Improvement of Customs Processing Procedure on Russian Customs Territory to Help Increase Non-commodity Exports

17 august 2017

Experts of the Marketing Analytics Center* have prepared a detailed report on customs processing procedure on the Russian customs territory. The report aims at solving a critically important government task — increasing the volume of non-commodity exports in Russia. One of the ways to do that is to identify and resolve key issues creating hindrances for exports.

Thanks to their regular meetings with entrepreneurs involved in exports, as well as government officials and members of the research community, the experts were able to perform a thorough analysis of problems in the area of applying customs processing procedure on the Russian customs territory, as well as propose some solutions. To what extent is the existing procedure profitable and convenient for entrepreneurs and how can we improve business environment for exports? You can find detailed answers in the Report entitled "Application of Customs Processing Procedure on Russian Customs Territory: Issues for Exporters".

Refining or processing of goods whereby foreign goods lose their individual characteristics; manufacture of goods, including installation, assembly, disassembly and adjustment; repair of goods, including restoration and replacement of parts; usage of goods as raw materials (if performed simultaneously with one of the operations listed above) — the Report provides an overview of the legal framework governing these procedures at national and supranational level.

As part of the work to identify barriers and problems with applying the customs processing procedure on the Russian customs territory the experts did an online survey of Russian companies using the procedure in the course of their business. The report details key problems identified as a result in the area of applying the customs processing procedure on the Russian customs territory and their possible solutions. The experts highlight the following key problems for exporters:

· the difficulty of obtaining a processing permit;

· the impossibility of applying the 0% VAT rate while re-exporting processed products;

· the difficulty of choosing the method of identifying foreign goods in processed products.

In conclusion, the authors suggest looking at foreign experience in applying customs processing procedure on customs territory.

*The Marketing Analytics Center is a central competence center for the analysis of Russian non-commodity exports and prospects for their growth and diversification. Its main objective is to provide information and analytical support to exporters and to promote the growth of non-commodity and non-energy exports. For companies, the center is a source of relevant and reliable information on global and individual markets, as well as the prospects and barriers for entry into these markets. For the government, this is a center for analysis and forecast of Russian foreign trade development and for formulating recommendations to reduce trade barriers.

Picture from open sources