Topic 3. Customs Regimes And Customs Destinations 5626v

Topic 3. Customs regimes and customs destinations Goods and means of transportation cross the customs border depending on the customs procedure they are placed under, in conformity with the procedure established in Chapter II of the Customs Code and Regulations on customs procedures application, approved through Government Decision nr. 1140 of 02.11.2005. Customs regime - a set of customs regulations defining the status of goods and means of transportation in accordance with the objectives of a business transaction and designation of goods. Customs destinations are classified in: 1. Customs regimes 2. Other destinations The customs regimes are classified in: 1. Final regimes a) import b) export 2. Suspensive regimes (with economic impact) a) transit b) customs warehouse c) inward processing d) processing under the customs control e) outward processing f) temporary import Other destinations are classified in: 1. Free Zone 2. Duty-Free Shop 3. Reexport 4. Destruction 5. Refusal for the benefit of the state. FINAL REGIMES 1. Import is the customs regime under which goods are released into free circulation on Moldova’s customs territory provided that all customs fees are paid measures of economic policy are applied. The customs fees and duties which need to be paid in an import procedure include the following: 1. Customs processing fee; 2. Import duty according to the Customs Tariff; 3. Excises according to the Fiscal Code; 4. Value added tax (VAT), which, barring exceptions, is 20 %; 5. Authorization (license) fees. 2. Export is the customs regime under which goods are permanently taken out of Moldova’s customs territory without an obligation to bring them back to this territory. Goods may be placed in this regime if all applicable taxes and fees have been settled. When goods are released under the export customs regime, they shall be brought outside of the customs territory in the condition in which they were found as of the customs declaration acceptance date excluding changes in the condition due to natural depreciation or diminution under normal transportation and storage conditions.

Suspensive regimes (with economic impact) 1. Transit Transit can be external and internal. External transit refers to the ission of non-Moldovan goods to move from one border customs office to another border customs office provided that the goods are not meant to be imported for use in Moldova. Goods or vehicles in transit are placed under customs seal. Goods can be transited only upon receipt of an authorization from the Customs Service. The transit timeframe is established by the customs office, but it cannot be higher than 8 days from the moment of crossing the customs border. Prohibited goods cannot be placed under the transit regime. The customs point of entry will set the time while transited goods have to reach the customs body of destination depending on the means of transport, distance, weather conditions, etc. Once at the destination point, transited goods have to be intact (except for natural wear and tear), as do the identification signs applied by customs. Internal transit refers to the movement of goods from an entry border crossing customs office to an internal customs office, not subject to customs duties, in later of which goods may be assigned to a different customs destination or may be subject to import procedures; or, in the case of export, to the movement of goods from an internal customs office to a border crossing customs office. Systems used for movement of goods. Transit systems applicable in Moldova are as follows: • Transit system of the European Community – applied on goods transported by road or railway in accordance with methodological norms stipulated by the Customs Service’s orders; • T1 certificate – applied on 1) imported goods entering Moldova before reaching the customs office of destination for final customs processing; and, 2) goods bound for export that were processed by an inland customs office before reaching the border customs point; • TIR system – according to TIR convention signed on June 14, 1975 in Geneva; • ATA system – according to the ATA Convention signed on December 6, 1961, in Brussels. In case of use of a transit procedure in accordance with the international agreements to which Moldova is part, the customs body shall accept it without issuing internal documents. 2. Customs warehouse is the customs regime when goods are temporarily placed in a warehouse under customs supervision without payment of duties and taxes, except for customs processing fees. Any goods, with the exception of those prohibited for import or export, may be placed under a customs warehouse regime. The customs warehouse regime allows for the storage in a warehouse of foreign goods, without the application of import fees and economic policy measures, or storage of local goods aimed for export. Customs warehousing authorization is issued by the Customs Service upon an application exclusively to persons based in the Republic of Moldova. Types of customs warehouses: 1. Public warehouse – intended for storage of any goods and accessible to any person; 2. Private warehouse – intended for storage of any goods belonging to warehouse’s owner. 3. Inward Processing. Inward processing is the customs regime when goods imported to Moldova are manufactured or processed and then exported from Moldova in the form of compensatory products. The authorization for inward processing is issued at request by the Customs Service only to legal entities from the Republic of Moldova, and should include the quantities and the timeframe for the compensatory products to be exported or to be given another customs destination. Period for export or re-export of obtained goods. When establishing the timeframe, the Customs Service takes into the time needed for processing operations and export of the compensatory products. The timeframe shall commence from the date when the goods are placed under the inward processing regime and can be extended on the basis of a well grounded request

from the owner of the authorization. Businesses failing to comply with the regime requirements are subject to penalties, liabilities and procedures of customs debt recovery. Systems/methods used for calculation of import duties. Inward processing implies that the following goods are subjected to some form of processing operations: 1. Foreign goods are taken out of Moldova’s customs territory as compensatory products; no customs duties are payable (except for customs procedures tax) or no economic policy measures are applicable – the so-called “suspensive regime”; 2. Goods imported and cleared for free circulation on condition of being taken out of Moldova’s customs territory as compensatory products; customs duties are paid and refunded at the moment of export – the so-called “drawback regime.” 4. Processing under the customs control - is the regime which allows foreign goods of non-Moldovan origin to undergo operations that transform their nature or condition under customs control on Moldova’s customs territory without the application of customs duties or economic policy measures. Resulting products are released in free circulation upon payment of any applicable customs duties. Goods can be placed under the regime of processing under customs control at the request of economic entity on the basis of authorization issued by the Customs Service on condition they meet the following requirements: -goods actually undergo the transformation; -goods cannot be reconverted into their original form after transformation. 5. Outward processing - is the customs regime when Moldovan goods are temporarily exported from Moldova in order to be processed in another country and then imported back to Moldova in the form of compensatory products. In outward processing, domestic goods are processed or transformed outside Moldova without the application of measures of economic policy, while the resulting products are imported with full or partial exemption from customs duties with the application of measures of economic policy. Outward processing implies the following operations: 1. Manufacturing of goods, including assembling, fitting or matching of products; 2. Processing of goods; 3. Reparation of goods, including mending and adjusting. Period for re-import of compensating goods. When establishing the timeframe, the Customs Service takes into the time needed for processing operations and import of the compensatory products. The timeframe shall commence from the date when the goods are placed under the outward processing regime and can be extended on the basis of a well grounded request from the owner of the authorization. Businesses failing to comply with the regime requirements are subject to penalties, liabilities and procedures of customs debt recovery. 6. Temporary import. Temporary ission according to the Customs Code of the Republic of Moldova is the customs regime designated for temporary use of goods on Moldova’s customs territory with partial or full exemption from paying duties or taxes and without the application of economic policy measures. Temporarily itted goods have to be re-exported in their initial state, except for natural wear and tear. Goods under temporary ission regime may not be sold, rented, sub-rented, pledged, transferred or released at the disposal of another person in Moldova without the Customs Service’s approval of the submitted request and payment of customs duties. The following goods can be placed under temporary ission with total suspension of customs duties: • professional materials, including printing, radio and TV broadcasting equipment and specialized vehicles for a period of up to 12 months; • materials for trade shows, exhibitions, fairs, conventions, including free product samples; • goods imported for educational, scientific or cultural purposes for a period of up to 12 months; • medical, surgical or laboratory equipment sent free of charge to hospitals and other sanitary institutions for diagnostic or other therapeutic purposes to supplant any insufficiency;

• materials to be used in calamities alleviation works; • containers, inner or outer packaging and certain pallets usually for up to 6 months, except for cases when such goods are object of a purchase, rental, borrowing or other similar commercial transaction conducted by a Moldovan resident; • road vehicles, railway transport means, air ships and sea ships. Certain goods can be placed under temporary ission with partial suspension of customs duties, which means that a warranty shall be deposited to ensure the coverage of any potential customs obligation arising later.

Other destinations 1. Free Zone is a customs regime under which foreign goods are located and used within appropriate territorial boundaries without any customs duties or taxes charged thereon and without applying economic policy measures provided law does not say otherwise, in the manner determined by this Code and other regulations and domestic goods are located and used within the specified territorial boundaries on the conditions applicable to exportation in accordance with the customs export regime. 2. Duty-Free Shops are retail outlets that are exempt from the payment of certain local or national taxes and duties, on the requirement that the goods sold will be sold to travelers who will take them out of the country. Which products can be sold duty-free vary by jurisdiction, as well as how they can be sold, and the process of calculating the duty or refund the duty component. 3. Reexport. When goods are brought into the customs territory, no import customs duties or taxes shall be charged if the goods are declared with the customs authority as designated exclusively for re-export. Such goods shall be actually brought out within not more than six months following the customs declaration acceptance date. In the event of failure to actually bring out the goods within the set deadline, import customs duties and taxes shall be paid in the manner set by law. When re-exported goods are brought out, paid import duties and taxes shall be subject to refund provided that: a) re-exported goods are in the same condition in which they were found at the moment of importation, excluding changes in the condition due to natural depreciation or diminution under normal transportation and storage conditions; b) re-exportation takes place within two years following the moment of importation; c) re-exported goods were not used to generate income. When re-exported goods are brought out no export customs duties or taxes shall be charged or economic policy measures applied except as otherwise provided by law. 4. Destruction is a customs regime under which foreign goods are destroyed under the customs control, including rendering them unusable without levying customs duties or taxes. Goods destruction shall be allowed with the customs authorities’ permission and shall be carried out in the manner set forth by the Customs Supervision Department. No permission shall be issued if goods destruction may cause significant environmental damage and in other events determined by law. 5. Refusal for the benefit of the state. is a customs regime under which an entity abandons goods to the state without levying customs duties or taxes and without applying economic policy measures. Goods abandonment to the state shall be allowed with the customs authorities’ permission and performed in the manner determined by the Customs Supervision Department. Goods shall be abandoned to the state by an interested entity and shall not entail anycosts to the state.