Export controls

General controls

What general controls are imposed on exports?

The following general requirements must be fulfilled to export products from Ukraine:

  • exporters shall provide customs authorities with the required set of documents for exporting products:
    • customs declaration;
    • invoices; contracts;
    • specifications; certificate of origin;
    • bill of lading;
    • documents confirming payment of customs fees and duties; and
    • various certificates, if it may be necessary for specific products (phytosanitary certificate, ecological certificate, permission to import (export) or to transit the narcotic drugs, psychotropic substances or precursors of narcotic drugs and psychotropic substances, veterinary certificate etc)); and
  • exporters shall settle customs payments, if any are envisaged by the legislation current on the day of exportation. The notion of ‘customs payments’ includes customs duties, value added tax and excise duty (article 4.27 of the Customs Code);
  • exported products are subject to a zero value added tax rate (article 195 of the Tax Code) and are not subject to excise tax (article 213 of the Tax Code);
  • export customs duties can be introduced by laws passed by the Ukrainian parliament. Currently, Ukraine applies export duties to:
    • barley;
    • ferrous alloy scrap metal;
    • non-ferrous scrap metal and semi-processed products with that use;
    • waste and scrap of ferrous metal;
    • seed grains of certain sunflowers; and
    • livestock and certain leather primary products; and
  • exporters shall fulfil the requirements of non-tariff regulation if any are envisaged by legislation on the day of exportation (eg, licensing or certification).

 

An exporter shall be registered with a local customs office in order to perform export transactions.

In addition, pursuant to the Law on Foreign Economic Activity, it is generally prohibited in Ukraine to export the following:

  • goods considered part of the national, historical, archaeological or cultural heritage of the Ukrainian people;
  • natural resources that are exhausted, if this limitation also applies to the internal consumption or production;
  • products that infringe intellectual property rights;
  • goods subject to Resolutions of the UN Security Council regarding limitations or embargoes on supplying with goods in the proper state;
  • timber and lumber of value and rare breeds of trees; and
  • postal parcels that could pose a threat to life and health.

 

In January 2019, the European Union requested consultations with Ukraine under the EU–Ukraine Association Agreement on Ukraine’s export ban on unprocessed wood. The consultations did not resolve the dispute. On 21 June, the European Union submitted a request for panel establishment. This is the first EU free trade agreement-based dispute to reach the panel stage.

Ukrainian exporters must comply with currency restrictions prescribed in Resolutions of the Board of National Bank of Ukraine. These restrictions are claimed by exporters to have substantial trade-restrictive effects. Notably, the National Bank of Ukraine required exporters to surrender about 50 per cent of their foreign currency proceeds. Under Ukrainian laws, the settlement period for exporters-residents’ revenue in import-export transactions did not exceed 180 days.

Nevertheless, at the beginning of 2019, the National Bank of Ukraine approved a new currency regulation system and unveiled a road map for currency liberalisation (eg, effective from February 2019, the settlement deadline for import-export contracts was extended up to 365 days).

In addition, Ukrainian exporters face constant difficulties with value added tax returns, which are subject to burdensome administration and have become a systemic problem of the domestic tax system.

Government authorities

Which authorities handle the controls?

Export controls are predominantly handled by the following authorities:

Special controls

Are separate controls imposed on specific products? Is a licence required to export such products? Give details.

Export controls are predominantly handled by the following authorities:

Supply chain security

Has your jurisdiction implemented the WCO’s SAFE Framework of Standards? Does it have an AEO programme or similar?

On 13 March 2012, the Ukrainian parliament passed a new version of the Customs Code in order to implement the World Customs Organization’s Secure and Facilitate Global Trade (SAFE) Framework of Standards into domestic customs legislation and harmonise it with several international treaties (in particular, the International Convention on the Simplification and Harmonisation of Customs Procedures, the Convention on Temporary Admission and the Customs Convention on the International Transport of Goods under Cover of Transports Internationaux Routiers carnets).

According to the Compendium of AEO Programmes (2012), the Authorised Economic Operator (AEO) programme has not yet been introduced in Ukraine; however, there are developments regarding this matter at governmental and parliamentary level. At the end of 2014, the State Fiscal Service developed amendments to the Customs Code in order to simplify the procedure of goods registration, in particular within the framework of further implementing the AEO programmes.

In 2015, Ukraine also ratified the World Trade Organization Trade Facilitation Agreement and EU-Ukraine Association Agreement. Both agreements, inter alia, provide for objectives to ensure additional measures to simplify trade procedures for entities satisfying certain criteria, in other words, authorised economic operators. In pursuit of the agreements mentioned, on 25 April 2016, the Ukrainian government approved the draft law prepared by the Ministry of Finance on the implementation of the AEO Institute. The draft law provides for issuance by the competent authorities of certificates of two types: regarding security and safety or regarding simplification of customs procedures. To receive such preferences, applicants must show:

  • impeccable financial solvency;
  • appropriate record-keeping;
  • compliance with customs legislation and taxation rules; and
  • a business reputation.

 

After its proper approximation and adoption, the above-mentioned draft law is expected to permit the mutual recognition of AEOs by Ukraine and the EU 2 October 2019 Law of Ukraine ‘On Amendments to the Customs Code of Ukraine on Certain Issues of Functioning of Authorised Economic Operators’ was adopted.

Applicable countries

Where is information on countries subject to export controls listed?

Among other functions, the State Export Control Service takes measures to implement Security Council decisions establishing or cancelling an embargo on goods exports. It also provides for the monitoring and analysis of exports from Ukraine and the exchange of relevant information on exports of particular categories of goods with the relevant authorities of foreign states and international organisations.

Countries subject to export controls are defined by regulations adopted by the Cabinet of Ministers. These regulations are based on Resolutions of the UN Security Council. For instance, the Resolution of the Cabinet of Ministers No. 302 on Implementation of the Resolutions adopted by the Security Council of the UN regarding Libya, 18 April 2012, was passed to fulfil Resolutions No. 1970, dated 26 February 2011; No. 1973, dated 17 March 2011; No. 2009, dated 16 September 2011; No. 2016 dated 27 October 2011; No. 2017, dated 31 October 2011; No. 2022, dated 2 December 2011; or Order No. 359p of the Cabinet of Ministers on implementation of the Resolution UN Security Council No. 2231, dated 20 June 2015, regarding Iran.

Within the context of Russian military action against Ukraine and the occupation of Crimea, the National Security and Defence Council's decision of 27 August 2014 prohibited exports to the Russian Federation of military and dual-use production.

The countries currently subject to export controls are listed on the UN website. This list can also be found on the State Service of Export Controls’ website with the indication of the relevant Resolutions of the UN Security Council and the Regulations of the Cabinet of Ministers.

Named persons and institutions

Does your jurisdiction have a scheme restricting or banning exports to named persons and institutions abroad? Give details.

The Law of Ukraine No. 1644-VII on Sanctions, dated 14 August 2014 (the Law on Sanctions), provides for such a possibility in the form of the restriction of economic operations. The Law on Sanctions was amended on 17 December 2017 and 19 September 2019. This law permits the National Security and Defence Council to impose sanctions on specified persons by submission of the Ukrainian parliament, the Ukrainian president, the Cabinet of Ministers, the National Bank of Ukraine and the Security Service.

Penalties

What are the possible penalties for violation of export controls?

The penalty for violation of export controls is a fine, as envisaged by Ukrainian legislation. Individual licensing and temporary suspension of foreign economic activity as penalties were withdrawn from the Law of Ukraine ‘On Foreign Economic Activity’ in early 2019. In accordance with the Resolution of the Cabinet of Ministers of 4 December 2019 No. 1180, more than 27,000 special sanctions applied in accordance with article 37 of the Law of Ukraine ‘On Foreign Economic Activity’ until 7 February 2019 to subjects of foreign economic activity have been abolished.

The penalty may be imposed by the Ministry upon request by the fiscal authorities, National Bank of Ukraine, the Antimonopoly Committee, the Security Service and other authorities, or on the basis of a court ruling.