Complete object: how to arrange the equipment correctly?
Director of customs brokerage and consulting company Port Clearance Alexander Gladilin
When industrial equipment is imported to Ukraine in disassembled form (wind power generators, mini-factories, technological lines, etc.), the customs can assign it a special status – “Complete Object” (СO). How is CO technology beneficial to equipment importers, and why is it vital for industrial investors?
Complete Object. What kind of “beast”?
In the case of the construction of a plant or workshop, its individual components are imported to Ukraine in stages, disassembled. Deliveries can take up to several months. When importing each component of an object, the customs requires them to be issued with separate UCGFEA (Ukrainian Classification of Goods of Foreign Economic Activity) codes. This entails additional losses for the importer on import taxes, since the duty on components is usually higher than for the whole equipment.
An alternative and more convenient option for the investor is to obtain a customs permit for registration of any part of the object (pipes, metal structures, generators, engines, etc.) with a common UCGFEA code assigned to the object as a whole (plant, line, workshop, etc.) … In most cases, the import duty on such equipment is zero.
Such permission of the customs allows you to significantly reduce the cost of the investment, avoiding additional losses on import taxes and greatly simplifying customs formalities. After all, each car or container with components is drawn up according to a single UCGFEA code of the whole equipment, which is called a “Complete Object” in the customs regulations. Investor’s savings can reach tens of millions of hryvnias.
Of course, the customs authorities are not always happy to issue such a permit due to the decrease in budget revenues. Because of this, the procedure for obtaining the status of CO is bureaucratic and involves an impressive package of technical documentation requested by the customs.
In practice of Port Clearance, there have been various cases associated with the CO technology. More often than not, the customs office, although it rests on trifles, still issues a permit with some creak and after providing additional documents. But there were also conflicts up to the investor’s complaints to the prosecutor’s office due to the unreasonable delay in the procedure when importing an oil extraction plant.
There was once a refusal to issue a permit. The medical equipment supplier forgot to put some of its parts in the container, and sent them in pursuit by the next vessel. The customs, having examined the situation, considered that medical devices are not COs due to the technical feasibility of their shipment in full set.
To forestall such attempts by the customs authorities it is better to begin the process of obtaining a permit for COs 2-3 months before the import of the first batch of components into Ukraine. And here a consulting or brokerage company plays an important role, which will undertake this scrupulous procedure. Its professional recommendations on the preparation of technical and shipping documents will determine whether an importer of wind power generators, a plant or a workshop will be able to obtain the status of a CO at the customs without a hitch.