Law No. 7418 " What else has changed in customs policy?

Short overview of changes.

In addition to the abolition of preferential customs clearance of cars, the law establishes restrictions on the alienation of imported vehicles no earlier than 1095 days from the date of their state registration in Ukraine. Introduces the need for vehicles to comply with environmental standards and establishes warnings that no benefits will apply to vehicles originating from the Russian Federation or the Republic of Belarus.

However, the main changes.

First, the law returns VAT and duties on imported goods canceled at the start of the war..

The law provides, in particular, additional grounds for the abolition or application of customs quotas and exemptions, the abolition of duties on certain groups of goods as a response to friendly actions from countries with which Ukraine has concluded free trade agreements. That is, we are talking about the possibility of applying some benefits for goods produced in the territory of countries that are now helping Ukraine..

Secondly, to sweeten the pill, the relevant changes are also being made to the Law of Ukraine “On Foreign Economic Activity”, which details the mechanism for implementing the principle of reciprocity in customs policy: in the event that any state introduces benefits for Ukrainian goods.

But it is still far from the point, the law is rather aimed at creating conditions for the adoption of new by-laws regarding the introduction (cancellation) of certain benefits in the future in response to the assistance received by Ukraine.

This step is obvious, it is beneficial to importers and Ukrainians as a temporary measure, since today it is difficult to guarantee and fully provide Ukraine with all the necessary goods in the current conditions - damage to infrastructure, enterprises, outflow of labor usually affect production. Therefore, customs benefits should affect the price of imported goods, which may be less due to the war in Ukraine..

Currency restrictions and imports.

However, it should be recalled that the list of critical import goods, approved by government decree, is in force, and it is of extreme importance precisely for Ukraine's ability to purchase goods. In parallel, there are restrictions on the implementation of cross-border transfer of funds introduced by the National Bank of Ukraine. And as of today, the ability to pay for goods and services for import into our country is determined precisely by the category of “critical imports”. It is now simply impossible to pay for other goods and services abroad, no matter what benefits we are talking about.. Banks very carefully check the purpose of the payment, request contracts and additional documents to confirm the purpose of the transaction. Any additional checks slow down processes, so they obviously do not make life easier for entrepreneurs.. Business representatives are now interested in changes in foreign exchange regulation, simplification of the processes of banking transactions and stabilization of the situation in the foreign exchange market.

The NBU reacts to this with restrained optimism, stating that it is this decision that may soon become the basis for the abolition of the mentioned currency restrictions..

“The entry into force of the law creates prerequisites for the lifting of restrictions on the purchase of foreign currency and cross-border transfers for the import of goods by the NBU. At the same time, in the conditions of martial law, we consider it expedient to maintain the restriction on the purchase of foreign currency and cross-border transfers for the import of services.. — The restoration of duties and taxes on imports of goods and services is an important step towards returning the ability of the foreign exchange market to self-balancing. In particular, this will support the further recovery of production in Ukraine and will limit the growth rate of imports, which puts pressure on the foreign exchange market and on Ukraine's international reserves."

The list of such goods and services is also regularly updated and revised, now covering almost 90% of the list of all goods that were imported to Ukraine before the war.. So if the NBU does not hesitate to lift currency restrictions, as it promises, and Ukraine really provides benefits for important groups of imported goods, the situation in foreign trade can very quickly change for the better.. If currency restrictions are lifted slowly, the real sector will only lose money, and prices for imported goods will continue to grow..

Therefore, first of all, we expect changes in the context of expanding (detailing) the list of goods and services classified as critical imports, and the approach regarding current currency restrictions. Since at the level of laws there are mainly grounds for the use of preferential mechanisms, their practical implementation is entrusted to the subjects that deal with such issues - the Cabinet of Ministers and the NBU, they are the ones who have the ability to quickly respond to changes in the environment and the needs of citizens..

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