Customs Code of the Eurasian Economic Union
On 26 December 2016, the Customs Code of the Eurasian Economic Union (EAEU CC) was signed by Russia, Kazakhstan, Armenia and Kyrgyzstan and is in the process of signature by Belarus. The agreement on the EAEU CC is due to enter into force on 1 July 2017 after signature and ratification in all EAEU Member States.
The EAEU CC is expected to remove a number of barriers established by the Customs Code of the Customs Union (CU CC), simplify the procedure and reduce time for conducting customs procedures.
The following novelties set by the EAEU CC can be underlined:
- Priority is established for electronic customs declarations, along with the possibility to use a written declaration in exceptional cases. The “one-stop shop” mechanism is also set for operations related to customs declaration and release of goods. The electronic document form is introduced for declarant’s applications amending (supplementing) information in the customs declaration and withdrawing a customs declaration. The written form may be used, e.g. when goods are placed under the customs transit procedure, with respect to international transportation vehicles and when using transport (shipping), commercial and (or) other documents, including those set by international treaties as a customs declaration. Note: written form may also apply on technical malfunction of electronic systems used by customs authorities.
- Introduction of automatic release of goods under customs declaration procedure without customs officer participation. Release of goods should be achieved in four hours from the moment of registration for customs declaration. The term may be prolonged only under certain circumstances. Moreover, a new general term of four months is set for temporary storage. Previously it was two months with a possibility to prolong for up to four months.
- Extended list of data to be indicated in the customs declaration. The list of data is supplemented with information about the carrier, the seller and buyer, trade mark, price of goods and about the unit price and net weight of goods in line with commercial documents.
- Changed procedure for preliminary customs declaration. It will be possible to submit a declaration not only before the goods are imported into the customs territory of the EAEU, but also before the goods arrive at the delivery point set by the customs authority. It is necessary to notify the customs authority on the allocation of goods in the zone of customs control, as indicated in the customs declaration. The EAEU CC also establishes additional reasons for denial of release of goods which were subject to preliminary customs declaration, such as legal changes or entry into force of acts of the Eurasian Economic Commission that in any way alter customs duties, taxes and procedures for granting privileges for their payment, as well as introducing internal market protection measures.
- Terms reduced for declaration registration (registration denial) and grounds specified for denial. Registration (denial of registration) must be carried out no later than one working hour from submission of declaration. A range of new grounds for denial is introduced, in particular failure to comply with the customs declaration procedure form, compilation of the customs declaration in an inappropriate form, failure to comply with features of customs declaration of goods set by national legislation. Furthermore, the customs authority must specify reasons for denial and propose recommendations for eliminating it in the denial of registration.
- Customs declaration can be submitted without confirming documents. In certain cases a declarant may provide only a customs declaration to the customs authority before the goods are released. However, the declarant must possess documents confirming the declared information, except documents verifying compliance with prohibitions and limitations at the moment of submission. A customs declaration on goods is submitted to the customs authority together with documents on the origin of the goods, if required, and with documents confirming the authority of the person to submit the goods declaration.
- Changed procedure for activity by authorised economic operators (AEO). Three types of AEO certificates are distinguished, each providing different conditions for acquiring their status and setting special simplifications for different types of AEO. Special simplifications have been introduced, such as priority for conducting customs procedures, customs transit without security, priority participation in pilot projects operated by customs authorities, customs control (inspection, examination) on a priority basis.
Royalties and analogous payments for using intellectual property are included in the price of goods imported through the customs border of the Customs Union
On 15 November 2016, the Eurasian Economic Commission Board (EEC Board) adopted the Regulation on Supplementing the Price Factually Paid or Payable for Imported Goods with Royalties and Analogous Payments for Using Intellectual Property (Regulation).
The Regulation establishes uniform approaches towards inclusion of royalty and other licence payments in the customs value of goods imported to the customs territory of the EAEU, including when the contract between the parties is silent on such payments. The main criterion for determining whether such payments are to be included in the customs value of the goods is the buyer’s inability to acquire the goods without making such payments.
Changed procedure for deferred determination of the customs value of goods
Since 1 November 2016, changes adopted by the EEC Board to the procedure for deferred determination of the customs value of goods have been in effect.
One of the main changes is that the procedure can be applied for release of goods for internal consumption both when the contract does not specify a fixed amount of royalties and analogous payments for using intellectual property and when the contract directly or indirectly entitles the seller to receive a part of income (revenue) gained from subsequent sale, disposal or use of imported goods. In this case, the part of such income (revenue) shall be calculated based on information unknown on the date when the goods declaration was registered. If interpreted widely, this income can be viewed not only as royalties and analogous payments to the seller, but also as any other income potentially owed by the seller, e.g. dividends.
Note: the procedure for deferred determination of the customs value of goods was introduced back in 2010 by the Agreement on Determining Customs Value of Goods Imported through the Customs Border of the Customs Union. In April 2016 guidelines for this procedure were approved by Decision No. 32 of the EEC Board.
Introduction of mandatory certification of electrical products under energy efficiency requirements
On 21 October 2016 Resolution No. 849 of the Council of Ministers of the Republic of Belarus “On Certain Issues of Confirming Compliance in the National System of Compliance Confirmation of the Republic of Belarus” (Resolution No. 849) was adopted. According to Resolution No 849, mandatory certification of electrical products under the energy efficiency requirements has been gradually introduced in the territory of Belarus. This is effective until entry into force of the EAEU Technical Regulation “On the Requirements for Energy Efficiency of Energy-Consuming Devices”, currently at the stage of national approval.
Under Resolution No. 849 mandatory certification is implemented in three stages:
- since 1 February 2017 – for refrigerators, freezers and combinations of these, electric ovens, general purpose incandescent lamps, compact fluorescent lamps, television sets and television monitors, household and office equipment;
- since 1 April 2017 – for air conditioners with nominal power up to 12 kW, external power supplies;
- since 1 September 2017 – for dishwashers, washing machines and dryers.
Currently, Gosstandart (State Committee for Standardisation of the Republic of Belarus) together with other state authorities is examining the possibility of postponing introduction of the term of mandatory certification requirements to 2018, based on complaints received from the business community.
The Russian Federation vs. The Republic of Belarus: EAEU Court practice
The EAEU Court accepted a claim by the Russian Federation on compliance by the Republic of Belarus with the EAEU Treaty, Article 125 of the CU CC, Articles 11 and 17 of the Agreement on Mutual Administrative Assistance between Customs Authorities of the Customs Union Member States of 21 May 2010.
These articles cover mutual recognition of decisions by the customs authorities of CU Member States in the process of conducting customs operations. This means that the customs authorities of CU Member States are obliged to recognize decisions by customs authorities taken in accordance with CU laws in the process of conducting customs operations and customs control. However, if the customs authority of another Member State violates CU laws when making decisions, there is no obligation for such recognition.
The Russian Federation pointed out in its claim that at the end of 2014 and the beginning of 2015 household appliances transported through Lithuania from Kaliningrad were detained at customs checkpoints in Belarus when finishing the customs procedure for customs transit and then sold in Belarus. The Russian Federation’s opinion is that these household appliances were EAEU goods, as they were manufactured (assembled) in the Kaliningrad region – within the Russian Federation. Then they were placed under the customs procedure of re-import into Kaliningrad region and transported to another part of the Russian Federation by transit through Lithuania.
A possible reason for the dispute is incomplete regulation of the procedure for transporting goods from Kaliningrad, a region having the status of a special economic zone. In the pre-trial settlement of the dispute, in particular within 12 rounds of bilateral consultations, the parties had worked out a table of disagreements related to application of the contested provisions to the transportation of household appliances from Kaliningrad.
Until entry into force of the Resolution of the Council of Ministers of the Republic of Belarus No. 366 of 29 April 2015 “On Certain Issues of Import of the Goods Transported in accordance with the Customs Procedure of Customs Transit from the Kaliningrad Region of the Russian Federation to the Customs Territory of the Eurasian Economic Union through the Republic of Belarus”, the procedure for customs control with respect to goods from the Kaliningrad region placed under the customs procedure of customs transit was regulated incompletely. Now, at customs control, if there are any reasons to treat EAEU goods transported from Kaliningrad as goods of foreign origin, the place of delivery for those goods changes from the customs authority of the Republic of Belarus to the customs authority of the Russian Federation in accordance with Article 220 CU CC.
Now the case is being adjudicated by the EAEU Court. Please note that a session of the Grand Chamber of the EAEU Court was held on 12 September 2016 in relation to admissibility of the Russian Federation’s claim on compliance by the Republic of Belarus with the EAEU Treaty and certain provisions of international treaties in the framework of the EAEU. By Resolution the Grand Chamber of the EAEU Court initiated proceedings in the case.
On 15 November 2016 another session of the EAEC Court was held where the declared petitions were resolved, the parties’ submissions were heard, and the term for presentation of evidence by the parties was established. Because of the necessity for the parties to submit additional evidence and for the court to take additional procedural actions, the trial has already been postponed twice: initially until 15 December 2016, and subsequently, until 24 January 2017.
On 24 January 2017 the third session of the EAEU Court was held where oral pleadings took place, examination of case materials was finished and the judicial panel retired to consider its decision. The parties will be notified additionally on the decision readiness.