Belarus Postpones Customs Union, by Tatiana Smolenskaya,, Moscow

Belarus has postponed the establishment of a Customs Union with Russia and Kazakhstan, who are likely to proceed without Belarus as the Union is scheduled to come into being on July 1, 2010.

The draft law on Ratification of the Agreement for the Union had been put on the agenda for June 14 of the Belarusian house of representatives following the recommendation of the Commission on CIS International Ties and Affairs.

Vladimir Putin said earlier in an interview on Russian TV: "Unfortunately, the Belarusian side has not confirmed its readiness to sign the necessary documents....President of Belarus Alexander Vladimirovich Lukashenko has reaffirmed the willingness of the Belarusian side to continue this work together in a trilateral format."

The Customs Union treaty between Russia and Kazakhstan outlines provisions for collecting VAT, declaring and controlling customs values, certifying country of origin, and provides duty relief and tariff preferences among other trade simplifications.

The time limit for customs clearance and the release of goods will be reduced from three days now to one day, but a 10-day extension may be permitted in special circumstances.

Customs duty on imports from outside the Customs Union will be paid into an international account and distributed with 87.97% for Russia, 7.33% for Kazakhstan and 4.70% for Belarus, if it takes part in the Union. Value added tax and excise duty tax will be paid to national accounts and transferred directly to the member states' budgets. Importers need to be correct first time when transferring money, as it will be administratively very complex to rectify errors after the fact.

In internal trade between the member states of the Union, VAT will be zero rated for the seller of goods in one country (exporter), while the buyer in another country (importer) will pay VAT to the local tax authorities. VAT rates are 18% in Russia, 20% in Belarus and 12% in Kazakhstan.

Russian resident companies that have been engaged in foreign trade for more than one year and have good standing can enjoy 'Authorized Economic Operator' status which allows customs clearance privileges, subject to a deposit of EUR1m (USD1.2m), which is reduced to EUR150,000 for manufacturing and exporting companies.

Businesses within the Customs Union may be eligible for additional tariff privileges as follows:

* Import duty exemption for technological equipment, components and spare parts, stores and other materials within the framework of an investment project;

* Exemption for automotive components used in the industrial assembly of cars, buses, vans, trucks, auto cranes.

For a transitional period, the length of which has not yet been specified, Russian companies must clear third country imports through customs in Russia and not through Belarus or Kazakhstan.


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