Customs bestowed with strategy

Russian Prime Minister Dmitry Medvedev has confirmed the Russian Customs Service's strategy through 2020. The schedule of measures within the strategy is to be set forward by April 30, 2013 with a provision for a transfer to electronic document flow by 2014. In our opinion, the strategy reflects the position of the Federal Customs Service (FCS) with little respect of the business community’s interests.

“Like talking to a brick wall”

As far back as in his presidential days in October 2011 Dmitry Medvedev strongly criticized the country’s customs service having stated the need of “radical changes” in the sphere.

  “The talks about the customs make me difficult to keep temper sometimes, they make me want to throw a microphone at the wall, Medvedev said then. – Whatever is done, all is turned inside out with absolutely foolish demands stultifying us while we are looking for investments, intellectual products or something else and the people coming are told to pay again and again. It is a huge system-wide problem of imposing order in our customs bodies. I’m afraid we cannot do without radical changes though undertaken not once before.”

Are there any above-mentioned “radical changes” in the newly signed strategy of the RF Customs development through 2020? In our opinion, nothing radical is stipulated by the document rather tightening the existing system. 

First of all, the core message is still the same – the list of the customs service’s tasks is headed by the budget fund raising. “Customs bodies of the Russian Federation still play an important role in replenishment of the federal budget’s revenues. In 2011 customs payments accounted for over 52% of the federal budget’s revenues. The analysis of the recent years’ customs payments to the federal budget demonstrates annual performance of the task set up for the customs bodies,” – the strategy victoriously reads.

Moreover, the document provides for target indicators of the customs’ activities in fiscal sector. As such, the share of annual customs payments returned to payers as a settlement of grievances waged by participants of foreign economic activities in respect of any decision or act or failure to act of a customs body or its official should not exceed 5% of the customs total payments. As for the implementation of the annual forecast for federal budget revenue administered by the customs it should not be below 100%. 

However, many experts think that the main objective of the customs should be not budget replenishment but prevention of prohibited articles (drugs, arms, cultural treasures) from crossing the border as well as defending of the national economy through control of export-import dues payment. Budget replenishment is the task of tax authorities rather than customs bodies. As long as the latter considers its priority within the amounts transferred to the budget it will be practically impossible to get rid of the system of all existing obstacles and exactions, we think. It’s sad that the task of fighting criminal cargoes occupies only the second place in the document following the budget replenishment task with the task of facilitation and acceleration of customs procedures moved even deeper into the background. 

A grief to bourgeois …

Further the document secures the earlier held quite controversial FCS reform related to the transfer of customs procedures to the state border. This concept was not an approved governmental document being implemented by FCT without taking into account the opinion of other ministries and authorities (The Ministry of Economic Development and Trade and the Federal Antimonopoly Service), not to mention the opinion of the business community. Since it is included into the strategy signed by the Prime Minister the reform can be considered to be approved (post factum though).

At the same time, the document does not secure the concept of new changes capable of resulting in loss of investment in customs logistics terminals near the border. That is what the transfer to the border meant for many businesses.

Antibusiness message is also revealed in the issue of customs officials’ location. “Location of customs officials at rented area sometimes makes them dependant on lease holding commercial entities and also results in spending budgetary funds on leasing of premises, - the document reads … - Location of customs officials with minimal costs within own premises can be achieved through completion of construction with a handover of the premises to the customs authorities for implementation of their functions.” The hint thus implies construction of the premises to the cost of private investors with further uncompensated transfer to the ownership of the government. 

In this regard we remind about the objections of the Association of Russian Seaports against the practice when investors are obliged to handover premises for uncompensated use of governmental bodies (including tax payment besides) without an alternative possibility to lease or to sell such premises. The business community used to argue as the state controlling authorities obtain an opportunity to escalate requirements to the premises keeping in mind their further transfer for uncompensated used. 

The strategy says nothing about acceleration of customs procedures at offshore cross border posts though they are of a specific nature. 

Of course, the strategy’s goals of 2018-20 providing for drastic reduction of procedure time, the number of documents needed, application of paperless technologies etc. are impressive. However, the analysis of the strategy’s key messages puts their implementation in doubt.

Summing up, it’s hard to escape a conclusion that the strategy almost completely reflects the FCS position with little respect of the business community’s interests. “Radical changes” turn to become another replica of old principles.

Vitaly Chernov