Ukraine: Customs Bonded Warehouses

Last Updated: 23 May 2013
Article by Scott Brown

All countries try to monitor and control import-export flows that pass through their borders. While some European countries have significant experience in these activities, contemporary Ukraine is continually developing its customs control systems (and supporting legislation). Ukraine's new Customs Code, which came into force on January 1, 2013, completely overhauled the prior legislation governing customs bonded warehouses.

As elsewhere, the Customs Service of Ukraine ("Customs Service") plays the key function in monitoring goods during their voyage through Ukrainian border points and transit through Ukraine. Due to the importance of controlling the flow of goods into and out of the country, the Ukrainian legislators have constantly revised specific regulations governing customs warehouses. Most recently, Decree No. 835 of the Ministry of Finance of Ukraine "On Approval of the Procedure of Granting Warehouse Objects the Status of "Customs Warehouse" and Revocation of Such Status" ("Decree No. 835"), dated July 16, 2012, was passed and is based on the special annex concerning customs warehouses of the 1973 International Convention on the Simplification and Harmonization of Customs Procedures.

Customs warehouses are defined as duly equipped premises, storage facilities, refrigerator and freezer compartments, and open or closed storage areas designated for the storage of goods under customs control. Customs bonded warehouses may store any goods declared into the regular customs regime, as well as those intended for transit, temporary import, processing inside or outside of Ukraine, export, and temporary export. The Customs Code distinguishes between closed (private) and open (public) customs warehouses. Closed customs warehouses are used for the storage of goods under customs control which cross the customs border pursuant to foreign economic agreements concluded solely by the warehouse owner or user. Open customs warehouses are used for the storage of goods under customs control which cross the customs border pursuant to import-export sale-purchase agreements concluded either by the warehouse owner/user or any other parties.

The legal relations between owners/users of open customs warehouses and parties which store goods at such warehouses are governed by civil agreements. The legal relations between an owner/user of a customs warehouse and the customs authorities are governed by the operation procedure of the warehouse as approved by the head of the relevant customs body and agreed upon by the warehouse owner/user. The operation procedure must set forth, at a minimum, the list of officials with the right to access the warehouse, the head of the warehouse, the minimum amount of customs officials who will be hired to undertake customs control and clearance of goods, the warehouse working hours, the warehouse reporting requirements, and any other special functions.

Certain "simple" warehousing operations involving goods stored in customs warehouses may be undertaken without permission from the customs authorities. Such simple operations are those necessary to ensure safe storage of goods, including the movement of goods to achieve rational storage, cleaning, ventilation, temperature regulation, drying, inventorying, etc. Anything above and beyond such simple operations requires permission from the customs authorities to grant the warehouse "customs warehouse" status, including preparation of goods for sale, consolidation and separation of consignments, packaging and re-packaging, sorting, marking, loading/unloading, etc.

Prior to 2013, warehouse owners/users had to obtain licenses in order to operate customs bonded warehouses, which entailed a cost of 2,500 USD for the initial license and 1,500 USD for each renewal or re-execution. The new legislation simply requires warehouse owners/users to receive permission for "customs warehouse" status from the local customs authority in the zone where the warehouse premises are located. Moreover, such permission (and prolongation or re-execution) is free of charge and is granted for an indefinite period. Permission is granted on the basis of an application and accompanying documents and is executed by including the warehouse owner and its premises into the Register of Customs Warehouses (the "Register"). Note, however, that such status may only be granted to Ukrainian residents. Business entities or individuals with customs broker licenses may become owners/users of open customs warehouses.

As customs warehouses are customs control zones, they must be especially equipped to receive the status of "customs warehouse". The requirements regarding the construction and layout and the arrangements for customs control are quite strict and extensively set forth in Decree No. 835. For example, duly authorized customs warehouses must have proper parking facilities, admission control and registration systems, 24-hour security and/or functional security and fire safety alarms, lighting, certified weighing equipment, ramps, observation areas, loading equipment, double-locking systems, etc. All customs warehouses must meet rather strict standards of video surveillance in all storage and loading areas. Customs officials must be granted access to all video files and communication lines to other state controlling bodies. In order to store hazardous goods or goods which require special storage conditions, the warehouse will be subject to even more rigorous construction and layout requirements.

In addition to the application for permission to obtain the status of a "customs warehouse", the owner or user of the warehouse premises must submit a number of supporting documents, including:

1) Certified copies of the documents confirming ownership rights or usage rights to the warehouse objects;

2) Certified copies of various safety-related documents, including fire alarm system approval, internal order on creation of a security department (alternatively, an agreement with a duly licensed security agency), permission to commence operations in all warehouse premises, a state sanitation and epidemiological conclusion in relation to all warehouse premises

3) The general territory plan with an indication of the location of all video surveillance objects, ingress and egress roadways, doors, windows, etc., a technological plan for means of control and reporting, operational procedure, etc.

Upon receipt of an application, the local customs authority must inspect the warehouse premises and all surrounding territory to ensure their correspondence with the submitted documents/information within 10 working days. If everything is in compliance with the requirements, the customs authority will issue an order within 3 working days to grant permission to open and operate a customs warehouse and to approve the operational procedures with the warehouse owner/user. On the next working day after the operational procedures are approved by the customs authority and agreed upon with the owner/user, the customs authority will send an electronic notice to the State Customs Service of Ukraine to include the warehouse into the Register. The notice will contain all relevant information about the warehouse premises, including registration and passport number of the applicant, name and location of the applicant, location of the warehouse premises, amount of warehouse objects, type of warehouse premises, area/volume, and the end date of the use of the warehouse premises if they are leased.

The State Customs Service has one working day to process the information and enter it into the Register. The customs authority will send to the successful applicant an extract from the Register within three working days from the date of its decision to grant permission to open and operate a customs warehouse. Much like a license, this extract serves as proof to all authorities of the authorization to open and operate the warehouse.

All goods stored in a customs bonded warehouse must be separated according to their respective customs regime (temporary import, import for sale, processing, etc.). Goods may be stored in a customs bonded warehouse without unloading from transportation. For this purpose, the consent of the warehouse owner/user and an agreement between the owner of the goods and the responsible transportation company is required.

As is common in most countries, customs warehouses are subject to stringent accounting and recordkeeping requirements. Customs warehouse owners/users must keep strict accounts of goods stored in their warehouses and submit quarterly reports to the customs authorities regarding the movement of goods to/from the warehouse. The customs authorities may, at any time, request extraordinary reports, but no more than once per year.

In addition to customs bonded warehouses, free customs zones may also be opened and operated with either a commercial or servicing nature. Free customs zones are duly equipped territories or warehouses intended for the storage of goods under customs control and their processing and/or the production of new goods. Commercial free customs zones are created for the free storage of goods without any restriction on length of storage. Service free customs zones are intended to allow the free activity of companies which repair, modernize or construct aircrafts and sea/river vessels and their parts. Industrial free customs zones are created for the purpose of processing (producing) goods on the territory of related special (free) economic zones. It remains to be seen how such free customs zones will be regulated in practice and whether the government will create special economic zones for industrial customs zones. Free customs zones are also subject to special rules related to their construction, layout, reporting and admission systems.

The Customs Code also permits the operation of temporary storage warehouses and customs cargo complexes. Temporary storage warehouses must be duly equipped and are intended for the temporary storage of goods under customs control until their release into a specific customs regime. Customs cargo complexes are territories with the duly equipped set of buildings, structures and technical and communication means necessary for conducting customs control and customs clearance of goods and commercial transportation means which cross the Ukrainian customs border. Both temporary storage warehouses and customs cargo complexes are also subject to strict construction, layout, safety and reporting requirements. Customs cargo complexes must also provide intermediary services related to the declaration of goods crossing the border, storage services, and loading/unloading services. Additional services may also be offered under the proper conditions.

The provisions of the Customs Code concerning customs bonded warehouses are rather straightforward, although proponents of economic reforms constantly offer amendments to the legislation governing this topic. Instead, what is sorely needed is a concentrated effort to implement in a transparent manner this otherwise well-developed and comprehensive legislation. Hopefully, Ukraine's effort to move towards the simplification and harmonization of customs procedures will also lead to less complex and expensive import/export operations and a decrease of corruption at the border.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions