Practical information on customs formalities

22th May 2012

Content

Customs in Russia, a few facts and fiqures

Which documents are required to accomplish your customs formalities?

How do you prevent a correction of your customs value?

Where do you accomplish your customs formalities?

How do you keep the cost of customs formalities predictable?

Integration of logistics and customs formalities

Trends and perspectives in customs fir

Customs in Russia

Russian customs is complex of multipurpose definitions, close related with internal and national politics.

Main objectives of customs policy of Russian Federation is providing state budget and customs tariff regulation and includes three main aspects:

fiscal: in 2011 customs provided 53% from income of state budget,export: 55% of customs income, about 1 million declarations,import: 45% of customs income, 3 million declarations

administration: stipulation of rates of customs duties, quotes, limitations of import-export, license for certain type of goods, other non-tariff regulations

law –enforcement: protection of state security of the country, life and health of citizens, cultural values, animal protection, surrounding environment, fight and prevention against drugs, the weapon, contraband, etc.

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Documents that are required to accomplish customs formalities

The list of documents is stipulated by the Customs Codex of the Customs Union, article 183, 240, 253, 294, 299, 308, and the Federal Law N 311 on customs regulation in the Russian Federation, article 208

Documents must be translated to Russian

Specific customs post can have particular requirements

General list of documents consists of 3 parts:

documents for registration of legal entity on customs, documents for customs formalities, documents for confirmation customs price.

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Documents for registration

All documents must be original or notarized copy

1. Organization charter with all alterations 2. Documents of state registration of legal entity3. Documents of registration with tax authorities4. Information about existing bank accounts and currency accounts including

the name of bank and its postal address5. Notification from the state statistical administration6. Documents certifying the actual location of legal entity (rental contract or

certificate of proprietorship for the premises of actual location of the company

7. The letter of appointment of Director General and Chief Accountant, copies of passports of Director General and Chief Accountant

8. Copies of labor books of Director General and Chief Accountant9. Balance sheet for the last accounting date, submitted to the tax authority

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Documents for customs formalities

1. A copy of the commercial contract with specifications and appendices (if any), which must contain: the seller's and buyer's details (consignee's address if it is different from

the one of the buyer); the price and total value of the contract; the terms and period of delivery; description of the goods, including quantity

2. Passport of import deal (original for the first time)+ copy signed and stamped by the consignee)3. Payment documents (copies) – application for currency transfer and bank statement in case pre-payment was made4. Documents (copies) confirming the goods transportation payment (depending on the terms of delivery)5. Agreement for forwarding services (copy)6. Transport documents (TIR, CMR, bills of lading, waybills etc)

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7. Invoice (original and translated copy) which must contain: details of Seller, Buyer, № and date of contract, name of goods, HS code, price and quantity of goods, terms of delivery according to INCOTERMS 2010, terms of payment

8. Packing list (original and translated copy) which must contain: net and gross weight for each position, which must correspond with

specifications the names and quantity of pieces and the kind of packaging any information on marking № of invoice and contract

9. Export declaration (copy + translation)10. Insurance certificate, if stipulated in the terms of delivery in the contract11. Certificate of origin (original)

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12. Necessary licenses and permissions of various government agencies of RF, if required for the type of cargo (notarized by the authority that issued the respective document or attested notary)

13. Certificates of conformity, permissions of ministries and other public authorities of RF, if required for this type of cargo (notarized by the authority that issued the respective document or attested notary)

14. Sanitary and epidemiological certificate (originals), if required according to the code TN VED

15. Description of goods, technical documentation, safety data sheets, pictures, photos, booklets, brochures

16. Other documents, depending on the specific characteristics of goods (certificates of analysis, certificates of quality)

17. Receipt of payment to the Russian customs authorities for duties

How do you prevent a correction of your customs value?

Check with your customs representative whether your invoice price is under or above the reference value (so-called “risks”) used by Russian customs.

If it’s under it, you have following options:

1. Prepare list of additional documents, insist on your position, prove the price but be ready for longer time of formalities and extra control of goods.

2. Pay for the additional duties according to the correction to get release of your goods, collect additional documents within 60 days after release declaration, present the documents to customs, prove the price, take back the amount of additional duties.

3. Pay for the additional duties according to the correction to get release of your goods corrections and go to court.

At the stage of customs clearance the proving of customs value is obligation of declarant, after transition to court stage it is shifted on customs office

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Documents for price confirmation

The list of documents stipulated by Decision of Commission Customs Union №376 from 20.09.20101. Export declaration (copy+ notary translation)2. Price lists of manufacturer or commercial proposal3. Price lists of seller or commercial proposal4. Orders, order’s confirmation5. Price information of the world and domestic markets for the similar and identical goods6. Transport and terminal handling documents in case of multimodal deliveries7. Agreements with 3rd parties (contracts related to this deal), accountant docs of capitalization8. Bank payment documents (if the invoice is paid) or proforma-invoice (for provisional value deals), and other payment/accountant documents, confirming the value of goods9. In case of existing relationship between seller and buyer, documents confirming that relationship doesn’t make impact for price of goods 10. Other documents which can confirmed the price

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Where do you accomplish your customs formalities?

At the external border of the customs union?

Actually the residence principle allows submission of customs declaration only on territory of country of registration of legal entity or place of residence of the individual.

In the future, economic agents will be able to execute customs formalities at any customs office in the customs territory of the Customs Union.

The development of the procedure and regulations is ongoing.

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At the Russian customs post of entry or at the customs post of destination of the consignments?

Important factor:

The concept of customs clearance and customs control of goods in the places closely located to the state border of the Russian Federation started in 2008. Goals: improvement of customs administration, clear control of imported goods, infrastructural development of frontier subjects of RF, decrease of transport load in the large cities caused by increasing foreign

trade turnover.Today status: 56 customs posts were closed, mainly in Moscow and St. Petersburg, 30

customs posts were opened along the bordersFuture plans: further liquidation of customs post is not planning, keeping and

developing of existing customs posts located in ports and airports, partial limitation of competence of others

At the Russian customs post of entry

Advantages:

remote electronic customs clearance, customs formalities can be completed straight after the truck has crossed

the border, vehicle can continue its journey directly to its destination, creates time benefits of one or two days for our customers, decrease of transportation cost of cleared goods from ports to final

receiver

Disadvantages:

in cases when paper documents flow are required = › causes courier costs and time delays

need constant availability of local representative for operational support

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At the customs post of destination of the consignments

Advantages:

proximity to the final receiver easy to handle paper documents, quick response for additional

customs requests personal “live” contact with customs house physical presence facilitate operational issues

Disadvantages:

shortage of inner customs posts high price of SVH

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How do you keep the cost of customs formalities predictable?

The total cost of customs formalities includes:

1. Customs payments (duty, customs charge, VAT)

Make sure that: customs code is proper defined according ETN VED of Customs Union,

documents confirming the customs code is prepared and easy-to-understand,

customs duty 0% ? Prepare additional documents from authorized laboratory, expert statement, acts of Chamber of Commerce, etc.

check “risks” and statistics level of customs value, if the price under the level, prepare price confirming documentation;

no contradictions in all documents.

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2. Certification costs

Make sure that: non-tariff requirements are attentively checked necessary certificates are prepared in time

3. Fee of temporary bonded warehouse (SVH)

learn the tariffs of SVH, ask for hidden costs make prognoses' calculation based on tariffs and expected time of

customs formalities and needful operations

4. Customs representative’ fee

choose the right partner,. get transparent price and conditions

Integration of logistics and customs formalities

Have transport/handling/customs formalities done by one partner or leave everything to a specialist and coordinate yourself or appoint a coordinator?

One partner is: possibility to focus on your core business responsibility for whole process one communication window

Added value of licensed customs representative:

professional guidance and consultancy in customs legislation electronic and remote declarations favorable relation from customs best practices based on experience different solutions

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DDP solution

• How does it work?

• Exporter sells to TradeCIS• TradeCIS sells to final receiver

• 2 separate contracts• 2 separate cashflows

Door-to-door solution

Final receiverExporter

Ahlers(TradeCIS)Importer

Price, terms, conditions

Cashflow

EURUSDEtc.

RUBUHAEtc.

EXW purchasing

contract

Local delivery contract (after

clearance)

Trends in customs field

Entry Russia to WTO is main factor defining further development of customs in nearest future.

Customs aspects: increase of trade, especially import simplifying customs procedure but in parallel strengthening of

customs control enhancing of measures of protection of intellectual property introduction of obligatory preliminary informing since 17.06.12 close cooperation of Russian customs with customs of others

countries, transparency in documentation flow the customs infrastructure will develop taking into account needs

of participants of foreign trade activities

Positive effect for foreign companies will be removal of trade barriers and access to invest and expand into a welcoming market

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Questions?

Thank you for your attention!

Olga NekrasovaAhlers St. PetersburgCommercial manager