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29 April 2015

Inward processing period reduced to one year

Resolution of the Cabinet of Ministers of Ukraine No. 198 dated 15 April 2015 ("Resolution No. 198") cancelled several legal acts, in which the extended time period of manufacturing of selected goods under customs regime Inward Processing was specified in the course of cross-border operations.

 After adopting of Resolution No. 198, the allowed time period for  inward processing will be established   on case-by-case basis (but not more than one year) by the customs authority according to the Customs Code of Ukraine ("CCU") For this purpose,  processing and disposal period of the inward processing goods will be taken into consideration. The allowed period is calculated from the date of customs clearance of the goods under customs regime Inward Processing. This period can be extended by customs, but it should not exceed 365 days (Art. 151, 166 of the CCU), upon the application of the relevant company.

It is worth noting that CCU provides the possibility to establish extended (longer than 365 days) periods of inward processing by means of new laws. However, previously, according to the previous version of the CCU as of 2002 the Cabinet of Ministers of Ukraine had the right to establish extended periods of inward processing upon application of the respective Ministry of Ukraine. In this case, the above mentioned application of the respective Ministry of Ukraine should provide relevant arguments  based on the technological characteristics of the prolonged manufacturing process of the goods (specifically in aviation, shipbuilding, defense industry, and nuclear energy). However, the aforementioned powers of the Cabinet of Minister of Ukraine were revoked after adoption of the new CCU in 2012, but previous resolutions of the Cabinet of Minister of Ukraine on the issue remained in force until now.

Therefore, adoption of Resolution No. 198 eliminated the above said conflict of CCU and regulatory acts, and  at the present the inward processing period should not exceed one year (as a general rule) according to CCU.

Resolution No. 198 entered into force from the date of its official publication. In our case, this is 29 April 2015, when the issue No. 31 of the "Oficiyniy vistnyk of Ukraine" was published. In the meantime, commenced and ongoing inward processing can continue within the previous allowed time periods, established in accordance with the respective acts cancelled  by Resolution No. 198.

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