Import Taxation in Ukraine

Import and export operations in Ukraine are subject to various taxes such as customs duties and VAT. In some cases, special excise duties may be applied and / or the request for other payments relating to the issuance of licenses and the approval of product labeling. Customs duties and the items for which they apply are subject to change only in accordance with the decisions of the Ukrainian Parliament.

UCFEA (Ukrainian Classification of Foreign Economic Activities) is based on the Harmonized Commodity Description and Coding System (1996) and on the EC Combined Nomenclature (2000) and is the customs classification system currently in use. The UCFEA serves as a basis for calculating the country's customs tariffs.

Import duties are calculated according to the Unified Customs Tariffs of Ukraine on the basis of the harmonized system and are calculated as a percentage of the customs value of goods and other goods, per single unit (of commodity or product) or for a certain number of units. For some types of goods and product groups, special customs duties are in force, such as special taxes, countervailing, anti-dumping and seasonal import and export taxes. Customs duties must be paid in Ukrainian currency, the Hryvnia.

The VAT is 20% calculated on the value of the goods at the customs exit, ie the CIF value plus customs and excise duties. VAT must be paid when customs duties and other taxes are paid at a rate established based on the customs value of the goods. In addition to VAT and customs duties in accordance with the Unified Customs Tariffs, there is an additional customs tax on the customs value of the goods. This additional tax in 2017 was lowered from 0.2% to 0.15%. The additional fee is capped at USD 1,000. An additional excise duty applies to luxury goods imported into Ukraine such as precious metals, alcoholic beverages and tobacco. It is required that importers, especially those dealing with luxury products, are always aware of the latest regulations governing the particular products they deal with. Generally the documentation required at customs are the certificates of origin of the products or machinery and the commercial invoice.

Import duties are applied partially or fully depending on the country of origin of the goods. The subsidized regime is granted in particular to those countries or groups of countries which are most active as trading partners in Ukraine. According to Article VII of the Law of Ukraine on Foreign Economic Activity, the tariff scheme in Ukraine includes three types of import duties depending on the country of origin of the goods: Full - higher than the MFN (Most Favored Nation) rate, for goods from states that do not benefit from special facilities. Most Favored Nation (MFN) - for goods that come from states that enjoy the treatment of the "most favored nation" and which can be 2 to 10 times less than full. Preferential - which applies to imports from countries with which Ukraine has a Free Trade Agreement or other trade agreements, for example to imports from CIS countries (Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan) and which are further lower than MFN rates.

After becoming a member of the World Trade Organization in 2008, Ukraine applied new and reduced MFN rates for all goods originating from WTO member countries. Beyond being part of the WTO, Italy enjoys a facilitated regime such as Most Favored Nation, being one of the most active countries as Ukraine's trading partners.

The value, for customs purposes, pursuant to Article 259 of the Ukrainian Customs Code is defined as the value indicated by the declarant (usually the one reported on the purchase invoice, the so-called "transaction value") or determined by customs based on alternative determination criteria to that of the transaction value. The Ukrainian customs tariff includes more than 11,000 items, most of which are subject to ad valorem duties, while a minimal percentage (about 6%) is affected by specific or mixed duties. The latter, in particular, apply above all to imported agricultural products, especially those that compete with goods produced within the country. To give an example, a 30% duty is applied to sunflower oil and a 50% duty on sugar, compared to a general average of 11.5% of customs duties for agricultural products. With regard to industrial products, the average duty rate is 4.91%, and therefore also for electrical / electronic material we should be around these values, without prejudice to the application of preferential regimes to be verified in relation to the specific type of goods and their origin.

The customs duty applied by the European Union varies according to the type of goods imported and is calculated based on its value contained in the seller's declaration which usually corresponds to the invoice sent with the product. If a check is carried out and the Customs employee detects a mismatch between the amount paid and the value of the goods, this will be re-evaluated and the duty will be calculated on the new evaluation. This procedure is at the discretion of the customs officer, it is based on presumed assessments. The choice of packages that are opened to verify the content is done randomly. In any case, the customs tax is calculated on the value of the goods including shipping costs. If these are not indicated, it is also indicated in this case on the basis of an assumed value. In shipments to the European Union, the duty applied corresponds to the Integrated Community Tariff (TARIC). The TARIC is calculated as a percentage according to the commodity tables introduced by Reg. (EEC) no. 2658/87 to the first customs of entry into the Union. Unfortunately, in order to calculate the TARIC you need the specific commodity code for the good you intend to import. Otherwise, it is not possible to accurately calculate the duties given the multiplicity of items and the different qualifications of use. To give a trivial example, the import of a dishwasher for family use is subject to a duty of 2.7%, while if it is imported for other uses it is subject to a duty of 1.7%. If the product code is not available, it would be useful to have a minimal description of the asset or the intended use of it.