Viktoriia Vysotska,

Senior Lawyer

Primary Advisors LLC

The introduction of the Authorized Economic Operator (hereinafter – AEO) program in Ukraine is one of Ukraine’s obligations under the Association Agreement with the EU and the World Trade Organization Agreement on Trade Facilitation.

Authorized Economic Operator (AEO) programs operate in almost 100 countries. In the EU, most customs clearance is carried out by enterprises with AEO authorization.

More and more Ukrainian enterprises receive AEO status in 2024, the increase in the number of companies receiving this status indicates the transparency and reliability of the business that is submitted for authorization.

So, let’s take a closer look at what the AEO status means.

AEO status is a special status that certifies a high degree of trust in a business entity and provides it with significant simplifications in customs formalities, as defined by the Ministry of Finance of Ukraine.

Law on Amendments to the Customs Code of Ukraine on Certain Issues of Functioning of Authorized Economic Operators from 02.10.2019 stipulates that an authorized economic operator is an enterprise that has been granted AEO authorization by the revenue and duties authorities in accordance with the Customs Code.

To put it simply, an AEO is a resident company participating in the international supply chain (manufacturer, exporter, importer, customs representative, carrier, freight forwarder, warehouse holder) that meets all the criteria established by the customs authorities and, due to its status, is entitled to use the benefits and special simplifications.

According to the experience of European countries, the Authorized Economic Operator receives a number of direct and indirect benefits. Enterprises with AEO status can optimize their activities due to the predictability and flexibility of customs procedures when crossing the border, increase the efficiency of internal systems and processes, increase cargo traffic during the period and reduce the cost of downtime at checkpoints, are exempted from the need to visit customs terminals to collect customs formalities and mandatory filling of goods, which will move under customs control, and also allows for more flexible planning of delivery process, in addition, such enterprises are recognized as reliable business partners in the international market.

Ukrainian legislation currently provides for two types of AEO authorisation: AEO-C (on granting the right to apply special simplifications in customs clearance) and AEO-B (on confirming safety and reliability).

Depending on the specifics of the activity, the Enterprise can independently choose the type of authorization, or simultaneously have authorizations of both types.

AEO authorization is recognized throughout Ukraine.

Recognition by customs administrations of foreign states of AEO authorization received by resident enterprises is carried out in accordance with international treaties of Ukraine.

Let’s consider in more detail the simplification and advantages of each of these types of AEO, which are provided for by the Customs Code of Ukraine.

Special simplifications for AEO-C:

– general financial guarantee (securing payment of customs duties under several customs declarations, within the basic amount of the general guarantee, confirmed by the customs authority, which can be relied upon);

– a general guarantee with a 50 per cent reduction in the amount of collateral for the base amount;

– a general guarantee with a 70 per cent reduction in the amount of security for the base amount (general guarantees with a 50 per cent or 70 per cent reduction in the amount of security for the base amount stipulate that for customs clearance of declarations, the guarantor must provide the customs authority with a document for 50 per cent or 70 per cent of the base amount specified in the relevant permit of the State Customs Service of Ukraine for the application of special transit simplification, thereby reducing the cost of the guarantor’s services for the company);

– exemption from the guarantee (use of a certain base amount of exemption from the guarantee, but with the actual exemption from securing the base amount with a guarantee issued by the guarantor);

– independent application of special type of seals (allows authorised enterprises to independently seal vehicles with goods transported under the common transit regime without presenting them to the customs authorities);

– the simplified declaration procedure (a simplified customs declaration in accordance with the requirements established by the customs legislation of the European Union contains a reduced amount of information (compared to a customs declaration filled in in the usual manner, which is sufficient to identify the goods. Only an invoice or other document that determines the value of the goods shall be submitted to the customs authority together with the simplified customs declaration);

– release procedure at the location (when importing goods: registration of EE IM (with a certain type of guarantee), delivery of goods to an authorized object; notification of arrival, etc. When exporting goods: stay of goods at an authorized object; loading of goods on the vehicle; application of seals of a special type; execution of TD, etc.;

–              procedure for the final use of goods (imported goods that are released into free circulation in Ukraine at reduced import duty rates (in accordance with the established Customs Tariff);

–              authorized consignee (release procedure at the location – placing goods in the next customs regime without entering the customs control zone of the destination customs);

–              authorized consignor (release procedure at the location – registration of exports without entering the customs control zone of customs departure);

–              authorized consignee of TIR (procedure for receiving goods that are transported in transit under the terms of the TIR Convention at the facility of the enterprise, without presenting such goods and TIR book to the customs authority of destination);

–              authorized consignor TIR (the procedure for placing goods in the customs transit regime under the terms of the Customs Convention on the International Transport of Goods using the TIR book at the facility, without presenting such goods and the TIR book to the customs authority of departure).

Advantages for AEO-C:

–              implementation of customs formalities for goods, commercial vehicles as a matter of priority;

–              reduction of the degree of risk by the automated customs clearance system to determine the list of customs formalities during customs clearance of goods and commercial vehicles;

–              use of a specially defined (if any) lane at the checkpoint across the state border of Ukraine to move commercial vehicles;

–              use of the national AEO logo.

Special simplification for AEO-B:

“self-application of seals of a special type,” as noted above, allows authorized enterprises to independently seal vehicles with goods that move under the regime of joint transit, without presenting them to customs authorities, which significantly saves time when passing the customs border.

Advantages for AEO-B:

–              receiving a notification from the revenue and duties authority that the relevant goods and vehicles for commercial purposes based on the results of the risk analysis according to the general declaration of arrival have been selected for customs inspection at the checkpoint (control point) across the state border of Ukraine until they are moved across the customs border of Ukraine;

–              implementation of customs formalities for goods, commercial vehicles as a matter of priority;

–              reduction of the degree of risk by the automated customs clearance system to determine the list of customs formalities during customs clearance of goods and commercial vehicles;

–              use of a specially defined (if any) lane at the checkpoint across the state border of Ukraine to move commercial vehicles;

–              use of the national AEO logo.

Conclusion:

Summarizing the above, I would like to note that today, Ukrainian companies have a unique opportunity to evaluate the benefits of using the AEO program and simplifications. Enterprises with the status of an authorized economic operator have a number of significant preferences over competitors who do not have this status, because the AEO status provides the right of preferential border crossing, simplified declaration, trusted relations with customs authorities, less customs inspections, saving time and money through the accelerated process of moving goods across the customs border and reduced customs clearance period. In addition, companies will be partially delegated the powers of customs authorities, along with responsibility for the results of customs formalities, a higher level of compliance with consumer requirements, improved access to visibility and transparency of data in the supply chain, improved inventory management due to a decrease in the number of excessive procedures, increased efficiency of delivery notifications, etc.