PROBLEMS of Customs Management in the CUSTOMS UNION

1. PROBLEMSof Customs Management in theCUSTOMS UNION

2. Single Customs Tariff Regulation has been introduced since January 1, 2010 Common Customs Tariff Comparison of arithmetic mean level of import duties: operated tariff (OT) and CCT First stage of Customs Union functioning

3. IA“24.kg”: How the customs tariffs can be changed? After entering of Russia in WTO after Russia’s entry into WTO on an average the level of tariff shelter will gradually decrease by 3.5 % The acting average rate of customs duty in KRmakes 5.1 %. in2012– 9.5 % in2013 up to 7.6 % in2014 up to 6.9 % in2015 up to 6 %. The average level of rates on obligations of KR to WTO is7.5 %

4. fromJuly 1, 2011 types of state control have been transferred from the Russian-Kyrgyz border to the external borders of the Republic of Kazakhstan and Russian Federation. РЕГИОНАЛЬНЫЙ ПРОЕКТ ПО ЛИБЕРАЛИЗАЦИИ ТОРГОВЛИ И ТАМОЖЕННОЙ РЕФОРМЕ (RTLC) Zhana-Zhol MSAP Kayrak MSAP Urlyu-Tyube MSAP Zhaysan MSAP Syrym MSAP Lokot MSAP Ganyushkino MSAP Khorgos MSAP Korday MSAP B. Konysbayeva MSAP

5. CUSTOMS LEGISLATION OF THE CUSTOMS UNION The major document to observe the procedures of customs transit is theTransit Declaration (further – TD).The procedure of filling of TD has been approved by the Decision of the Customs Union Commission as of June 18, 2010 No.289. Number of documents and structure of documents in case of import/transit of goods to/through the CU territory. Obligatory documents: - invoicefor the transported goods; - Packing list; - consignment note which is a bill of lading, way-bill or other documents, confirming availability of the agreement for transportation of goods and accompanying them during such transportation (CN, CMR, AIGTR);

6. For customs purposes it is required to make a separate break-down for each type of goods • by the codes of goods, • by the number of goods(in units – piece, kg, grams, liters,meters, etc.) , • places, weight (gross, net), • same as ininvoice, packing lists and other shipping documents

7. Decision of Customs Union Commission dated 20.09.2010 No. 376 On procedures of declaration, control and correction of customs cost of goods Effective from January 1, 2011 Procedure of declaration of customs cost of goods Procedure of correction of customs cost of goods Has been in effect in a month from the date of official publication Procedure of control of customs cost of goods Publication date of the CUC decision: 21.09.2010

8. “Cost Control” Risk Management Systems (RMS) Understatement of the customs costof goods when declaring and motivating it by the fact that a full package of documents has been submitted (agreement, invoice, price list, payment documents and other documents justifying customs cost) by a participant of foreign economic activity • Additional inspection on customs cost is assigned in case of signs of unreliability of the declared customs cost • Automatic organization of RMS of aggregateprice informationbased on real declarations without participation of a man taking into account data bases of FCS and SCC of the Republic of Belarus is being used

9. System Problems Influencing Implementation of Customs Cost Control • Problems of data base correctnessof electronic copies of declarations for goods in TAIS-2 for the analysis of the customs cost Unreliable/incomplete filling by the customs applicants of the goods description incolumn 31 of DGaccording to the requirements of the Instruction on procedure of filling the declaration for goods

10. Information Policy Service and PR of NECK“Atameken”, 23 .01. 2012 In Kazakhstan, the RMS profiles are adjusted in such a way that about 80% of all cargos falls under additional inspection, whereas goods made in China are subject to 100% control. As the practice shows, additional inspections are assigned almost for each supply of goods, and the importers have to pay customs payments for each supply individually in accordance with the price information organized by customs authorities.

11. Experts of“Atameken”and Kazakhstan’s entrepreneurs believe that the process of customs clearance has not been simplified with the introduction of RMS, but to the contrary has become more complicated and has increased multiply the red-tape and corruption.. Repeated requests of “Atameken” to bringRMSto its initial ideology – simplification of formalities for bona fide participants of FEAhave led to nothing Experts of“Atameken”are convinced that making the criteria of risk assessmentas well as decision of control and risk management system itselfavailable for foreign economic activity participants, the entrepreneurs could optimize the process of goods registration, decrease the contact with the customs employees, and consequently corruption developments.

12. Where it is more profitable to make a customs clearance in the conditions of Customs Union – in Russia, Kazakhstan VAT inRussia - 18 % inKazakhstan - 12 % «Контроль стоимости» Системы Управления Рисками services of the customs representative inRussia - inKazakhstan - VATinKyrgyzstan - services of the customs BROKERin Kyrgyzstan -

13. Is it important for you TO BE INFORMED ABOUT THE PROBLEMS faced by FEA participants in Kazakhstan for the last 2 years – during formation and beginning of operation of the Customs Union Will theproblemsin customs management in the conditions of the Customs Union influence your businessas the additionalreal burden??? In other words, how does it all reflect on your business???

14. THANK YOU FOR ATTENTION