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17Wschodnioeuropejskie Czasopismo Naukowe (East European Scientific Journal) #11, 2016
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EURASIAN ECONOMIC UNION: FINANCIAL ASPECTS OF FOREIGN TRADE
OPERATIONS
Tararyshkin Yura
Master of Management, PhD applicant, Economics Faculty, Belarusian State University Tabak-invest Ltd., specialist on foreign
economic activities, Minsk, Belarus Tarasov Vladimir
research supervisor, Head of the corporate finance department at the economics faculty of Belarusian State University,
Doctor of Economic Sciences, Professor
Integration processes on the territory of post-Soviet space is an integral feature of modern stage of economic development of the Commonwealth of Independent States. The intermediate stages of such processes were the Customs Union entered into force on July 1, 2010 and the Common Economic Space - from January 1, 2012. In order to create a higher degree of integration the Treaty on the Eurasian Economic Union came into force on January 1, 2015, the provisions of which are aimed at free movement of goods, works and services during foreign trade operations and intensification of international trade in the Eurasian Economic Union.
Key words: INTEGRATION PROCESSES, CUSTOMS UNION, COMMON ECONOMIC SPACE, EURASIAN ECONOMIC UNION, FOREIGN TRADE OPERATIONS, CUSTOMS CODE.
Developing integration processes on the territory of postSoviet space is an integral feature of modern stage of economic development of the Commonwealth of Independent States [2]. The intermediate stages of such processes were the Customs Union entered into force on July 1, 2010 and the Common Economic Space - from January 1, 2012. In order to create a higher degree of integration the Treaty on the Eurasian Economic Union (signed on May 29, 2014) (hereinafter - the Agreement on the EAEU) came into force on January 1, 2015. The provisions of the EAEU Treaty are aimed at free movement of goods, works and services during foreign trade operations and intensification of international trade in the Eurasian Economic Union (hereinafter - the EAEU) [1].
Within the common customs territory of the Russian Federation, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Armenia and the Kyrgyz Republic a common foreign trade policy with regard to third-party countries is carried through by the means of customs and tariff regulation, that is the main foreign economic activity control instrument
Customs fees
Import :ustom: duty
VAT levied on imported goods
Figure 1. Types of customs duties
The customs authorities shall charge customs duties, control the correctness of it's calculation and timely payment, if necessary, take measures on forced recovery of customs duties. The payment of customs duties is dependent on the declared customs procedures. The proportion of customs duties in the budget of the Member States of the EAEU is ranging from 25% to 50%. The Customs Code of the Customs Union had established: a single procedure for customs regulation, common rules of good's declaration and customs payments. Goods and vehicles are crossing the customs border in accordance with their customs procedures, identifying the status of goods and means of
[1]. Business entities of the EAEU member states move goods duty free in mutual trade, regardless of the origin of the goods. Customs clearance of the goods is carried out on the territory of the State-party of the EAEU where business entities importing goods into the customs territory or exporting them from this territory are registered.
At the customs border of the EAEU the functions of control of the goods movement are transferred to the outer loop, financial instruments are used by customs authorities to collect the customs payments, to enroll and distribute import customs duties, to levy indirect taxes in the country of consumption of the goods by tax authorities in mutual trade of the participating States of the EAEU.
In accordance with the Customs Code of the Customs Union on the outer loop of the customs border of the EAEU the following customs duties are charged: import and export duties, customs duties, value added tax (hereinafter - the VAT) and excise duties on imported goods, when declaring them [3], recycling fee [7, 9 p.48] (Figure 1).
Export customs duty
tax on
goods
Recycling fee
transport in such movement [3].
Within the EAEU a Common Customs Tariff (hereinafter -the CCT) is applied - which is a set of rates of import customs duties, applied to goods imported into the customs territory from third-party countries, classified in accordance with the Commodity nomenclature of foreign economic activity and is an instrument of trade policy of the EAEU. Carried out by Russia and Belarus work on the unification of import duties in accordance with the Program of actions of the Republic of Belarus and the Russian Federation on the implementation of the provisions of the Treaty on the Union State establishment [5]
© Tararyshkin Yura, Tarasov Vladimir, 2016
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and the Agreement between the Government of the Republic of Belarus and the Government of the Russian Federation on the completion of the unification and creation of a unified system of tariff and non-tariff regulation in the Union State (signed on January 29, 2001) [8] was the basis for the formation of the CCT, entered into force on January 1, 2010. In accordance with the Treaty on the functioning of the Customs Union within the terms of multilateral trading system (signed on May 19, 2011) the EAEU member states use the rates of import customs duties in consideration of the Russian Federation obligations to the World Trade Organization (hereinafter - the WTO) [4].
On the customs territory of the EAEU production equipment, accessories and spare parts, raw materials and materials imported for the exclusive use on the territory of a member state of the EAEU are exempted from import customs duties in case of investment project realization in the prior sphere (sector of the economy) in accordance with the national law of the State.
As one of the conditions for unification of customs territories of States-parties to the single customs territory and completion of the Customs Union formation, on September 1, 2010 the mechanism of enrollment and distribution of import customs duties levied on the outer loop of a single customs territory of Belarus, Kazakhstan and Russia had been put into operation, which provides the income of customs duties into the budget of each participating State of the Customs Union, in accordance with established standards, depending on the share of imports. Such mechanism had made it possible to fully apply the rules of the Customs Code of the Customs Union, to ensure the free movement of goods in mutual trade of the participating States without paying import duties and to simplify the work of economic entities during foreign trade operations. Within the EAEU the Republic of Armenia and the Republic of Kyrgyzstan had joined to this mechanism. Distribution of import customs duties amounts for each State-party of the EAEU is specified in accordance with standards of the EAEU: The Republic of Armenia - 1.11%; The Republic of Belarus - 4.56%; The Republic of Kazakhstan - 7.11%; The Kyrgyz Republic - 1.9%; The Russian Federation - 85.32% [1].
Due to the execution of the Russian Federation's obligations to the WTO [4] in 2015 the CCT arithmetic average rate decreased by 0.59 percentage points (from 8.68% to 8.09%). In the context of the financial crisis, in 2015 decrease in rates of national currencies of the EAEU member states to the US dollar can be pointed out (Armenian dram - 1.5% reduction, the Belarusian ruble - 27.1% reduction, Kazakhstan tenge - 75.7% reduction, Kyrgyz KGS - 27.5% reduction, the Russian ruble -12.9% reduction) [7]. The decline in the volume of import and CCT's arithmetic average, changes of national currencies rates are the factors that affect the flow of import duties into the budgets of member states of the EAEU.
Export customs duties and customs fees in the member states of the EAEU are levied in accordance with their national legislation [2,3,11].
Within the common customs territory of the Customs Union in the mutual trade of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation on July 1, 2010 for the first time on the territory of the former Soviet Union the mechanism of indirect taxes collection by the tax authorities had been introduced on the basis of 'country of destination' [10]. When importing goods into the territory of one member state of the EAEU from the territory of another member state of the EAEU the VAT and excise duties are levied by the tax authorities of the
member state of the EAEU, to the territory of which the goods are imported, unless otherwise is provided by the legislation of that member state of the EAEU in connection to the goods that are subject to excise stamps marking (accounting and control marks, signs). The collection of excise taxes on goods, that are subject to marking with excise stamps (accounting and control marks, signs), in Belarus and Russia is assigned to the customs authorities, in Kazakhstan - to the tax authorities. The payment of excise taxes on excisable goods, that are subject to marking, should be made in the terms established by the legislation of the member state of the EAEU. When exporting goods a zero rate of VAT at a rate of "0" percent is applied and exemption of excise taxes payment (refund of the amount paid) in case of documentary confirmation of completion of export operation.
According to the EAEU Treaty (Articles 71 and 72) the principles of interaction of the EAEU member states in the field of taxation are set out [1]. Goods imported from the territory of one member state of the EAEU to the territory of another member state of the EAEU, are subject to indirect taxes. Member states of the EAEU levy taxes, other fees and duties in mutual trade so, that taxation in the member state of the EAEU, on the territory of which the goods of other member states of the EAEU are sold, was not less favorable than the taxation applied by that member state of the EAEU in the same circumstances to similar goods originating from its territory. The EAEU members determine the directions, as well as forms and procedures of legislation harmonization regarding to the taxes, which affect the mutual trade, not to disturb the conditions of competition and not to impede the free movement of the goods, works and services at the national level or at the level of the EAEU, including:
1. harmonization (unification) of excise taxes rates on the most sensitivity excisable goods;
2. further improvement of the VAT collection system in mutual trade (including the use of information technology).
Rates of the indirect taxes in mutual trade of the goods imported into the territory of the member state of the EAEU shall not exceed the rates of indirect taxes imposed on similar products when sold on the territory of that member state of the EAEU. In conditions of mutual trade between the member states of the EAEU favorable conditions are created in regard to the collection of the VAT and excise duties for the participants of foreign economic activity concerning the increase of the period of documents reporting to the tax authorities, necessary to justify the use of the zero VAT rate from 90 to 180 days from the date of shipment (delivery) of the goods and its application to the exporting goods.
Amounts of indirect taxes to be paid on the goods, imported into the territory of one member state of the EAEU from the territory of another member state of the EAEU shall be calculated by the taxpayer on the basis of specified national tax rates (in Belarus - 20%, in Russia - 18%, in Kazakhstan - 12%, in Armenia - 20%, in Kyrgyzstan - 12%). In the Republic of Belarus due to the VAT 22% of total budget revenues are generated, in the Russian Federation - 15.4%, in Kazakhstan - 9.9% [7]. The difference in the VAT rates between the member states of the EAEU is caused by differences in economic systems (the correlation of raw materials and industrial components) and the course of economic reforms. Wherein there is a reduced VAT rate of 10% in the Republic of Belarus and the Russian Federation concerning the groups of socially important goods.
This procedure of levying indirect taxes creates equal competitive conditions on imported and manufactured goods
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for all member states of the EAEU, and improves their export potential.
On September 1, 2012 in the Russian Federation the recycling fee has begun to be charged when declaring the vehicles. In the context of the Union State of Russia and Belarus on March 1, 2014 in the Republic of Belarus the recycling fee has also begun to be charged on imported vehicles. In the Republic of Kazakhstan the recycling fee had been enacted in 2016 [7].
With a view to implement in legislation of the EAEU tariff obligations of the Republic of Kazakhstan, adopted as a condition of membership in the WTO, in accordance with which the customs duties rates are lower than the rates of the CCT of the EAEU, the Decree of the Eurasian Economic Commission on October 14, 2015 number 59 approved a list of goods in regard to which the Republic of Kazakhstan applies the rates of customs duties, that differ from the customs duties established in the CCT (hereinafter - the List) (withdrawal from the CCT). This List includes 1347 commodities to which the rates of customs duties in accordance with the obligations of the Republic of Kazakhstan to the WTO are lower or the rates do not fit the standards established in the CCT. In accordance with the tariff obligations of the Republic of Kazakhstan to the WTO an annual decline of the import customs duties rates is provided in accordance to the reduction schedule, specified in the Report of the work group on Kazakhstan's accession to the WTO. In order to implement
articles 9 and 10 of the Protocol on certain issues of importing and circulation of the goods within the customs territory of the Eurasian Economic Union, signed on October 16, 2015 [6], in the Republic of Kazakhstan there had been established a system of registration of the goods, included in the List in the form of electronic invoices (hereinafter - EINV), which provides an indication of numbers of good's declarations, as well as the rates of customs duties levied on the goods, that were imported into the Republic of Kazakhstan. Such goods transported from the territory of the Republic of Belarus to the other member states of the EAEU should include a certain set of shipping documents, as well as a copy of the EINV. The customs authorities of the member states of the EAEU had approved an algorithm of authorized bodies of the EAEU interaction concerning the process of confirmation of the shipping documents authenticity.
Thus, the existing financial arrangements in the customs territory of the EAEU are aimed at creating equal conditions for commercial development of foreign economic activity of the EAEU's member states and use of a single trade regime in regard to foreign goods.
In terms of development of the draft Customs Code of the EAEU it is necessary to simplify the customs procedures, that are executed by the customs authorities during foreign trade operations on the customs territory of the EAEU, in order to improve international trade and develop integration processes.
LITERATURE
1. The Treaty on the Eurasian Economic Union (together with Applications № 1-33) (edition of 08.05.2015) (signed in Astana on May 29, 2014) // National Register of Legal Acts of the Republic of Belarus October 10, 2014, №3/3050.
2. The Agreement on free trade zone (with the "Rules for Dispute Resolution") (signed in St. Petersburg on October 18, 2011) // National Register of Legal Acts of the Republic of Belarus May 30, 2012, №3/2803.
3. The Treaty "On the Customs Code of the Customs Union" (signed in Minsk on November 27, 2009) (edition of 08.05.2015) // National Register of Legal Acts of the Republic of Belarus July 6, 2010, №2/1694.
4. The Treaty on the functioning of the Customs Union within the framework of the multilateral trading system (signed in Minsk on May 19, 2011) // National Register of Legal Acts of the Republic of Belarus November 14, 2011, №3/2746.
5. The Program of Actions of the Republic of Belarus and the Russian Federation for the implementation of the provisions of the Treaty establishing the Union State [signed in Moscow on December 08, 1999) // "Zvezda", № 236, 1999, "Soviet Belorussia", № 296 1999.
6. The Protocol on certain matters of importing and circulation of goods within the customs territory of the Eurasian Economic Union (signed in Burabay on October 16, 2015) // National Legal Internet Portal of the Republic of Belarus, 07.01.2016, 3/3206.
7. Website of the Eurasian Economic Commission (EEC): http://www.eurasiancommission.org
8. The Agreement between the Government of the Republic of Belarus and the Government of the Russian Federation on the completion of unification and creation of a unified system of tariff and non-tariff regulation in the Union State (signed on January 29, 2001) // National Register of Legal Acts of the Republic of Belarus, 2002, №41, 3/335.
9. Customs duties: textbook / L.I. Tararyshkina, V.A. Ostroga; edited by L.I. Tararyshkina. - Minsk: BSU, 2014. - 279 p.
10. Tararyshkina L.I. Features of foreign trade operations taxation within the single customs territory of EAEU Customs Union//Belarusian economic journal. - 2011. - №4. - P.15-23.
11. Tararyshkina L.I. The practical aspects of export customs duties, other duties, taxes and fees applying, having equivalent effect on the customs territory of the Eurasian Economic Union // Belarus in the modern world: materials of the XIV International conference devoted to the 94-th anniversary of the Belarusian state University, held on October 29, 2015 / editor-supervisor V.G. Shadurski [etc.]. - Minsk: Publishing centre of the BSU, 2016. - pages 289-291.
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