Import & Export Duties
Few goods are subject to export duties in Ukraine at the present time. According to international practice, all imported/exported goods are subject to customs and border control checks. Importers are required to complete a customs freight declaration for every item imported. It is often recommended to use licensed customs brokers to navigate the difficulties of the Ukrainian customs bureaucracy, as constantly changing regulations and significant discretion on the part of the customs officer may prove obstacles to the successful import of a product.
Imported goods are subject to customs fees, import duties (ranging from 5-200%), excise taxes (10-300%), and VAT (20%). These charges do not apply to goods imported for temporary import, re-export and transit. Customs valuation in Ukraine generally conforms with world standards, where customs value is defined as the sum of the sales price, transportation costs, freight, insurance, storage fees, and any other costs not foreseen in the contract price. Receipts should be presented to document these costs and to allow customs officers to determine the proper customs value. In the event that receipts are not available, Ukrainian customs will assess the customs value using comparative pricing of similar goods and services in the country of origin.
Excise taxes are applied to a number of luxury goods, including alcohol, automobiles, jewelry, tires, and tobacco. Excise duty rates are expressed as a percentage of the declared customs value, plus customs duties and customs fees paid for importing products. Excise duties for alcohol, tobacco, and automobiles are not calculated by their customs value, but rather by volume, units, or weight (engine volume, in the case of automobiles) imported into Ukraine and are declared in EURO per unit. Excise duty payment should be made in Ukrainian currency at the exchange rate effective on the day of payment. The value of excise duty is calculated in the following way:
[(V+D+F) x R]/100
where: V = customs value of goods
D = import duty
F = customs fee
R = excise rate (a percentage for goods other than alcohol, tobacco, and automobiles)
VAT is levied at 20%, based on the customs value on the invoice, and is generally payable at the time of customs clearance by the importer, though a promissory note can also be applied. (V+D+F) multiplied by 20 (rate of VAT) and divided by 100 will give the amount payable of VAT.
Import duties differ and largely depend upon whether a similar item to that being imported is produced in Ukraine; if so, the rate may be higher. Ukraine’s policy to protect domestic manufacturers may result in gradual increase of import duties for items produced in Ukraine (though opposition from the IMF and Ukraine’s aspirations to enter WTO is likely to put constraints on that trend). Import duties are levied in accordance with the Ukrainian Unified Custom Tariffs, which were approved on January 13, 1993 (the "UCT"). The UCT provides for three levels of custom duties for products being imported into Ukraine: (i) preferential; (ii) most favored nation; and (iii) full.
The first level is applied to products, originating (i) from countries, with whom Ukraine has entered into a customs union, (ii) from countries with whom Ukraine has created special customs zones, (iii) from countries which have provided "preferential" treatment to Ukraine pursuant to a bilateral agreement and (iv) countries which are classified as "developing countries" by Ukraine (the list currently includes 145 countries), except for those products from developing countries, which fall within classification # 25-97.
The second level is applied to those countries, which have granted Ukraine most favored nation status and to products from developing countries, which fall within classification # 25-97. Currently, thirty countries have established a most favored nation regime with Ukraine.
The third level is applied to all other goods.
In 1996 Ukraine introduced import licenses. Goods subject to import licensing include: agricultural chemicals, pharmaceutical products (except dental materials and sutures), veterinary medicines, cosmetics, sporting weapons, self-defense articles and hygiene products.
Ukraine has signed free trade agreements with each of the former Soviet republics, excluding Kyrgyzstan and Tajikistan. These treaties cover customs duties, but not VAT or excise tax, with the exception of the treaty with Belarus. In December 1997, Russia and Ukraine agreed to a mutual exemption on VAT. In addition Ukraine participates in the Black Sea Cooperation Council, along with Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, the Russian Federation, and Turkey. Currently, negotiations are underway for the establishment of a customs union with neighboring Moldova, as well as discussions for a Baltic-Black Sea Cooperation Agreement. Ukraine intends to become a full member of the Central European Free Trade Agreement (CEFTA), which is predicated on Ukraine first becoming a member of the World Trade Organization. Ukraine is not planning to join the Commonwealth of Independent States customs union.