Ukraine Customs Authorities Reform

Courtesy of Oleksandra Danko of UNIAN (see link below)

In 2019, Ukraine launched a large-scale reform of the tax and customs services, which included the payment of taxes online, as well as the elimination of smuggling and queues at customs. Until 2012, two separate State Tax and Customs Services already existed in Ukraine. before they were united into a single department – the Ministry of Revenue and Duties.

The official launch of the separate tax and customs services took place in August and December 2019, respectively. The number of customs offices was reduced from 26 to 16. The new head of the tax service inherited a whole lot of problems. The key ones, according to businesses, are delays in VAT refunds, unreasonable requests and interpretations of tax legislation by regulatory authorities, as well as biased decisions taken by fiscal authorities.

Fighting Corruption

Customs reform actually started in July, when its new head was appointed, Maksym Nefyodov. After all formal barriers were overcome, he took a course on turning customs into a European-style body without corruption. And this is one of the acute problems in this area, because, according to experts, our country loses about $5 billion annually from corruption at customs.

Personnel purge

Based on the priority of tasks, Nefyodov took up the personnel purge. First, he urged those who did not want to work under the new rules to resign. And towards the end of 2019, it became known that more than 500 odious leaders of different levels, known for the patronage of smuggling flows, did not become part of the new team and would be fired. In addition, the new chief said that in 2020 there would come a re-certification of customs officers, based on which their salaries will be become part of the new team and would be fired.

Recertification of Customs Officers

In addition, the new chief said that in 2020 there would come a re-certification of customs officers, based on which their salaries will be reviewed upward, up to the salary level of customs brokers.

First Successes

Despite the fact that Nefyodov promised system changes no earlier than a year later, the first tangible innovations were already launched. In particular, among them is an online service for calculating the value of customs clearance of imported cars with EU tags. It is worth noting that this service has become very popular among Ukrainians since a previously closed pricing information is now available on more than 2,300 thousand car models cleared 2018-2019.

Technical re-equipment

In addition, at the end of last year, customs launched seven scanning systems for inspecting goods at checkpoints that had been purchased long ago but had never been put into operation. These measures will radically reduce the time for cargo inspection, since the scan does not require physical inspection of goods by customs officials. The Customs Service intends this year to purchase new scanners and begin the reconstruction of 12 checkpoints that cover almost the entire western border, as well as key checkpoints on the border with Russia and Belarus.

Stronger checkpoints

In addition, by the end of 2021 it is planned to complete repairs at the checkpoints of Uzhgorod and Luzhanka, and by the end of 2022 – at Krakivets and Shehini, at the expense of a Polish loan.

Move to electronic customs

Nefyodov also expressed confidence that within a year he would be able to launch "electronic customs" in order to create a more open agency and expedite all customs procedures. He managed within a year to move public procurement into the electronic format, so the voiced deadline is very realistic.

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