Risks & Prospects of Trading with Crimea

В статье рассматриваются проблемы, связанные с торговлей с Крымом. Эти проблемы возникают из того, что в Крыму действуют две правовые системы: формально — украинское право, и, кроме того, право РФ, которая считает Крым частью своей территории, хотя такой статус Крыма и не признается международным сообществом. В частности и особенности, значительные трудности существуют при оформлении транзита в таможенном отношении. Формально по законодательству Украины в Крыму имеется зона свободной торговли (свободная экономическая зона — СЭЗ). Однако в Украине имеет место движение общественности, поддержанное Президентом, за отмену такого элемента правового статуса Крыма как СЭЗ.

The problem behind trade with Crimea has been causing inconveniences for Ukrainian business for more than one year and it is far from being resolved (or at least from a resolution acceptable for business). Setting aside all the political disputes around the Crimean conflict, it should be admitted that Ukrainian business does not want to lose its trading relations with Crimea, notwithstanding the status of the peninsula. However, the legal reality is not friendly for business initiatives on the part of Ukrainian merchants in Crimea.

The status of Crimea — real obstacle for trade

It is impossible to ignore the fact that at the moment the Russian Federation actually enjoys operative control over Crimea and this fact allows it to extend its own sovereignty to those territories. While Russian sovereignty over Crimea is not recognised by the majority of countries in the world, Ukraine continues to enact regulatory acts directed at Crimea and those countries, which do not recognise Crimea as part of the territory of the Russian Federation, follow those acts as well. Thus, from the legal standpoint Crimea is still recognised as the territory of Ukraine. In fact, any activity related to Crimea always faces the duality of legal regulation. An entity should comply with both Ukrainian laws and Russian laws (by virtue of de-facto Russian sovereignty in Crimea), which sometimes may be contradictory.

One of the most significant reactions on extension of Russian sovereignty over Crimea made by Ukrainian state authorities was enactment of the On Establishment of the Crimea Free Economic Zone, and Specific Features of the Exercise of Economic Activities within the Temporarily Occupied Territory of Ukraine Act of Ukraine. That Act, among other things, provided that the territory and waters of Crimea is the free economic zone, within which business entities and sole entrepreneurs are non-residents of Ukraine, that may perform payments within Crimea in foreign currency as well. Supply of goods to Crimea is possible with one remark — Crimea is not recognised as the customs territory of Ukraine and any supplies to or from Crimea are subject to customs control within checkpoints on the administrative border between mainland Ukraine and Crimea. The aforementioned Act really helped those, who have trade relations with Crimea, since it authorised international trade rules (sale and purchase for foreign currency with issuance of customs declarations) in trade between two Ukrainian regions (notwithstanding one of them having the status of an occupied territory). For instance, goods that are being sold to Crimea should be dispatched as export goods.

In addition, para 9.1 of Article 9 of the On Establishment of the Crimea Free Economic Zone, and Specific Features of the Exercise of Economic Activities within the Temporarily Occupied Territory of Ukraine Act provides that on the territory of the free trade zone “Crimea” it is possible to provide payments in foreign currency without additional receipt of an individual license from the National Bank of Ukraine. However, Ukrainian banks are still prohibited from performing activities in Crimea as well as from entering into correspondent relations with Crimean banks. So, in practice it is impossible to provide direct payments to Crimea or receive such payments from Crimea.

Transit issues

It was assumed that the regime of free trade zone in Crimea would allow bringing legal regulation to conformity with the actual state of things around the status of Crimea. The assumption was grounded on the understanding that if Crimea is not the customs territory of Ukraine, then transit between third countries and Crimea is allowed. In practice things appeared to be much more complex.

According to Article 90 of the Customs Code of Ukraine transit is a customs regime whereby goods and/or commercial vehicles are being moved under customs control between two customs authorities of Ukraine or within the zone of activity of one tax authority without any exploitation of such goods, without payment of customs duties and without application of measures of non-tariff regulation of international trade. In other words, a transit regime allows delivery of goods to a destination outside the customs territory of Ukraine through such territory without any expenses on tax or customs duties. Since, as was mentioned above, Crimea is not a customs territory of Ukraine at the moment, it may be assumed that goods from foreign countries may be delivered to Crimea under the customs regime of transit.

However, in the Letter of the State Fiscal Service of Ukraine of 26 September 2014 No. 5626/7/99-99-24-01-06-17 On customs formalities while moving goods through borders of the “Crimea” free trade zone, it was clarified that an importer should use two different customs declarations to deliver goods to Crimea — one for transit between the checkpoint on the state border of Ukraine and the checkpoint on the administrative border between Crimea and  mainland Ukraine and one for import of goods to Crimea. Moreover, delivering goods to Crimea from third countries should be located under the customs regime of the free customs zone, unlike goods delivery from mainland Ukraine, which should be located under the customs regime of export.

It should be noted that in accordance with part 1 of Article 137 of the Customs Code of Ukraine, the customs regime of the free customs zone terminates upon re-export of goods, located under such regime, or upon location thereof under another customs regime. According to part 5 of Article 434 of the Customs Code of Ukraine sale and/or consumption of foreign goods on the territory of the free customs zone is prohibited. Thus, generally, foreign goods delivered from third countries to Crimea may not be sold and consumed there. To avoid those limitations legislators envisaged that several provisions of the Customs Code of Ukraine related to prohibitions of sale and consumption of foreign goods on the territory of the free customs zone are not applied to the “Crimea” free trade zone. So, now it is possible to deliver goods from third countries to Crimea for their further sale and consumption. The following differences exist in relation to goods that were located under the regime of the free customs zone and were imported to Crimea:

— those goods do not come under customs control;

— those goods may be exploited notwithstanding the fact there is an adopted list of operations that may be applied to the goods within the industrial free customs zone;

— those goods may not be located under other customs regimes;

— those goods may be sold and consumed within the “Crimea” free trade zone.

However, attention should be paid to the fact that once goods are located under the regime of the free customs zone for their import to Crimea, that regime will not be terminated after the goods have been physically imported to the territory of Crimea. Notwithstanding prohibition on the sale under the regime of the free customs zone being ineffective, the fiscal authorities may recognize such a situation as “concealed import” without payment of appropriate taxes and duties and try to charge them in addition. So, in case of end of the regime of the temporary occupation of Crimea (On Establishment of the Crimea Free Economic Zone, and Specific Features of the Exercise of Economic Activities within the Temporarily Occupied Territory of Ukraine Act connects this event with termination of UN General Assembly Resolution No. A/RES/68/262) the customs authorities may demand from importers the payment of duties and taxes for importing goods to the customs territory of Ukraine during the period of temporary occupation of Crimea. While such actions on the part of the authorities will likely be illegal, the risk of such situation occurring is probable.

Vague prospects for Crimean trade

The latest events with the physical blockade of roads to Crimea by activists actually reflect the position of the authorities with regard to trading with Crimea. While there is already a registered draft act in the Verkhovna Rada of Ukraine, which envisages termination of the free trade zone in Crimea, the President of Ukraine said in one of his recent interviews that he supports termination of the “Crimea” free trade zone. In the event that the free trade zone is terminated in the future, traders will lose the possibility to provide payments with Crimean entities in foreign currency, such Crimean entities will not be recognised as non-residents for tax purposes and transit between third countries and Crimea, even in that aforementioned form, will be impossible.

From the Draft Act registered in the Ukrainian Parliament and related to the new status of temporarily occupied territories (including Crimea, some districts of Donetsk and Lugansk oblasts), it can be concluded that trade with Crimea will be completely prohibited. Allowing the import of only certain types of goods into Crimea (namely humanitarian aid, food and consumer goods), is being proposed and delivery of such goods should be carried out under the supervision of the OSCE or the Red Cross.

Therefore, while at the moment Ukraine has no clear position on the economic status of Crimea, and the current state of legal regulation of economic activities in Crimea contains a bunch of hidden risks, it is very likely that in the near future such a position will be unambiguous — no trade with Crimea. From the legal standpoint such a position is clear and has no legal risks, but on the other hand, the reason why there are no such risks is because there is no trading activity at all. Furthermore, a total ban on trade with Crimea will lead to problems with delivery of goods that were already paid for and with payments for goods that were delivered before the ban was applied.

Авторы: Oleg O. Milchenko, Andriy V. Selyutin

Источник: http://www.ujbl.info/article.php?id=695

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