What the importer pays
A commercial shipment from China is subject to up to three customs payments.
- Import duty. The rate depends on the Ukrainian HS code (UKTZED). Most rates are ad valorem, a percentage of customs value. Some goods carry a specific rate (euros per kilogram or per unit) or a combined one.
- Excise duty. Only for excisable goods: alcohol, tobacco, fuel, cars and a few others. Equipment, furniture, clothing or household goods from China carry no excise.
- VAT at 20%. Charged on customs value plus duty and excise. Exemptions exist, but they are exceptions to check for the specific code.
There is no separate state fee for filing the declaration. Broker services, inspections and storage at a temporary storage warehouse are paid separately and are not customs payments.
Which duty rate applies to Chinese goods
The Customs Tariff of Ukraine sets two rates for each code: a reduced rate and a full rate. The reduced rate applies to goods from countries that receive most-favoured-nation treatment, including WTO members. China is a WTO member, so Chinese goods take the reduced rate.
The full rate is usually higher. Customs can apply it if it doubts the country of origin and nothing confirms it. So ask the supplier for a certificate of origin from the start, even though it cannot bring the duty below the reduced rate.
There are no preferential free-trade rates for China, because the two countries have no free trade agreement. What counts is the country of origin: Chinese goods arriving via Poland or Germany are still Chinese for customs.
Check whether anti-dumping or special duty applies to your goods. It is charged on top of regular duty and can be larger than the duty itself.
Customs value: the base for duty
The primary method is the transaction value. The invoice price is increased by the costs the buyer bears up to the Ukrainian border:
- transport to the point of entry into Ukraine: ocean freight, port handling, the truck or rail leg to the border;
- insurance on that stretch;
- packing, if it is not included in the price;
- royalties and licence fees, if the supplier will not sell without them.
What you add depends on the delivery term. Under FOB you add ocean freight and everything up to the border. Under CIF the freight is already in the price, but the land leg from the European port to the border is still added. Under EXW you also add transport within China.
Delivery from the border to your warehouse is not part of customs value. Your forwarder's invoice should therefore split the two. If it shows a single "Ningbo to Kyiv" amount, customs may take all of it into the base.
Payments are calculated in hryvnias at the National Bank of Ukraine rate on the day the declaration is filed. If the invoice is in dollars and the rate rises during transit, so do the payments.
A worked example
A shipment of equipment is bought FOB Ningbo. For the example we take a 5% duty rate and no excise.
| Item | Amount, USD |
|---|---|
| Invoice value, FOB Ningbo | 40,000 |
| Ocean freight to an EU port and transport to the Ukrainian border | 3,600 |
| Insurance | 100 |
| Customs value | 43,700 |
| Duty, 5% of customs value | 2,185 |
| VAT base: customs value plus duty | 45,885 |
| VAT, 20% | 9,177 |
| Total customs payments | 11,362 |
The total is USD 11,362, over 28% of the invoice, with a duty rate of only 5%. Most of it is VAT, and VAT is charged on an amount that already includes freight and duty.
If your company is VAT-registered, import VAT goes to your input tax credit. That lowers the real cost, but the money still has to be in your account on clearance day. It comes back later through the credit.
When customs adjusts the value
This happens more often with Chinese shipments than with European ones. If the declared price is lower than in similar shipments, customs may request additional documents in writing. The list is limited by the Customs Code, and the usual requests are:
- the export declaration from the country of dispatch;
- the manufacturer's price list or quotation;
- payment documents for the goods;
- the carriage contract and freight invoice;
- catalogues or specifications, if the product description has no technical details.
If the documents do not satisfy the inspector, customs determines the value by another method and the payments go up. The goods can still be released: the difference is secured with a financial guarantee or a cash deposit, and the adjustment can be appealed.
Understating the invoice price is a bad idea. Those shipments are the first to be adjusted, and customs looks more closely at the importer's next ones.
Settle the HS code before you pay
The code sets the duty rate and sometimes decides whether permits are needed. Goods with similar descriptions can fall under different codes, and the rate difference can reach several percent of the shipment value.
For complex goods such as kits, modules or multi-function devices, it is worth getting an advance classification ruling from customs. It is binding on customs authorities and protects you from extra charges on later shipments.
How to prepare documents while the container is still at sea is covered in "How to Ship a Container from China to Ukraine". Why the freight rates that feed into customs value differ every time is explained in our breakdown of a container rate. We handle clearance ourselves; see the customs clearance page.