The Customs Code of the Eurasian Economic Union ("CC EAEU") enacted on 1 January 2018 for the first time has established the import procedure for disassembled and incomplete machinery and equipment during a period exceeding 4 months from the date that the first batch of equipment components ("Equipment") is placed into temporary storage at the level of supranational law. The list of the Equipment covered by the procedure was determined by Decision of the Eurasian Economic Commission No. 45 dated 3 April 2018. It includes:
- Nuclear reactors and piles, turbines, engines, furnaces, as well as the other machines listed in Section XVI of the Foreign Economic Activity Commodity Nomenclature of the Eurasian Economic Union ("FEACN EAEU").
- Instrumentation: measurement and inspection tools (groups 84, 85, 90 of FEACN EAEU), iron-and-steel structures (bridges, their sections, towers), various iron-and-steel tanks with a capacity over 300 litres, pre-engineered building systems (headings 7308, 7309 00, 9406 of FEACN EAEU) normally delivered as parts of the Equipment.
- Industrial transport facilities, groups 86-89 of FEACN EAEU: vessels, boats, and floating structures, aircraft and spacecraft, railroad engines, trams, and other rolling stock.
The newly established procedure ("Procedure") differs from the one in effect in Russia since 2001.
The procedure for paying the import customs duties and taxes at the rates applied to the assembled and complete Equipment, as well as for the uniform prohibitions and restrictions thereto is as follows:
1. Obtain the Equipment classification decision ("Decision"). The procedure, timeframe, and form of the Decision are set forth in the Federal Law "On Customs Regulation in the Russian Federation" ("Customs Regulation Law"). At present, the Decision is made by the Federal Customs Service of the Russian Federation. The Decision contains a schedule that lists each component of the Equipment corresponding to its FEACN EAEU code.
The classification Decision for the machinery and Equipment delivered disassembled is applicable within the Eurasian Economic Union member state making the Decision.
2. Notify the customs authority where the Equipment is supposed to be declared on the deliveries in the proper form and manner as set forth in the Customs Regulation Law.
3. Specify the classification code in the transit entry in accordance with the Decision made (if the Equipment components travel through the territory of another EAEU member state on their way).
4. Declare the components listed in the Decision.
The import customs duty and tax rates along with the prohibitions and restrictions are applicable as of the date when the customs authority registers the component declaration.
5. Submit the declaration for the last component before the overall deadline for submitting the final declaration for the goods—within six years from the date when the conditional release request for the first batch was registered. Prior to requesting the Decision, be aware of the fact that the Procedure is subject to meeting a combination of requirements as follows:
- the Declarant of the Equipment components is the recipient of the Decision;
- the Equipment components imported to the customs area of EAEU will be delivered to a single recipient;
- all components are declared to a single customs authority.
In addition to the above requirements, the EAEU member state's law may prescribe the importation of the goods under a single transaction.
Companies obtaining the Decision prior to 1 January 2018 and importing the first component:
- Prior to 1 January 2018—may import the Equipment components after 1 January using the conditional release requests subject to securing the payment of customs duties and taxes1.
- After 1 January 2018—the Equipment components shall be imported in accordance with the procedure set forth above, i.e. involving the submission of the customs declaration and payment of customs duties and taxes.
Additional requirement suggested by the draft Federal Law "On Customs Regulation"
Part 3, Article 105 of the draft Federal Law "On Customs Regulation in the Russian Federation" submitted to the State Duma of the Russian Federation Federal Assembly on 28 April 2018 introduces an additional requirement to the declaration Procedure: "The component of the good must be imported to the Russian Federation under a foreign economic transaction. The declaration for the goods as it regards the last component of a complete or finished good may contain the details of the good imported under a single foreign economic transaction or under multiple foreign economic transactions, but under a single agreement (contract)".
When the Equipment is procured from two or more manufacturers, this requirement forces the buyers to switch to indirect supplies and perform transactions through foreign consolidators. Otherwise, it is impossible to use a uniform classification code of FEACN EAEU for the Equipment resulting in the payment of import customs duties and taxes for a part of the Equipment delivered under each individual foreign economic transaction.
The experts of the AEB Customs & Transport Committee have submitted their objections to draft Article 105 in its current form and voiced them at the discussion of the draft law by the working team for the consideration of the draft Federal Law "On Customs Regulation in the Russian Federation" of the State Duma of the Russian Federation Federal Assembly within the Budget and Taxation Committee.
1. Pursuant to Article 215 of Federal Law No. 311-FZ dated 27.11.2010 "On Customs Regulation in the Russian Federation".
Originally published by AEB Business Quarterly | Summer 2018.
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