CUSTOMS SERVICES IN KHABAROVSK KRAI, RUSSIA

FEBRUARY 1999

POST OF ORIGIN: KHABAROVSK

AUTHOR: ANDREI VASENYOV, BISNIS REPRESENTATIVE IN KHABAROVSK

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SUMMARY
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1. This is the sixth report in a series of reports on Russian Far East customs. The report provides information on the documents the importer needs for customs clearance of goods brought into Russia, and describes customs practices in Khabarovsk Krai. Practices and regulations followed by Khabarovsk are similar to those in other parts of the Russian Far East, though local interpretations and procedures may vary. End summary.

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ADMINISTRATIVE STRUCTURE
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REGIONAL CUSTOMS

2. The liberalization of the Russian economy, started in the early 1990s, created a great boom in international trade. During the last eight years, regulations on customs procedures have been among the most changeable parts of Russian legislation. Customs legislation is becoming more cumbersome, and more focused on collecting money for the federal budget.

3. The State Customs Committee (SCC) runs sixteen Regional Customs Departments throughout the country. The Far Eastern Regional Customs Department is based in Vladivostok, and manages customs established in Russia eastern territories including Khabarovsky Krai. Khabarovsk
Customs is in charge of customs posts in Khabarovsk, Komsomolsk-on Amur, Bikin, Vanino, Birobidzhan, and Neryungry (southern Sakha Republic). Since Khabarovsk trade turnover is growing, the Krai administration is trying to raise the status of the local customs office to a Regional Customs Department and to gain independence from Vladivostok.

CUSTOMS DECLARANTS

4. In 1992, the SCC established ROSTEK (Rossiyskaya Tamozhenno-Expluatatsionnaya Kompaniya), a network of customs subsidiaries that maintain customs facilities (like administrative buildings, warehouses, and an automobile fleet). ROSTEK also sells merchandise confiscated by customs. In 1998, when the federal government was not able to provide customs with adequate funding, ROSTEK was obliged to earn money, and began acting as a customs declarant. Local customs serves ROSTEK clients on a "first priority" basis. In Khabarovsk, at first year of operation as a declarant, ROSTEK enjoyed some 22% of the market share.

5. During the international trade boom of 1992 - 1997, approximately 22 agencies provided customs clearance in the Khabarovsk Krai. The major local trading firms established customs clearance departments. Numerous one-person firms served Chinese merchants. During the last six years, the Department of Customs Declaration of the Khabarovsk Chamber of Trade and Industry has been the most reliable declarant in the Krai, controlling about 40% of the market. In 1999, ROSTEK should gain leading position.

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REQUIRED DOCUMENTATION
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REGISTRATION OF IMPORTERS

6. Importers must register at the Krai Customs Office, by submitting the following documents:
a) the Company Charter;
b) a Certificate of Company registration by the local (district) administration;
c) a Certificate stating that the Company is registered by the Krai Statistical Agency;
d) a Certificate stating that the Company is registered by the District Tax Inspectorate;
e) a Certificate stating that the Company has opened a hard currency and a ruble accounts.
All documents must to be submitted in original or notarized copy.

DOCUMENTS FOR EACH SHIPMENT

7. Each shipment must be accompanied by a contract, commercial invoice, packing list, and certificate of origin.
8. The CONTRACT should contain:
a) terms and conditions of delivery;
b) full names of the exporter and the importer;
c) legal addresses (if the legal address of the Russian Company differs from its mailing address, the rental agreement has to be submitted).

9. The COMMERCIAL INVOICE describes the import transaction from start to finish. It is the primary shipping document used by Russian customs officials for merchandise control and valuation. It should contain:
-invoice number;
-contract number; and
-importer license number.
It should clearly state terms of payment, designate the exporter and the buyer, precisely describe the merchandise, provide the price of each item and its total shipment value, freight and insurance cost, as well as other details essential for completion of the transaction. The terms of shipment in the invoice should correspond to the ones in the contract.

10. The PACKING LIST should provide a detailed summary of the shipment, the gross and net weights and dimensions of the shipment, and the number of packages. The net weight includes the weight of packaging for retail sale; gross weight includes the weights of merchandise and packaging excluding the weight of a container. The packing list should also indicate the contract number.

11. The CERTIFICATE OF ORIGIN is not obligatory, but desirable. It helps to assess duties levied in Russia. Shippers can use a standard business form for this purpose, unless the importer provides a special form with the sales contract.

CERTIFICATION

12. Pre-shipment inspection and certification of merchandise is required for the import of virtually all commodities into Russia. Shipping documentation may need to include a "certificate of conformity," "certificate of safety," or sanitary or health certificate. In Russia, inspection is traditionally performed by the regional branches of the Federal Committee for Standardization, Metrology and Certification (Gostandart). In the U.S., the Swiss company SGS performs inspections on behalf of the State Customs Committee of Russia. Imports of food and pharmaceuticals require certification from the Russian Ministry of Health and the Russian Veterinary Section respectively.

13. In Khabarovsk, apart from Gosstandart, certification of merchandise can be arranged through the Department of Certification of the Far Eastern Chamber of Commerce and Trade. Pre-shipment inspections are usually carried out on a fee-for-service basis. Since they can be expensive, the sales contract should clearly designate which party bears inspection costs. The procedure for certification of hazardous shipments is cumbersome, and is usually performed through the administrative structures of the federal government. It is best to ask the freight forwarder to hold the shipment until customs authorities confirm that all documentation is in order.

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CUSTOMS REGIMES
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14. Goods in Khabarovsky Krai may fall under a variety of customs regimes.

GOODS RELEASED FOR FREE CIRCULATION (GOODS IMPORT)

15. "Goods Released for Free Circulation" is the customs applicable regime when imported goods could be left permanently in Russia without any obligation to export. Goods released for free circulation stipulates following conditions:
a) payment of customs duties and taxes;
b) observance of economic policy measures and other restrictions.

GOODS RE-IMPORT

16. "Goods Re-import" is the customs regime when Russian goods exported from Russia are re-imported on a fixed date without payment of customs duties and taxes. The following conditions must be observed:
a) goods should be re-imported into Russia within 10 years of the export date;
b) goods should be in the same condition as they were at the moment of export, except for natural deterioration or waste under the normal conditions of transportation and storage.
The customs agency of RF should return export customs duties and taxes paid at customs when goods were taken out of Russia if goods are re-imported within 3 years of the export date.

GOODS IN TRANSIT

17. "Goods In Transit" is a customs regime valid when goods are transported between two customs locations in Russia under customs supervision and control (including transportation through the territory of foreign state) without payment of customs duties or taxes.

CUSTOMS WAREHOUSE

18. "Customs Warehouse" is a customs regime valid when imported goods are stored under customs supervision and control without payment of customs duties or taxes for the period of storage. Any goods can be put into customs warehouse, except goods prohibited for export or import. Goods intended for export in customs warehouse are free from customs duties or taxes, if duties or taxes are paid; these payments will be returned when goods are exported out of Russia. If goods are exempt from duties or taxes, customs fees are to be returned, goods must be exported within 3 months of entry to the customs warehouse.

DUTY-FREE SHOPPING

19. "Duty Free Shopping" is a customs regime valid when goods are sold under the customs supervision on the customs territory (international airports or ports) without customs duties or taxes. Goods may be sold only in special duty free stores.

TEMPORARY IMPORT/EXPORT OF GOODS

20. "Temporary Import/Export of Goods" is the customs regime valid when goods are used temporarily in Russia without payment of duties or taxes. These goods should be returned to their origin in unchanged condition, except for natural deterioration or losses under normal conditions of transportation and storage. Temporary import/export is allowed only with confirmation of re-import/re-export and payments of customs duties. The government offers some exemptions from customs duties and taxes on temporarily imported/exported goods. Partial exemption provides a monthly payment of 3% of the amount of the normal custom fees.

PROCESSING OUTSIDE THE CUSTOMS TERRITORY

21. "Processing of Goods Outside Russia" is the customs regime valid when Russian goods are exported, processed outside Russia and then released for free circulation in Russia with complete or partial exemption from import customs duties and taxes. Customs duties and taxes paid for goods exported for processing and re-imported into Russia are returned. Exemptions must be approved by the State Customs Committee and Ministry of Finance.

GOODS EXPORT

22. "Goods Export" is the customs regime valid when goods are exported for sale abroad. For many exported goods, export duties must be paid.

GOODS RE-EXPORT

23. "Goods Re-export" is a customs regime valid when foreign goods are exported from Russia without paying import duties or taxes. Goods re-export must be approved by the Customs agency of Russia and usually other authorities. If imported goods are declared solely for re-export, import customs duties and taxes are not charged. When goods are re-exported, import customs duties paid when goods were taken into Russia are refunded if:
a) re-exported goods are in the same physical condition as at import, except for changes due to natural deterioration or losses under normal conditions of transportation and storage;
b) goods re-export is conducted within 2 years of import;
c) re-exported goods were not used to make profit.

GOODS LIQUIDATION

24. "Goods Liquidation" is a customs regime valid when foreign goods are liquidated under customs control free of custom duties and taxes. Goods liquidation must be approved by the SCC.

DONATION OF GOODS TO THE STATE

25. "Donation of Goods to the State" is a customs regime valid when a legal entity donates goods to the state without paying customs duties or taxes. Goods donation to the State must be approved by the SCC.

DUTY-FREE CUSTOMS ZONE AND DUTY-FREE WAREHOUSE

26. "Duty Free Customs Zone" and "Duty Free Warehouse" are customs regimes valid when foreign goods are stored and used in a zone or warehouse without payment of customs duties or taxes.

GOODS EXPORTED FOR REPRESENTATIVE OFFICES

27. According to the RF resolution # 883 dated 23 July 1996" Concession on payment of import customs duty and value added tax (VAT) for goods importing by foreign investors as contribution to authorized capital stock of the enterprise with foreign investments," goods imported as a foreign contribution to authorized capital stock are free from customs duties if goods:
a) are not subject to excise tax;
b) could be considered fixed assets;
c) are imported soon after filing of documentation to form an enterprise.

28. According to RSFSR Law "On foreign investments in RSFSR" #1545-1 dated 4 July 1991 and RF Government Resolution # 757 dated 30 June 1994 "On order of production determination, imported by enterprises with foreign investments for own needs," enterprises fully owned by foreign investors and joint ventures with over 30% foreign investment may import goods for their own use without an import license. Foreign owned forms that have invested at least USD 100 million in Russia may receive a 50% reduction on import of goods into Russia. Cumulative exemptions may apply to 50% of the amount the firm invested in Russia.

EQUIPMENT IMPORTED UNDER INTERNATIONAL AGREEMENTS

29. According to RF Law #25-FE dated 5 Feb 1997 "On changes and amendments to the RF Law On customs tariff," customs duty need not be paid on equipment or materials purchased through loans issued by foreign governments and international financial organizations in accordance with International agreements of RF. A recent government decree directed that foreign financed equipment held by customs and covered by contracts signed before March 15, 1995 should be released with users given up to five years to pay duties.

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CONTACT INFORMATION
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Khabarovsk Customs
Yevgeny Schukin, Head
14 Dzhambula Street
Khabarovsk, Russia 680038
Tel: (7-4212) 342-531, 341-031
Fax: (7-4212) 344-794

ROSTEK Company
Vladimir Mischenko, Director
43 Amur Blvd. , 8th Floor
Khabarovsk, Russia 680000
Tel: (7-4212) 342-872, 345-984
Fax: (7-4212) 342-872

Far Eastern Chamber of Commerce and Industry

Andrei Budanov, Head of the Declaration Department
113 Sheronov Street
Khabarovsk, Russia 680000
Tel: (7-4212) 236-184, 392-423
Fax: (7-4212) 235-458
e-mail: vano@fecci.khv.ru

Khabarovsk Center for Standardization, Certification and Metrology
Boris Shayevich, Director
65 Karl Marx Street,
Khabarovsk, Russia 680000
Tel: (7-4212) 329-262
Fax: (7-4212) 714-063

Sanepidnadzor
Rita Liberova, Head
109/B Karl Marx Street
Khabarovsk, Russia 680009
Tel/fax: (7-4212) 371-317

Veterinary Service Department
Vladimir Khaychenko, Head
19 Karl Marx Street, off #12
Khabarovsk, Russia 680000
Tel/fax: (7-4212) 327-413

POST REMARK: The report was compiled by Andrei Vasenyov on the basis of information provided by Khabarovsk Customs, ROSTEK, CARANA Corporation, the Far Eastern Chamber of Commerce and Trade, the Foreign Economic Relations Department of the Khabarovsk Krai Administration, and some Khabarovsk importers.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)