Azerbaijan facilitates import procedure for goods A review by Caliber.Az

The year 2022 ended with the restructuring of Azerbaijan’s State Customs Committee (SCC) activities. These efforts are aimed at ensuring transparency in the work of the agency, curbing corruption and other abuses, as well as optimizing regulatory and administrative mechanisms. It is expected that these measures will help the SCC to reduce the complaints from business entities to a minimum, a more stable replenishment of the revenue part of the budget and achieve maximum digitalization in the committee’s work. The next step in this direction will be the changes and amendments to the law “On customs tariff”, recently adopted by the National Majlis (Parliament) in the third reading.

The new stage of the modernization of the Azerbaijani economy, implemented for more than three years, provides full support for the development of the non-oil sector, especially small and medium-sized enterprises (SMEs), with a view to expanding the production and export of industrial and agricultural products. The SCC plays a key role in these reforms, and since July there has been a qualitative change in its activities. Following the appointment by the Head of State of the new SCC leadership, the consistent fight against corruption and bureaucracy began, and, in this context, the process of adjusting the committee’s staff was launched.

During the recent public discussions on “Customs Reforms: Challenges and Opportunities”, these changes, which were being demanded by business circles of the country for a long time, were considered. The Forum participants were unanimous that the positive changes in the activities of the SCC are ultimately intended to ensure full transparency of the work of the entity, and, through maximum digitization of customs procedures, to facilitate the foreign trade activities of entrepreneurs.

One of the objectives of the customs reforms is to further expand the possibilities of electronic resources of the SCC: the e-customs platform and its mobile version “Smart Customs”. Thus, from January 1, 2023, participants of foreign trade operations will have access to new rules of registration of goods on the e-customs platform, and in general, users can use such electronic options as the system of “simplified declaration and electronic trading”, “electronic queue”, “fast transition”, “calculation of customs payments related to the import of cars” and many other services.

The sharp reduction in the flow of goods through the “red corridor” at the customs borders of the country is evidence of the efficiency of the ongoing reforms: if last year about 70% of the total number of customs goods passed through this mechanism, then it was only 7% this year. The “Red Corridor” is a permit system that provides detailed checking of information and documents required for customs purposes, goods and vehicles.

It is worth recalling here, that in 2019 the country introduced a simplified pass system, “Green Corridor”, and due to modern digital solutions of risk assessments and electronic details, physical inspections of goods were reduced by 70%, while the capacity of customs checkpoints more than tripled. According to the information published by the SCC, currently, 790 business entities carry out import and export operations through the “Green Corridor” on a permanent basis. However, today there is a great demand to increase the number of participants in the “Green Corridor” due to the connection to the system of many SMEs. “The most important task is to revise the procedures and facilitate access of small and medium-sized businesses to services of the ‘green corridor’”, believes Orkhan Mammadov, Chairman of the Board of the Azerbaijan SMEs Development Agency (KOBIA).

Referring to the difficulties faced by entrepreneurs in some cases, the head of KOBIA also mentioned the difficulties in recovering part of the claimed value due to the impossibility to provide documentation on spoiled products after the export of food products, mostly fruits and vegetables. The need to implement progressive international experience to implement regulatory mechanisms in this area was noted on. In addition, in some cases, both import and export products are priced above the actual prices, which further leads to conflicts with fiscal authorities. In this regard, says Mammadov, the possibility of using simplified tools based on international experience can also be considered.

Among the main concerns of entrepreneurs are the mechanism for determining the customs value of imported goods and the speed of decision-making in this regard. Azerbaijan has long introduced an electronic mechanism for administration and control over the process of foreign trade transactions, the VAIS-RISK system, which provides automatic risk analysis when inspecting goods, containers, vehicles and their documents. Nevertheless, according to the Chairman of the Confederation of Entrepreneurs of the Nakhchivan Autonomous Republic, Vugar Abbasov, businesspeople still face a problem in the field of customs valuation. According to him, sometimes the risk-based approach at customs affects and transparent businessmen who submit documents and prices of goods in due course, in particular, delays the customs clearance process, which is a source of business dissatisfaction.

This year, the SCC has tightened its controls on transparency in the determination of the customs value of imported goods, and it is likely that many of the problems associated with the customs clearance procedure will soon be simplified. The amendments to the law “On customs tariff” adopted by the Milli Majlis in the third reading contribute to this.

In particular, the changes introduced in the document make it easier to determine the customs value of goods and the new principles should be based on simple and fair criteria. In order to establish a common practice in the field of customs valuation, to prevent abuse and negative situations in this area, new standards will be adopted: rules for the application of methods of customs valuation in accordance with this Law will be approved. According to the articles of the Law, applications (declaration) of entrepreneurs, received by the customs authority in connection with the implementation of the goods pass, must be considered within one day and on the basis of this, the goods pass. According to the amendments to the law, if it is necessary to make appropriate adjustments to the customs value for the passage of goods, the customs authority is obliged to notify the declarant of this within 24 hours from the date of submission of the declaration to the customs authority.

The unrestricted passage of goods shall take place as soon as the customs authority determines that the following requirements have been met: Customs duties, VAT and other charges required by the declaration have been paid; if necessary, paid additional customs debt, in accordance with article 221.1 of the Customs Code (CC); other requirements are fulfilled in accordance with articles of the CC.

It should be mentioned, that according to Article 221.1 of the CC, in case, if during the inspections, audit or other investigation carried out by specialists of the SCC, it will be found that the valuation does not correspond to the current law “On Customs Tariff” or, for other reasons, the customs authority is obliged to send to the foreign trade participant not only a written but also an electronic notice of the relevant adjustments in the customs value, taking into account their clear justification, in accordance with the law. This notification must be sent within 24 hours of the submission to the customs authority of the declaration for goods carried. The document noted that the amount of security required for the passage of goods is determined by the largest amount of additional customs debt that may arise as a result of changes made to the notification, of course, subject to payments, already paid in the declaration.

Given the importance and requirement to businesses for simplifying and speeding up customs valuation procedures, one can hope that the document will be approved next year and put into practice by the SCC as soon as possible.