- have a method of interaction between companies and the state at the foreign economic level;

- select and justify the best methods of state customs and tariff policy;

- conduct a systematic analysis of professional situations;

- to analyze economic phenomena and processes in the field of state customs and tariff policy;

- use the results of economic research in practice;

- master the methods of customs clearance of export-import operations;

- master the skills of customs control.

*Source of picture in the lecture notes are Internet

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Topic 1. CUSTOMS BUSINESS, SOURCES OF CUSTOMS, CUSTOMS POLICY

CONTENT:

1.1 Basic concepts of customs.

1.2 Sources of customs.

1.3 Customs policy.

1.4 Tariff and non-tariff regulation.

1.1. Basic concepts of customs.

Customs business – these are the procedure for moving goods and vehicles across the customs border, customs regulation related to the establishment and collection of taxes and fees, customs control and clearance procedures, combating smuggling and violations of customs regulations.

Customs regulation is based on principles:

- exclusive jurisdiction of the country in its customs territory

- exclusive competence of the customs authorities of the country on its territory;

- uniform procedure for movement of goods and vehicles across the customs border;

- observance of the rights and interests of individuals and legal entities;

- legality;

- systematicity;

- efficiency;

- publicity;

- transparency.

The customs territory of the country is usually:

- land;

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- territorial sea or ocean;

- inland waters;

- airspace;

- artificial islands;

- installations and structures;

- territory of special customs zones.

1.2. Sources of customs.

Sources of customs – these are the official and documentary forms of expression and consolidation of norms customs business originating from the state or recognized by it, giving them legal, obligatory value.

The Customs Code usually contains:

- tasks of customs authorities in the field of regulation of export-import operations;

- procedures for joint customs control of goods moving across the customs border of the country with the customs services of neighboring countries;

- democratization and unification of customs control procedures, customs clearance of goods belonging to enterprises, organizations, institutions of all forms of ownership, and citizens;

- detailed types of customs regimes that take place when moving goods across the customs border of the country, their regulatory definition and conditions of their application in the process of export-import operations;

- provisions which lay down the progressive principles of regulation of legal relations in terms of movement of goods by citizens across the customs border of the country;

- flexible principle of construction of the customs tariff of the country, which meets the requirements for customs tariffs of the member states of the General Agreement on Tariffs and Trade and the World Trade Organization;

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- provisions establishing the methodology for determining the customs value of goods, which is developed taking into account the requirements of the General Agreement on Tariffs and Trade.

1.3. Customs policy.

The country's customs policy is influenced by the following factors:

- economic – the general state of the country's economy, the peculiarities of its economic system, the peculiarities of the development of certain sectors of the economy, existing external relations, the state of world economic relations, etc .;

- ideological and political – government programs to protect the internal market and its individual areas, environmental security, protection of morals, spirituality, etc .;

- international factors – membership of the country in various international organizations, existing bilateral and multilateral international agreements, state participation in customs and economic unions, support for certain international legal and economic sanctions, government policy on granting preferences to individual states and more.

The main principles of customs policy:

- legal equality and non-discrimination;

- unity of customs policy;

- unity of state regulation;

- unity of tariff policy;

- unity of control policy;

- unity of the customs territory;

- harmonization and unification of customs activities;

- protection of the rights of participants in international activities;

- exclusion of unjustified state interference in customs policy.

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The main functions of customs policy include:

 fiscal function – filling the state budget by collecting duties, value added tax, excise duty on goods and other items when moving across the customs border.

 regulatory function – provides for the influence of the state and its

competent authorities on foreign economic relations by means of economic and administrative nature in order to regulate the latter in order to ensure national interests and the interests of domestic producers and create favorable conditions for them, ensure implementation of state economic policy, international legal obligations of the state.

 protective function – aimed at protecting the state from external threats:

protection of national security, maintenance of peace and international security, public order, morality, protection of the internal market,

environmental security, protection of consumer interests, creating conditions to maintain legality of the movement of goods across the customs border, effective fight against smuggling and violations of customs rules, assistance in the fight against international terrorism, crime, etc.

1.4. Tariff and non-tariff regulation.

Tariff regulation of state foreign trade policy is the main tool for influencing trade relations between different countries.

The basis of tariff regulation is the duty.

Kind of duties:

- by method of recovery: advalorem, specific, combined;

- by the nature of application: seasonal, antidumping, compensatory;

- by originally: autonomous, conventional, preferential;

- by type: constant, changeable;

- by accrual method: nominal, effective;

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- by the object of laying: export, import, transit.

According to the method of collection, a duty is allocated:

- advalorem, which is calculated as a percentage of the customs value of goods;

- specific, which determines the fixed amount charged from the unit of measurement of a particular product;

- combined, which is formed by a combination of the first two types of duties.

By the nature of the application of the duty may be:

- seasonal, which is accrued in a particular season;

- antidumping, which is used in case of detection of the fact of import of goods at dumped prices, which leads to significant losses in national industries;

- compensatory, which is used to neutralize subsidies provided by the state of the exporter to increase the competitiveness of goods in the markets.

By the nature of the origin of the duty may be:

- autonomous, established by the legislative documents of a particular country without taking into account the existence of bilateral or multilateral agreements with other countries on foreign trade relations;

- conventional, formed by bilateral or multilateral negotiations and may not be promoted by any state unilaterally;

- preferential, that is, these are special preferential rates that apply to imported goods originating in certain countries or groups of countries.

- compensatory, which is used to neutralize subsidies provided by the state of the exporter to increase the competitiveness of goods in the markets.

- According to the object of taxation, the duty is divided for import, export and transit. These names indicate the existence of certain rates of duty on goods imported, exported or transited.

- Depending on the type of rates, the duty can be constant or variable.

Public authorities, according to the created circumstances or cannot change

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them, or they are subject to change, accordingly, in case of observance of certain conditions.

- According to the method of calculating rates, there are duties nominal, which is specified in the customs tariff, and effective, which determines the level of customs duty on imported goods, calculated at customs tariff rates.

In world practice, non-tariff regulation measures mean the establishment by the state of quantitative restrictions on the movement of goods through customs.

Quantitative restrictions are an administrative form of state non-tariff regulation of trade, which determines the goods whose export or import is allowed.

Means of non-tariff regulation : - quantitative restrictions :

- quotas;

- licensing;

- “voluntary" export restrictions;

- public procurement policy.

- methods of protectionism:

- technical barriers;

- internal taxes;

- requirements for local components.

There are such quotas:

• global quotas — determine the volume of exports (imports) in value or physical units for a certain period of time;

• individual quotas — provide for the distribution of exports or imports for certain countries;

• seasonal quotas — apply to certain agricultural products and regulate the receipt of imported agricultural products in certain seasons of the year;

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• tariff quotas — are a combination of quantitative restrictions and customs tariffs. They determine the volume of imported goods by the minimum amount of duty.

A "voluntary" restriction on exports is that importing countries, using political and economic leverage, offer the exporting country to reduce sales of certain goods in foreign markets.

Public procurement policy – it is a method in which the state structures of the country are obliged to purchase certain groups of goods only from domestic producers. This method is justified by national security requirements.

Another method is to require the presence of a certain percentage of local components in the finished product, which is sold on the domestic market. Such a policy is aimed at the consistent replacement of imported products with domestic goods through the development of national production facilities.

Questions for self-control:

1. What is Customs?

2. What are the principles of customs regulation?

3. What is usually included in the customs territory of the country?

4. What sources of customs do you know?

5. What points does the country's Customs Code usually contain?

6. What factors influence the country's customs policy?

7. What are the basic principles of customs policy?

8. What are the basic functions of customs policy?

9. What are the types of duties?

10. What quotas apply?

Tests

1. What is the main task of customs policy?

a) security of the state in the economic sphere;

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b) ensuring security in the social sphere;

c) ensuring the protection of national interests of the state;

d) ensuring security in the political sphere;

e) all answers are correct.

2. What factors affect the customs policy?

a) economic, ideological, political, international, legislative;

b) economic, political, international;

c) political, international, legislative;

d) economic, legislative, political, international.

3. What are the functions of customs policy?

a) fiscal;

b) protective;

c) regulatory;

d) correct answers a) and b);

e) correct answers a), b), c).

4. The main tasks performed by customs authorities include:

a) implementation of customs control;

b) creation of favorable conditions for acceleration of trade and passenger flow across the customs border;

c) customs clearance of goods and vehicles moving across the customs border;

d) correct answers a) and b);

e) correct answers a), b), c).

5. The set of measures carried out by customs authorities within the limits of the competence for the purpose of maintenance of observance of norms of the code, the international agreements concluded in the order established by the law is

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a) customs policy;

b) customs procedures;

c) customs control;

d) customs clearance.

6. In the customs case, the goods do not include:

a) currency values;

b) products of labor intended for sale;

c) electric and thermal energy;

d) vehicles for transportation of goods across the customs border.

7. The system of principles and directions of activity of the state in the sphere of maintenance of the economic interests and safety by means of customs-tariff and non-tariff measures of regulation of foreign trade is

a) customs procedures;

b) customs control;

c) customs policy;

d) customs clearance.

8. A plot of land or part of the territory of a border railway, automobile station, sea, river port, airport with a complex of buildings, structures, where customs control and passage of goods across the state border is carried out, is

a) customs control zone;

b) checkpoint;

c) customs inspection hall;

d) part of the checkpoint.

9. The headquarters of the World Customs Organization is located in the city a) Geneva;

b) Paris;

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c) Brussels;

d) Washington.

8. The arguments against social responsibility include:

a) changing the needs and expectations of the general public, the availability of resources to solve social problems;

b) insufficient level of employment of a wide audience, insufficient ability to solve social problems;

c) insufficient reporting to a broad audience, business-friendly long-term prospects;

d) all answers are correct.

9. The tariff methods of economic regulation of foreign economic activity include

a) quota;

b) license;

c) subsidy;

d) import duty.

10. Which of the following non-tariff method instruments is regulated by imports:

a) tariff quota;

b) taxes and fees;

c) quota;

d) licensing.

11. Payers of customs duties are

a) natural persons carrying out customs clearance;

b) only legal persons carrying out customs clearance;

c) there is no correct answer;

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12. The revenue part of the budget is formed by the following function of the customs tariff:

a) regulatory;

b) fiscal;

c) stimulating;

d) protective.

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Topic 2. THE CONCEPT, CONTENT AND STRUCTURE OF THE CUSTOMS REGIME. CHARACTERISTICS OF CUSTOMS

REGIMES.

CONTENT:

2.1. The concept of customs regimes.

2.2. The essence and procedure for applying certain customs regimes.

2.1. The concept of customs regimes.

Customs regime – a set of interrelated legal norms that, in accordance with the stated purpose of moving goods across the customs border of the country, determine the customs procedure for these goods, their legal status, tax conditions and determine their use after customs clearance.

Customs regimes perform the following functions:

- determine the requirements for goods that are placed under a specific customs regime;

- establish the procedure for moving goods across the customs border of the country;

- determine the conditions of stay of goods in the customs territory of the country and abroad;

- establish requirements for the use of goods that are in a particular customs regime;

- regulate the rights and obligations of persons moving goods.

The main characteristics that qualify the type of customs regime:

- Country of Origin;

- purpose of relocation;

- direction of movement;

- the term of the regime;

- rules of disposal of goods;

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- rules of use of the goods;

- rules of ownership of the goods.

There are the following customs regimes:

- import;

- export;

- re-import;

- re-export;

- temporary import;

- temporary removal;

- duty-free trade;

- transit;

- customs warehouse;

- free customs zone;

- processing outside the customs territory;

- processing in the customs territory;

- destruction;

- refusal in favor of the state.

The declarant has the right to choose the customs regime in which he wishes to place the goods, subject to the conditions of such regime.

Placing goods in the customs regime is carried out by declaring them and completing certain customs formalities.

If necessary, the customs regime in which the goods are placed may be changed to another, subject to compliance with tariff and non-tariff regulation of foreign economic activity.

Internal structure of the customs regime:

1) conditions of the customs regime – circumstances that determine the location of goods;

2) restriction of the customs regime – direct or indirect prohibitions on certain actions with goods;

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3) requirements of the customs regime – actions in the implementation of which it is possible to complete the customs regime.

2.2. The essence and procedure for applying certain customs regimes.

Import – it is a customs regime according to which foreign goods, after payment of all customs duties and fulfillment of all necessary customs formalities, are released for free circulation in the customs territory of the country.

Import of goods into the customs territory in the import regime provides:

1) submission to the relevant customs authority of documents certifying the grounds and conditions of import of goods into the customs territory of the country;

2) payment of taxes and fees levied on goods during the import of goods into the customs territory of the country in accordance with the laws;

3) compliance with the requirements provided by law for non-tariff regulation measures and other restrictions.

Export – it is a customs regime under which goods are released for free circulation outside the customs territory of the country without any obligation to re-import them.

Export of goods outside the customs territory in the mode of export provides:

1) submission to the relevant customs authority of documents certifying the grounds and conditions of export of goods outside the customs territory of the country;

2) payment of taxes and fees imposed on exports;

3) compliance by the exporter with the requirements provided by law.

Re-import – it is a customs regime according to which goods that have been exported or processed for export outside the customs territory of the country are

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released for free circulation in the customs territory of the country with exemption from customs duties established by the laws of the country on import of these goods. regulation of foreign economic activity.

After placing in the customs regime of re-import of goods:

1) the amounts of export duty paid on the export of these goods shall be returned to the persons who paid them or to their successors.

2) taxes when placing goods under the customs regime of re-importation are paid in accordance with the legislation of the country.

Goods may be moved across the customs border of the country under the customs regime of re-importation, if :

1) originate from the territory of the country;

2) are imported not later than 1 year after their export outside the customs territory of the country;

3) were not used outside the country for profit;

4) are imported in the same condition in which they were at the time of export, except for changes provided by the legislation of the country (for example due to natural wear and tear, etc.).

Re-export – it is a customs regime under which goods previously imported into the customs territory of the country or into the territory of a free customs zone are exported outside the customs territory of the country without payment of export duty and without the application of measures of non-tariff regulation of foreign economic activity.

After placing the goods in the customs regime of re-export :

1) the amounts of import duty paid upon import of these goods shall be returned to the persons who paid them or to their successors.

2) taxes when placing goods under the customs regime of re-export are paid in accordance with the legislation of the country.

Goods originating in other countries may be exported outside the customs territory of the country if :

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1) a re-export permit has been granted;

2) are exported no later than 1 year after their import;

3) were not used for profit;

4) are exported in the same condition in which they were at the time of import, except for changes provided by the legislation of the country (for example due to natural wear and tear, etc.).

Temporary import – it is a customs regime according to which foreign goods and commercial vehicles are imported for specific purposes into the customs territory of the country with conditional full or partial exemption from customs duties and without the application of non-tariff measures of foreign economic activity and are re-exported until the end of the established period. what changes, except for normal wear and tear as a result of their use.

The period of temporary importation of goods is set by the relevant authority in each case.

The period of temporary importation of commercial vehicles shall be set by the relevant authority, taking into account that these vehicles must be re-exported immediately after the end of the transport operations for which they were imported.

Movement of goods in the mode of temporary import provides:

1) submission of documents for such goods to the relevant customs authority;

2) submission to the relevant customs authority of documents on the obligation to return them within the time limits stipulated by law;

3) submission to the relevant customs authority of a permit for temporary import of goods.

Temporary removal – it is a customs regime under which goods or commercial vehicles are exported outside the customs territory of the country with conditional full exemption from customs duties and without the application of non- tariff measures of foreign economic activity and are subject to re-import until the

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end of the prescribed period without any changes, except normal wear and tear as a result of their use.

The term of temporary export of goods, commercial vehicles is set by the body of revenues and fees in each case.

Movement of goods in the mode of temporary export provides:

1) submission of documents for such goods to the relevant customs authority;

2) submission to the relevant customs authority of documents on the obligation to re-import them within the time limits stipulated by law;

3) submission to the relevant customs authority of a permit for temporary export of goods.

Refusal in favor of the state – customs regime, according to which the owner renounces goods under customs control, without any conditions in his favor.

In the regime of refusal in favor of the state, taxes and fees are not charged and levied on goods, as well as non-tariff regulation measures are not applied.

Destruction – it is a customs regime according to which foreign goods under customs control are destroyed or brought to a state that excludes the possibility of their use, with conditional full exemption from customs duties imposed on imports of these goods, and without the application of non-tariff measures of foreign economic activity.

If the goods to be destroyed or destroyed may be placed under the customs regime of refusal in favor of the state, the relevant authority shall propose in writing to the declarant to choose this customs regime. With the consent of the owner of the goods with the proposal of the body of revenues and fees, these goods are placed in the customs regime of refusal in favor of the state.

Not considered operations of destroy goods:

1) use for consumption by animals of goods previously intended for human consumption;

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2) carrying out processing operations with goods;

3) receipt of processed products, including installation, dismantling, processing or handling of goods;

4) repair of goods, including their restoration;

5) the use of goods as such, which facilitate the process of manufacturing processed products, if they themselves are completely consumed.

The following goods may be subject to destruction:

1) drugs and narcotic drugs, psychotropic substances, their analogues and precursors;

2) low-quality and dangerous products;

3) military, hunting, sports firearms and ammunition for it;

4) cold steel and air guns;

5) explosives;

6) special means charged with tear gas and irritating substances, means of individual protection, means of active defense and means for performing special operations and operative-search measures.

Customs warehouse – it is a customs regime according to which goods are stored under customs control with conditional full exemption from taxation by customs duties and without application of measures of non-tariff regulation of foreign economic activity.

Any goods may be placed under the customs regime of the customs warehouse, except :

1) goods prohibited for import into the country, export from the country and transit through the territory of the country;

2) goods whose expiration date for consumption or use has expired;

3) goods arriving in the country as humanitarian aid;

4) live animals;

5) electricity moved by power lines.

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Transactions that can be carried out with goods stored in a customs warehouse without the permission of the relevant authorities:

1) movement of goods within the warehouse;

2) ventilation;

3) cleaning;

4) creation of the optimum temperature mode;

5) corrosion protection;

6) drying;

7) pest control;

8) inventory.

Transactions that can be carried out with goods stored in a customs warehouse with the permission of the relevant authorities:

1) consolidation and fragmentation of parties;

2) formation of shipments;

3) sorting;

4) packing, repackaging;

5) marking;

6) loading, unloading, overloading;

7) sampling and sampling of goods;

8) other similar operations.

Free customs zone – it is a customs regime according to which goods are imported into the territory of a free customs zone and exported from this territory outside the customs territory of the country with exemption from customs duties and without the application of measures of non-tariff regulation of foreign economic activity.

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Duty free trade – customs regime, according to which the goods are and are sold under customs control at checkpoints at the customs border of the country, open to international traffic, other customs control zones, defined by the relevant customs authorities, without collection of duties, taxes and export taxes.

Processing in the customs territory of the country – this is the customs regime, according to which foreign goods are processed in the manner prescribed by law without the application of measures of non-tariff regulation of foreign economic activity, subject to further re-export of processed products.

The term of processing of goods in the customs territory of the country is set by the relevant authority.

Processing outside the customs territory of the country – it is a customs regime according to which goods are processed in the manner prescribed by law outside the customs territory of the country without the application of measures of non-tariff regulation of foreign economic activity, subject to return of these goods or products of their processing to the customs territory of the country.

Transit – it is a customs regime under which goods and / or commercial vehicles are moved under customs control between two revenue authorities of the country or within the area of activity of one revenue authority without any use of those goods, without payment of customs duties and without application of measures of non-tariff regulation of foreign economic activity.

Types of transit:

1) transit through the country – from the point of import to the point of export;

2) internal transit or cabotage :

- from the point of import to the relevant authorities;

- from the relevant authorities to the point of export.

Goods moving in transit must:

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1) be in an unchanged condition, except for changes due to natural wear and tear or loss under normal conditions of transportation and storage;

2) not be used for any purpose other than transit;

3) move with the appropriate permit, still issued by the relevant authorities;

4) move along the established routes and paths;

5) be brought to the border within the period specified by law.

Questions for self-control:

1. Determination of the customs regime.

2. What are the functions of the customs regime?

3. What are the main characteristics that determine the customs regime?

4. What customs regimes do you know?

5. Describe the Internal structure of the customs regime.

6. What is Import and Export? Transit?

7. What are the differences between re-import and re-export?

8. Describe temporary imports and temporary exports.

9. What is meant by Refusal in favor of the state? Destruction?

10. Describe Customs warehouse.

Tests:

1. The function of the customs tariff includes a) fiscal and incentive;

b) regulatory;

c) protective and political;

2. The revenue part of the budget is formed by the following function of the customs tariff:

a) regulatory;

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b) fiscal;

c) stimulating;

d) protective.

3. Forms a rational structure of exports and imports of the following function of the customs tariff:

a) stimulating;

b) regulatory;

c) protective;

d) political.

4. The following function of the customs tariff exerts economic pressure on other states or provides them with customs privileges:

a) political;

b) protective;

c) fiscal;

d) regulatory.

5. Non-tariff methods of economic regulation of foreign economic activity include

a) import duty;

b) license;

c) duty;

d) excise duty.

6. Which of the following instruments of the non-tariff method regulates exports:

a) public procurement;

b) technical barriers;

c) subsidies;

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d) requirements for the content of local components.

7. Which of the following non-tariff method instruments is regulated by imports:

a) subsidies;

b) dumping;

c) lending;

d) taxes and fees.

8. Tariff measures of customs taxation include:

a) VAT;

b) excise duty;

c) duty;

9. What is not one of the main characteristics that classify the type of customs regime?

a) direction and country of movement;

b) the purpose of the movement;

c) rules of possession and disposal of goods;

d) the period of stay of the goods abroad.

10. Who chooses the customs regime of the goods?

a) the customs inspector;

b) the owner of the goods;

c) the customs inspector or the owner, depending on the type of goods;

d) does not matter.

11. Under what regime the goods which were earlier taken out of the territory in an export mode, are imported into the country in the specified terms?

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a) re-export;

b) re-import;

c) temporary import / export;

d) transit.

12. How is the concept of customs regime defined?

a) as a set of provisions that characterize the way goods are moved through the ICU;

b) as a set of provisions that characterize the statute of goods when moving through the ICU;

c) as general characteristics of the goods, which determine the method of its movement through the ICU;

d) as a set of interrelated legal norms, which in accordance with the stated purpose of moving goods across the customs border determine the customs procedure for these goods, their legal status, tax conditions and determine their use after customs clearance.

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Topic 3. CUSTOMS CLEARANCE OF FOREIGN ECONOMIC TRANSACTIONS

CONTENT:

3.1 Foreign economic agreements. Contract.

3.2 International rules "INCOTERMS 2020".

3.1 Foreign economic agreements. Contract.

Foreign trade agreement (contract) – materially executed agreement of two or more subjects of foreign economic activity (including trade) and its foreign counterparties, aimed at establishing, changing or terminating their mutual rights and obligations in foreign economic relations.

A foreign trade contract of sale must be concluded in writing, unless otherwise provided by law or an international agreement.

Foreign trade agreement (contract) – materially executed agreement of two or more subjects of foreign economic activity (including trade) and its foreign counterparties, aimed at establishing, changing or terminating their mutual rights and obligations in foreign economic relations.

A foreign trade contract of sale must be concluded in writing, unless otherwise provided by law or an international agreement.

By agreement of the parties, additional conditions may be indicated in the contact:

1. Quality guarantees

2. Conditions for involving subcontractors 3. Carrier agents

4. Determination of load norms (unloading)

5. Terms of transfer the technical documentation for the goods 6. Preservation of trademarks

7. Protective reservations from the moment of contract validity

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3.2 International rules "INCOTERMS 2020".

International rules "INCOTERMS" there are international rules for the interpretation of commercial terms that define the obligations of the seller and the buyer to deliver the goods and the moment of transfer of the risk of accidental loss or damage to the goods from the seller to the buyer.

Countries in which operate international rules “INCOTERMS” are present at pic. 3.1.

Pic. 3.1. Countries that apply operate international rules “INCOTERMS”

*Source: Internet

The International Chamber of Commerce has worked diligently to generalize the terms of delivery of goods and, since 1923, proposes their basic terms.

Currently, in foreign trade relations, the contractors of the agreement are guided by the Rules of Interpretation of Commercial Terms as amended in 2020 - abbreviated name "Incoterms 2020" (there were versions of the Rules issued by the International Chamber of Commerce in 1936, 1953, 1967, 1976, 1980, 1990 2000, 2010).

Incoterms 2020

The new trading terms of Incoterms 2020 were developed in the International Chamber of Commerce (ICC) by a committee of experts - the Drafting Group. The

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committee includes lawyers from the United States, Britain, France, Turkey, and Germany, and for the first time includes representatives from China and Australia.

The new rules of Incoterms 2020 were published in the IV quarter of 2019, and came into force on January 1, 2020.

Incoterms 2020 Universal

(Transport for all modes of transport)

"Sea" (Sea / other water transport)

1. EXW (Ex Works) 4. CIP (Carriage and Insurance Paid to)

8. FAS (Free Alongside Ship)

2. FCA (Free Carrier) 5. DAP (Delivered at Place)

9. FOB (Free On Board)

3. CPT (Carriage Paid to) 6. DPU (Delivered at Place Unloaded)

10. CFR (Cost & Freight)

7. DDP (Delivered Duty Paid)

11.CIF (Cost, Insurance

and Freight )

*Source – Internet

Incoterms 2020 includes eleven terms of delivery. They are:

EXW Ex Works FCA Free Carrier CPT Carriage Paid To

CIP Carriage and Insurance Paid to DAP Delivered At Place

DPU Delivered at Place Unloaded DDP Delivered Duty Paid

FAS Free Alongside Ship FOB Free On Board CFR Cost and Freight

CIF Cost, Insurance and Freight

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First seven terms are for all modes of transport. Four latter terms are for sea or inland waterways transport only.

TERMS OF DELIVERY:

1) EXW (EX Works (... named place)

*Source - Internet

The moment of delivery of the goods is when they are placed at the buyer’s disposal in the previously named place (e.g. factory, warehouse or on the premises) and the agreed time.

Type of transport - all modes.

Features: If the seller is in the EU, Incoterms 2020 recommends using the FCA condition instead of EXW. It is better to use the EXW condition only for domestic deliveries.

What are the seller’s obligations?

 The seller delivers the goods to the place specified by the buyer, on the agreed date or within the agreed period.

 The seller delivers the goods together with the commercial invoice in accordance with the contract of sale and any other evidence of conformity with the documents, which were mentioned in the contract (in paper or electronic form).

 At the buyer’s request provides the risk and cost of assistance in obtaining the authorization necessary for the export of goods.

 Notifies the buyer of the date the goods are left at the buyer’s disposal.

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 Provides the buyer with all assistance in obtaining any documents necessary for completing export, import or transit clearance formalities.

 The seller provides the buyer with any information necessary for obtaining insurance (at his expense and request).

What are the buyer’s obligations?

 The buyer, at his own risk and cost, obtains documentation authorizing him to export and carry out all for export, import or transit clearance formalities.

 Carries out all import, export and transit clearance formalities.

 Organizes the transport of goods from the place of delivery.

 Takes the delivery of the goods and provides the seller with evidence of having taken delivery.

 From the moment the goods are delivered in accordance with the contract, he bears all the costs and risks of the goods.

Unloads and loads the goods in the export and import port.

2) FCA (Free Carrier (named place of delivery)

*Source - Internet

Delivery is considered complete when the goods are delivered to the carrier named by the buyer, or at the seller's premises, or at any other place specified by the buyer (for example, in the carrier's terminal).

Almost 40% of contracts all over the world are concluded based on this rule.

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 The seller has to provide the goods, the commercial invoice and other evidence of conformity as may be required and specified in the contract,

 Upon request and at the buyer’s expense, the seller enables and assists in obtaining a shipping document,

 Appoints a person responsible for loading the goods to the vehicle of the purchaser of the products,

 The seller is responsible for preparing the goods for loading (measurement and packing of the goods),

 He adjusts the goods for export and bears the risks and costs involved,

At the request of the buyer, he may conclude a contract of carriage on normal terms and conditions at the cost and risk of the buyer.

 The buyer completes the formalities related to the import of goods and their transport from the moment of delivery by the seller to the courier,

 He bears the risk of losing or damaging the products from the moment of delivery to the courier,

 It concludes transport contracts, although the seller may (as an additional service) arrange transport at the expense and risk of the buyer,

 He takes care of all necessary transit formalities and preparing the goods to import,

 The buyer orders transport,

 He takes delivery of the goods at the place agreed upon in the contract in advance.

3) FAS (Free Alongside Ship (named port of shipment)

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*Source - Internet

Delivery complete when the seller delivers the goods by placing them alongside the ship indicated by the buyer or at the point of loading/port (if any) or when purchasing already delivered goods..

Type of transport – sea or inland waterways.

Features: In the contract it is necessary to specify as much as possible precisely point of loading in port of shipment of the goods as to this point all risks and expenses are borne by the seller, and after delivery to this point - the buyer.

 Carrying out all the duties under the terms of delivery specified in the contract. This means delivery of the goods along with a commercial invoice in conformity with the contract of sale and other related documents.

 Delivering goods by placing them alongside the ship within the prior specified period and at the named port indicated by the buyer.

 Informing the buyer in advance of the delivery of the goods.

 Providing at his own expense a document confirming delivery of the goods to the buyer. If such proof is a transport document, the seller must assist the buyer, at his request, risk, and cost, in obtaining it.

 at the buyer request, risk and cost in obtaining any documents necessary for transit and import clearance formalities.

 Packaging and marking the goods.

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 Operating according to all transport-related security requirements until delivery of the goods to the buyer.

 Concluding the contract of carriage from the named port of shipment, except where the contract of carriage is made by the seller (at the buyer’s expense and risk).

 Assisting the seller, at his request, risk, and cost, in obtaining any documents necessary for the export clearance formalities.

 The buyer must notify the seller in advance of any safety requirements related to transport, ship name, loading point and the delivery date within the period agreed in the contract.

4) FOB (Free On Board (named port of shipment)

*Source - Internet

The time of delivery shall be deemed to be the time when the goods are loaded to the vessel designated by the buyer, on the designed date, and in the form prescribed by the port authorities.

Features: It is not advisable to use this term if the goods are transferred to the carrier before they get on board the ship (for example, the goods are in containers that are usually delivered to the terminal). In such cases, the term FCA is used.

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 The seller has to deliver the goods to the vessel at the place designated by the buyer. He also has to bear the costs involved.

 Obtains permission to export products.

 The seller shall be fully liable for any damage to the goods before loading to the vessel.

 Informs the buyer of all undesirable events that occur during the delivery of products to the ship.

 Informs the buyer that the goods have been delivered to the ship.

 He delivers sales notes.

 The seller is responsible for the export clearance and related costs.

 The buyer is responsible for any damage to the goods and theft after the goods have been loaded into the ship.

 He bears the costs related to the conclusion of the transport contract and import issues.

 It shall inform the seller about designated port, the name of the vessel and the delivery date.

 Organizes import clearance and bears the associated costs.

5) CFR (named port of destination)

*Source - Internet

The moment of delivery and transfer of risk is when the goods are on board the vessel.

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Features: In the contract it is necessary to specify precisely the point in the port of destination agreed by the parties as to this point expenses are paid by the seller. It is not advisable to use this term if the goods are transferred to the carrier before the moment when he gets on board the vessel. In such cases, the term CIP is used.

 Loading at the starting point of transport.

 Making a contract for carriage.

 Delivering the goods on board the vessel along with a commercial invoice in the place indicated by the buyer, as well as bearing the costs related to it.

 Controlling the quality of goods, weighing, measuring and counting the goods – necessary before loading the goods onto the ship.

 Safe packaging of goods necessary for transport to avoid unnecessary risk.

 Operating according to all transport-related security requirements for transport to the destination.

 Providing a transport document issued to the destination port of the goods and its copy in electronic form.

 Providing information to the buyer at his expense and risk needed to obtain insurance.

 Taking up the delivery at the time and place specified in the contract.

 Transporting the goods from the named port of destination to the main office and unloading at the port.

 Informing the seller about the port of destination and date of delivery.

 The buyer obtains the import license necessary for the transaction and bears the costs of carrying out customs clearance.

 Carrying out pre-shipment controls of the goods (if it is required in the country from which the goods are shipped).

6) CIF (Cost, Insurance and Freight (named port of destination)

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*Source - Internet

Delivery took place at the moment when the goods got on board the vessel at the port of shipment. The seller is obliged to pay for delivery (freight) to the port of destination and insure the goods in favor of the buyer.

Features: In the contract it is necessary to specify precisely the point in the port of destination agreed by the parties as to this point expenses are paid by the seller. It is not advisable to use this term if the goods are transferred to the carrier before the moment when he gets on board the vessel. In such cases, the term CPT is used. The buyer must understand that the seller guarantees only the minimum insurance coverage. The buyer may require that additional insurance coverage be established in the contract.

 The seller is obliged to conclude a contract of carriage to a designated port of shipment at his own expense.

 Conclude and pay the freight contract costs.

 The seller is responsible for the loading the goods on the vessel.

 The seller is obliged to conclude an insurance agreement (with minimum coverage) and deliver it to the buyer.

 Is responsible for the export clearance and related costs.

 The buyer is responsible for any damage or theft of the goods after the goods have been loaded to the vessel.

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 Is obliged to bear all the costs required to obtain the certificate of origin, consular documents and import rates of duty.

 He has to inform the seller of the designated port, the name of the vessel and the delivery date.

 He organizes the import clearance and bears all related costs.

 The buyer has to obtain all documents necessary for import or transit.

7) CPT (Carriage Paid To (named place of destination)

*Source - Internet

Delivery took place when the seller delivered the goods to the carrier designated by him or another person in a place agreed by the parties. The seller pays for the transportation of the goods to the specified destination.

Features: The contract should specify as precisely as possible the place of delivery, where the risk passes to the buyer, the destination to which the seller is obliged to pay for delivery. This term should be used if the goods are delivered from seller to buyer by several modes of transport (for example, first by rail and then by sea).

 Seller provides commercial invoice and other required documents in paper or electronic form.

 Seller is responsible of delivery of goods to the carrier at the place of delivery on the agreed date or within the agreed period.

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 Seller is responsible for damage or loss of goods until they are handed over to the carrier at the named point and within the specified time.

 Seller has to contract or organize the transport of goods to the named place of destination. If such a place does not exist, the seller can choose the point that best suits this purpose.

 One of the seller obligations is operating according to all transport-related security requirements for transport to the destination.

 Seller has to carry out and pay for export clearance, as well as assisting the buyer with import clearance.

 Seller counts and weigh goods and, if required, packs the goods at its own expense.

 Seller informs the buyer about the delivery of goods to the carrier and provides the buyer with documents authorizing the buyer to take over the goods.

 The seller is not obliged to make a contract of insurance but must provide information for this purpose at the buyer’s request.

 Buyer takes up the delivery of the goods.

 He takes responsibility for damage or loss of goods from the time they have been handed over to the carrier.

 Buyer accepts documents provided by the seller.

 Buyer has to carry out and pay for import clearance, as well as assist the seller with export clearance.

 He inform the seller about the place and date of delivery.

 The buyer is not obliged to make a contract of carriage.

 The buyer is not obliged to make a contract of insurance.

8) CIP (Carriage and Insurance Paid Тo (named place of destination)

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*Source - Internet

Delivery of the goods is the moment of handing over the goods to the carrier.

If there are several carriers, the seller is liable for the goods only until they are handed over to the first carrier. The risk related to the damage or loss of the goods transfers from the seller to the buyer at the time of placing the goods, e.g. on a ship or a train. The seller is obliged to pay for delivery to the specified destination and insure the goods.

Features: This term is convenient to use if more than one mode of transport is used to deliver the goods. If the parties want the risks to pass to the buyer not on the first carrier, but on the next stage of transportation, then this should be explicitly stated in the contract.

 Carrying out all the duties under the terms of delivery specified in the contract.

 Handing over the goods to the carrier on the agreed date stated in the contract.

 Contracting or organizing the carriage of the goods from the agreed point of delivery to the named place of destination.

 Operating according to all transport-related security requirements for transport to the destination.

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 Assisting the buyer in obtaining any documents necessary for transit and import clearance formalities.

 Taking delivery of the goods.

 Carrying out and paying for import clearance.

 Obtaining documents necessary for import and transit.

 Assisting the seller, at his request, risk, and cost, in obtaining any documents necessary for the export formalities.

 Informing the seller about the place and date of delivery.

9) DAP (Delivered At Place (named place of delivery)

*Source - Internet

Delivery took place at the moment when the goods are made available to the buyer on a vehicle that has arrived and is ready for unloading at the agreed destination.

Features: This term should be used if several modes of transport are used.

The seller is not obliged to perform customs formalities when importing goods into the country of destination. If the parties want to oblige the seller to do this, then the term DDP should be used.

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 Seller provides commercial invoice and other required documents in paper or electronic form.

 He delivers goods ready for unloading at a named place and within the specified period.

 He takes responsibility for damage or loss of goods until they are delivered at the agreed point and time.

 The seller’s obligation is contracting or organizing the transport of goods at the indicated destination at his own cost. If such a place is not specified, the seller can choose the point that best suits this purpose.

 Seller operates according to all transport-related security requirements for transport to the destination.

 The seller has to carry out and pay for all export and transit clearance, as well as assist the buyer with import clearance.

 He has to count and weigh goods and, if required, pack the goods.

 He provides the buyer with documents authorizing the buyer to take over the goods.

 The seller is not obliged to make a contract of insurance.

 Buyer pays the price of the goods as provided in the contract of sale.

 He takes up the delivery of the goods.

 Buyer has to accept documents provided by the seller for being enabled to take up the goods.

 He takes responsibility for damage or loss of goods from the time they have been delivered.

 Buyer has to carry out and pay for import clearance, as well as assist the seller with export clearance.

 Buyer informs the seller about the designated port/place of delivery, types of means of transport and date of delivery.

 The buyer is not obliged to make a contract of insurance but must provide information for this purpose at the seller’s request.

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10) DPU (Delivered at Place Unloaded (named place of delivery)

*Source - Internet

The seller delivers the goods to the buyer by placing them at the disposal of the buyer at the agreed terminal discharged from the arriving vehicle.

Features: This term should be used if several modes of transport are used.

The contract recommends the exact place of unloading, as the risks to this point are borne by the seller. If the parties wish to transfer to the seller the costs and risks associated with unloading and loading, transportation of goods from the terminal to another location, then the terms DAP, DDP should be used.

 Carrying out all the duties under the terms of delivery specified in the contract. This means delivery of the goods along with a commercial invoice in conformity with the contract of sale and other related documents.

 The seller is responsible for unloading goods from arriving means of transport, and then delivering by placing them at the disposal of the buyer at the point agreed in the contract.

 Contracting the carriage of the goods.

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 Providing the buyer, at his own expense, with all documents necessary to enable the buyer to take over the goods.

 Assisting the buyer at the buyer request, risk and cost in obtaining any documents necessary for transit and import clearance formalities.

 Informing the buyer about matters related to receiving the goods.

 Unloading goods at the place of delivery.

 Assisting the seller, at his request, risk and cost, in obtaining any documents necessary for the export and transit clearance formalities.

 Carrying out and paying for import clearance.

 Informing the seller in advance of all safety requirements related to transport, ship name, loading point and possible delivery date within the period agreed in the contract.

11) DDP (Delivered Duty Paid (named place of delivery)

*Source - Internet

Delivery took place at the moment when the seller provided the buyer at the destination with goods that have been cleared for import and are ready for unloading.