Of import duties in Ukraine

Key words:

Ad valorem rate; Specific rate; Combined rate;

Preferential rate; Privileged rate; Full rate;

Country of origin; Most favored nation; WTO

Import customs duty is the instrument of fiscal and trade policy targeted to:

- raise taxes;

- restrict trade;

- protect domestic industry;

- restrict import of certain products;

There are 3 types of duty by method of calculating:

ü Ad valorem, given as a percentage of customs value of goods;

ü Specific, given as a specified monetary amount for each unit of goods;

ü Combined (Compound), given as a combination of both calculation methods (mix type – combination of the two). Duty amount is calculated both as ad valorem and specific tariff.

Most customs tariff are levied at ad valorem rates, and only 1.5 percent of tariff line items are subject to specific or combined rates of duties.

QUESTIONS:

1. Which duty (ad valorem or specific) is more effective at the case of

a) increasing prices: ____________________;

b) decreasing prices: _____________________.

2. Please, choose the products with:

- ad valorem customs duty rates

__________________________________________________

- specific customs duty rates

__________________________________________________

- combined customs duty rates

__________________________________________________

2. Wheat flour is imported to Ukraine: quantity – 10 t; price – 60 EUR per 1 ton.

The rate of import duty on wheat flour is 25%, but not less than EUR 20 per 1 ton

What is the amount of import duty?

__________________________________________________

__________________________________________________

3. Wheat flour is imported to Ukraine: quantity – 10 t; price – 100 EUR per 1 ton.

The rate of import duty on wheat flour is 25%, but not less than EUR 20 per 1 ton

What is the amount of import duty?

__________________________________________________

__________________________________________________

As a rule, all imports are subject to payment of customs duty. Customs import duties are paid in accordance with Customs Tariff of Ukraine.

Customs Tariff of Ukraine is differentiated by level of customs duty rates. Ukraine’s import duty schedule imposes 3 kinds of customs tax rates:

1) ________________________ are applied to goods originating from countries entering together with Ukraine in the customs unions or forming special customs zones, as well as where a special preffered customs regime is established according to international agreements with Ukraine.

2) ________________________ are applied to goods originating from countries or economic unions with “ most favored nation status”^* granted by Ukraine in international agreements as well as from countries-WTO members.

3) ________________________ are applied to goods originating from other countries (with which Ukraine has signed no above mentioned agreements or free trade agreements), or when the country of origin cannot be determined, as well as to goods moved through the customs border of Ukraine by citizens above established standards (norms).

*Algeria, Azerbaijan, Belarus, Bosnia and Herzegovina, Iran, Kazakhstan, Democratic People's Democratic Republic, Lebanon, Libya, Syria, Serbia, Taiwan, Turkmenistan, Uzbekistan

QUESTION:

1. What does the level of customs duty rate depend on?

_____________________________________________________________

2. Please, fill in the table below.

Country of Origin of goods	Import Customs Duty
Preferential	Privileged	Full
1. Most Favored Nation
2. Undetermined
3. WTO
4. Customs Union
5. Neither Most Favored Nation no WTO

COUNTRY OF ORIGIN OF THE GOODS The country of origin of goods is considered the country in which the goods were completely manufactured or sufficiently processed. The following goods shall be considered goods completely manufactured in a country: 1) minerals extracted in the territory of the country or in its territorial waters, or in its continental shelf and from the sea floor, provided that the country has an exclusive right to develop such resources; 2) plant products, grown or harvested in the territory of the country; 3) live animals that were born and raised in this country; 4) products received from animals raised in this country; 5) products of hunting, fresh-water and sea fishing; 6) products of sea fishing, obtained and (or) produced in the world ocean by the vessels of this country, as well as vessels leased (freighted) by this country; 7) secondary raw materials and waste materials, which are the result of production and other operations carried on in this country; 8) hi-tech products obtained in open space at space ships that belong to this country or leased by this country; 9) goods produced in this country exclusively from products specified in items 1 – 8. A criterion of sufficient processing is based on: 1) a rule that requires change in the classification code of the goods based on the Harmonized Commodity Description and Coding System at the level of any the first four digits (commodity position) after their processing; 2) or on a rule of ad-valor portion, which provides for changes in the value of the goods as a result of its processing, provided that the added value in this case is not less than a certain percent of the value of the goods received as a result of the processing; Shall not be considered as such, that meet the criterion of sufficient processing: 1) operations related to ensuring preservation of the goods during storage or transportation; 2) operations related to preparing the goods for sale and transportation (making smaller sets of goods, preparing goods for deliveries, sorting, repackaging); 3) simple assembling operations; 4) mixing goods (components) without giving to the resulting products characteristics that substantially distinguish them from the initial components; 5) a combination of two or more of the specified above operations; 6) slaughtering of animals. The country of origin is certified (verified) with Certificate of Origin of the Goods. A certificate of origin of the goods must undoubtedly state that the goods in question are originated from the respective country, and must specify: 1) a written statement of the exporter on the country of origin of the goods; 2) a written statement of a competent authority of the country of exportation, which has issued the certificate, stating that the information reflected in the certificate is correct.

4. FREE TRADE AGREEMENTS

1. Free trade agreements: Ukraine with CIS and Macedonia. Ukraine has concluded a Free Trade Agreement (FTA) with Russia and other CIS countries, as well as with Macedonia. So Ukraine applies zero tariff rates for the majority of categories of products imported from these countries. Free Trade agreements allow goods to be imported into Ukraine duty-free provided the following terms:

1. Direct purchase:

______________________________________________________________;

2. Direct shipment:

______________ _______________________________________________;

3. Country of origin of the goods:

__________________________________________________________________

_________________________________________________________________;

4. Imported goods are not in the list of exeptions of free trade agreement. Free Trade Agreements contain the clause regarding the exemption of some products from zero-tariff regime (sugar, alcohol, skins and some other food products are frequently excluded from the FTAs).

QUESTION:

What rate of Customs Tariff of Ukraine is applied to imported goods if at least one of the terms is not provided?

______________________________________

2. Free trade agreement: Ukraine with EFTA. EFTA (European Free Trade Association, EFTA) was founded in 1960 to promote free trade in goods and services, as well as the free movement of capital and people. A free trade area brings together the customs territory of 4 European countries: Iceland, Liechtenstein, Norway and Switzerland.
The Free Trade Agreement between Ukraine and the EFTA countries entered into force on June 1, 2012. Agreement provides for the reduction and abolition of import duties of Customs Tariff of Ukraine to the countries participating in EFTA.

Exercise. What is the amount of import duty?

a) Laminated boards worth $10 000 are imported to Ukraine from Poland. The commodity is produced at the Polish plant and originated from Poland. Rate of customs duty in the Customs Tariff of Ukraine is: privileged - 10%, full - 15%.
_______________________________________________________________________________________________________________________________________________

_______________________________________________________________________

b) Laminated boards worth $10 000 are imported to Ukraine from Russia. Contract of sale is concluded with the resident of the Russian Federation. The commodity is made at the Russian plant. The country of origin is Russia, which is confirmed by certificates of origin.
_______________________________________________________________________________________________________________________________________________

_______________________________________________________________________

RESUME:

In order to determine the amount of import duty, please, do the following:

1. ________________________________________________________________

________________________________________________________________

2. ________________________________________________________________

_______________________________________________________________

3. ________________________________________________________________

________________________________________________________________

4. ________________________________________________________________

___________________________________________________________________________

EXERCISES

TOPIC#4.

Дата добавления: 2015-11-14