A company confirms the customs value of imported tableware

Customs issues: Valuation

Back in December 2021, the Council was approached by a Ukrainian importing company that imported various types of tableware from Bulgaria, manufactured by the parent company, i.e. an affiliated company.
At that time already, the customs office resorted to adjusting the customs value of imported tableware, increasing its value almost twice, and that was becoming systematic. Although the importer stated that companies’ affiliation did not affect the customs value, the customs doubted it and also pointed out to discrepancies in the documents.
In addition, the customs had concerns regarding calculation of the price of goods. Although the contract provided for the inclusion of costs for marking, packing and loading in the price of goods, calculations provided by the exporter did not satisfy the customs, as they did not detail each of these operations, but only summarized them under one cost item – as third-party services.
Alongside this, the customs referred to shortcomings of documents related to goods transportation. Customs officials detected the alleged difference between the dates of applications for transportation and the dates of loading; the difference in the cargo escort services volume and cost, particularly the fact transportation costs amount certificate was issued by the forwarder, and not directly by goods carrier; the difficulty of distinguishing the volume and cost of cargo escort services abroad and in Ukraine.
To resolve this situation, the Council organized a tripartite meeting with the local customs and the importer to find out what were the reasons for the systematic adjustment of the customs value of the company’s goods and how to overcome doubts of the customs.
Since the exporter-manufacturer had different registration of goods at higher prices than with the importer-subsidiary, the parties agreed that the local customs would make a request through the State Customs Service of Ukraine to the National Customs Agency of the Republic of Bulgaria to check information on possible discrepancies.
In view of the full-scale invasion of the Russian Federation into Ukraine, the work on the complaint was forcibly suspended during the restructuring of the Council to consider issues related primarily to martial law.
However, with the resumption of the Council’s activities in accordance with the Rules of procedure at the end of autumn 2022, we found out that the practice of adjusting the customs value of the importer’s supplies had not changed, and in some cases the amount of the increase had become even larger compared to previous periods.
At that time, the importer already had a considerable number of successful precedents for challenging decisions on customs value adjustment in court, and that number was only growing.
Then the Council decided to directly engage the State Customs Service of Ukraine in solving the company’s problem and recommended that the importer file complaints about the latest decisions on the customs value adjustment according to Chapter 4 of the Customs Code of Ukraine. In addition, the Council handed the case over for joint consideration of the BOC Expert Group and the State Customs Service of Ukraine.
As a result, it was agreed with the customs what additional documents and explanations the importer could provide to cover all doubts on the part of customs authorities.
Realizing that information from the competent authority of Bulgaria could also help to resolve the problem of systemic adjustment, the Council joined the process and through the EU Public Finance Management Support Program for Ukraine (EU4PFM) was able to find out details of the reply letter from the Bulgarian customs agency, which for unknown reasons, which had never been received by the Ukrainian recipient since September 2022.
The Council immediately requested assistance from the Embassy of Ukraine in the Republic of Bulgaria, which promptly communicated with the relevant customs authority. And after a while it was possible to find the necessary materials – a letter from the National Customs Agency of the Republic of Bulgaria, which confirmed authenticity of documents from the exporter and absence of any discrepancies.
In late April 2023, the State Customs Service of Ukraine satisfied the importer’s complaints and canceled the adjustment decision.
As a result, since the beginning of May 2023, systematic adjustment of the customs value had stopped, and the company passed customs clearance at the contractual price declared by it. In just one month, about a dozen deliveries of Bulgarian tableware to Ukraine was smoothly cleared. According to the importer’s estimates, the company managed to save over UAH 1 mn.

Next case:: Return from occupation and to VAT and group 4 single tax payer status