CUSTOMS WAREHOUSES

For a variety of reasons an importer may not have an immediate customer for the goods, may plan to re-export goods, or otherwise may not know how the goods will be disposed.  In these situations it may be to the importer’s advantage to store the goods in a warehouse facility where the application of customs duties and taxes is deferred. It is international best practice for the arrangements for the storage of goods in customs warehouses and for stock keeping and accounting to be under the close supervision of the customs administration.  Warehouses may be either public (open to the goods of all traders) or private (operated by a particular trader).  Most customs administrations require customs warehouse operators to post a security (financial guarantee).

“Customs warehousing” is the customs procedure whereby goods may be stored in a place approved and licensed by Kosovo Customs, pending payment of any customs duties or taxes that may be owed on the goods.  The customs warehouse procedure is the suspense regime which serves to facilitate trade, wherein the payment of duties and taxes is delayed until such time as the importer needs the goods in Kosovo.  The customs warehousing procedure is distinct from procedures relating to temporary storage, temporary importation, and inward processing.

TEMPORARY IMPORTATION AND STORAGE

Temporary importation means that goods may be used in Kosovo without payment of duty or VAT under certain conditions and re-exported afterwards in the same state as they were in at import. Goods in temporary storage can only be stored in places approved by Kosovo Customs under conditions laid down by Customs.  Kosovo Customs may require the person holding the goods to provide security (a financial guarantee) with a view to ensuring payment of any customs revenue which may have to be paid to arrange for release of the goods from customs control.

Temporary storage is the customs procedure that is applied when imported goods arrive in Kosovo and are presented to Kosovo Customs for clearance. The imported goods are to be held in “temporary storage”, pending clearance for entry into the country. The legal authority for the temporary storage of imported goods is set out in Articles 54 to 57 of the Customs Code.  Until such time as imported goods are assigned a customs-approved treatment or use, those goods, following presentation to Customs, have the status of “goods in temporary storage”.

Goods in temporary storage can only be stored in places approved by Kosovo Customs under conditions laid down by Customs.  Kosovo Customs may require the person holding the goods to provide security (a financial guarantee) with a view to ensuring payment of any customs revenue which may have to be paid to arrange for release of the goods from customs control.

Where the places have been approved on a permanent basis for the placing of goods in temporary storage, such places are referred to as ‘temporary storage facilities’.

Goods may be placed in a temporary storage facility on the basis of a summary declaration.  However, Kosovo Customs may require the lodging of a specific goods declaration made out in the normal form and manner, if insufficient information is provided on a summary declaration.

Articles 96 to 98 of “Administrative Instruction No. 11/2009 Laying down Provisions for the Implementation of the Customs Code” provide more information on the temporary storage of goods (see pages 57 and 58 of the AI).

In order to ensure the effective application of customs control, Kosovo Customs may, where they do not themselves manage the temporary storage facility, require that:

  • – Temporary storage facilities be double-locked, one key being held by the Kosovo Customs officers, the other by the operator of the temporary storage facility; and
  • – The person operating the temporary storage facility keeps stock accounts which enable the movements of goods to be traced.

Goods in temporary storage may normally be subject only to forms of handling as are designed to ensure their preservation in an unaltered state without modifying their appearance or technical characteristics.

TEMPORARY IMPORTATION

Certain goods may be brought into Kosovo on a temporary basis without the payment of duties and taxes. These goods are referred to as temporary imports. Temporary Importation is the customs procedure whereby an importer declares that certain goods are being brought into Kosovo for a limited time and for a specific purpose, after which the goods will be exported.  For example, the Temporary Importation procedure may be used for goods such as large capital equipment that is imported for a specific single use in Kosovo (e.g., road construction equipment), wherein payment of full duties and taxes on the imported equipment would make regular or permanent importation economically unfeasible.

It is international “best practice” to require the posting of a security (a financial guarantee) in connection with permitting temporary imports. In that connection, one of the most important internationally accepted systems for permitting the temporary admission of goods is the ATA carnet. This relies on an international chain of guaranteeing organizations that provide security for any duties and taxes that may be owed in the event that the temporary imports are not properly re-exported within the time period specified. A number of international conventions provide for ATA carnets, the most recent of which is the Istanbul Convention. However, Kosovo is not a party to any of these conventions and customs financial guarantees have not yet been fully developed in Kosovo.

The legal basis for temporary importation of goods into Kosovo is set out in Articles 140 to 147 of the Customs Code, and in Articles 329 and 330 of the “Administrative Instruction No. 11/2009 Laying down Provisions for the Implementation of the Customs Code” (see page 165 of the Administrative Instruction).

The temporary importation procedure allows the use in Kosovo, with total or partial relief from import duties and without their being subject to commercial policy measures, of imported goods intended for re-export, so long as the imported goods have not undergone any change except normal depreciation due to the normal use made of them.

Authorization for temporary importation may be granted at the request of the person who uses the goods, arranges for them to be used or is responsible for the importation.

Kosovo Customs will refuse to authorize use of the temporary importation procedure where it is impossible to ensure that the import goods can be identified for fiscal control purposes in terms of proving that the goods have been used temporarily in Kosovo and then exported.   Nevertheless, Kosovo Customs may authorize use of the temporary importation procedure without ensuring that the goods can be identified where, in view of the nature of the goods or of the operations to be carried out, the absence of identification measures is not liable to gives rise to any abuse of the procedure.

Kosovo Customs will determine the period within which the imported goods must have been re-exported or assigned a new customs approved treatment or use.  Such period must be long enough for the objective of authorized use to be achieved.  The maximum period during which goods may remain under the temporary importation procedure is normally 24 months.  However, Kosovo Customs may determine shorter periods with the agreement of the person concerned, and if exceptional circumstances so warrant, Customs may, at the request of the person concerned and within reasonable limits, extend the temporary periods in order to permit the authorized use of the goods.  “Exceptional circumstances” means any event as a result of which the goods must be used for a further period in order to fulfill the purpose of the temporary importation operation.

Kosovo Customs will ensure that the total period for which the goods remain under temporary importation arrangements for the same purpose and under the responsibility of the same holder does not exceed 24 months, even where the arrangements were discharged by entry for another suspense arrangement and subsequently entered again for temporary importation.  However, at the holder’s request, they may extend this period for the time during which the goods are not used, in accordance with the conditions laid down by them.  Kosovo Customs will ensure that the total period for which the goods remain under the temporary importation procedure for the same purpose and under the responsibility of the same holder does not exceed 24 months, even where the arrangements were discharged by declaration under another suspense arrangement and subsequently declared again for temporary importation.  However, at the holder’s request, Kosovo Customs may extend this period for the time during which the goods are not used, in accordance with the conditions laid down by them.

Goods placed under the temporary importation procedure must remain in the same state (not be further processed or manufactured, etc.).

Repairs and maintenance, including overhaul and adjustments or measures to preserve the goods or to ensure their compliance with the technical requirements for their use under the temporary importation procedure are admissible.

Annex 35 E of the Administrative Instruction No. 11/2009 provides the Application Form for Authorization for Temporary Importation.

INWARD PROCESSING

Inward processing is a customs procedure where the temporary admission of goods imported into Kosovo is subject to exemption from payment of import duties and taxes pending re-exportation over a specified period after being subjected to production, processing or repair.

There are several benefits derived from internal processing procedures. The most important is the ability to produce and process goods with the financial burden of paying customs duties and taxes. The benefit to the government is the increased economic activity from production and processing of goods, strengthening the competitiveness of Kosovo’s industries. The internal processing procedure covers not only general merchandising but also situations where the foreign customer remains the owner of the imported goods.

Special provisions relating to internal processing can be found in Articles 118 and 119 of the Customs Code.

More detailed information on procedures related to Internal Processing can be found in Articles 311 to 315 of the “Administrative Instruction no. 11.2009 Determining the Provisions for the Implementation of the Customs Code “.

An Authorization for Inward Processing shall be permitted by Kosovo Customs only when the applicant intends to re-export or export the compensating products or products. The authorization shall specify the means and methods for identifying imported goods on compensated products and determine the conditions for the proper performance of operations using equitable goods. Such identification methods or conditions may include the examination of the data.

Kosovo Customs may authorize processing operations only if:

Concludes that processed products are obtained from imported goods;

It would not be economically advantageous for the manufactured goods to return to their previous condition (in the yarn), and

The use of procedures enables processing activities to occur in Kosovo without harming the basic interests of similar goods in Kosovo.

For more detailed information on how equal products or compensating products are handled under the regime of suspended duties in Kosovo, please contact the Department for Customs Procedures with Economic Impact at Kosovo Customs.

OUTWARD PROCESSING

Outward Processing is a customs procedure under which goods which are in free circulation in Kosovo can be temporarily exported for production, processing or repair abroad and then imported into a partial or total exemption from payment of import duties and taxes.

Compensation products resulting from overseas processing operations abroad can then be imported with partial or total import or import duties. Thus, with goods under the procedure of complete exportation, goods which are in free circulation in Kosovo and are temporarily exported under the outward processing procedure are, after they have been returned to Kosovo (after being repaired, produced or incorporated in goods other) continue to be treated as free-circulation goods for which duties and taxes are not applicable.

The Outward Processing Procedure requires the goods to be subject to appropriate identification measures, making it possible to certify that compensating products are wholly or partly obtained from temporarily exported goods. It is essential that when goods are declared for Outward Processing Procedure, customs can apply the appropriate controls.

Special Provisions regarding Outward Processing can be found in Articles 148 to 163 of the Customs Code.

More detailed information on Outward Processing is provided in Articles 360 to 362 of the “Administrative Instruction No. / 11/2009 Determining the Provisions for the Implementation of the Customs Code”.

In summary, the Internal Processing Procedure allows Kosovo goods to be temporarily exported from Kosovo in order to undergo processing operations and products resulting from such operations to be released for free circulation with partial or total relief from import duties.

Temporary export of Kosovo goods involves the application of commercial policy measures and other formalities for the export of Kosovo goods from Kosovo

The following definitions will apply:

“Temporary exported goods” means goods placed under the external processing procedure;

“Processing operations” means:

  1. – work on goods, including their erection and assembly in other goods;
  2. – processing of goods; and

iii. – repair of goods, including their restoration and placement in the country.

“Compensating products” means all products resulting from processing operations;

“Rate of utilization means the quantity or percentage of compensating products obtained by processing a certain quantity of goods temporarily exported.

The external processing procedure is not open to Kosovo goods:

For which export increases repayment and repayment of import duties,

Which, prior to exportation, have been released for free circulation with total relief from end use, as long as the conditions for such authorization continue to be applicable.

 

GRANTING AUTHORIZATION

The authorization to use the external processing procedure shall be granted at the request of the person who arranges for the processing operations to be carried out.

An Authorization will be granted only:

Persons established in Kosovo;

Where it is considered that it will be possible to establish that the compensated products have resulted from the processing of the goods temporarily exported;

When the authorization for using the external processing procedure is not seriously responsible for violating the essential interests of Kosovo processors (economic conditions).

The authorization shall specify the means and methods for determining that the compensated products have resulted from the processing of the goods temporarily exported or to verify that the conditions for using the standard exchange system have been met.

Such methods and methods include the use of the information document set out in Annex 41 to the “Administrative Instruction no. 11/2009 Determining the Provisions for the Implementation of the Customs Code “, and examining the relevant data ..

Where the nature of processing operations does not allow the creation of compensated products resulting from temporarily exported goods, the authorization may be granted in justified cases, provided that the applicant can provide a generous guarantee that the goods used in the processing operations share the same TARIK eight-digit code, the same commercial quality and the same technical characteristics as the goods temporarily exported. In such cases, the authorization will determine the conditions for the use of the agreements.

Where repair arrangements are required, the goods temporarily exported must be able to be repaired and the arrangements can not be used to improve the technical performance of the goods.

PROCESSING UNDER CUSTOMS CONTROL

Processing under Customs Control is the custom procedure whereby the temporary admission of imported goods into Kosovo, is conditionally relieved from the payment of import duties and taxes, the processing of which leads to products which are subject to a lower amount of import duties than that applicable to the imported goods.

The arrangements for Processing under Customs Control apply to goods the processing of which leads to products which are subject to a lower amount of import duties than that applicable to the import goods.  The arrangements also apply to goods which have to undergo operations to ensure their compliance with technical requirements for their release for free circulation in Kosovo.

The method of determining the customs value of processed products declared for free circulation is provided for in Article 327 of the Administrative Instruction mentioned above.

Specific provisions pertaining to Processing Under Customs Control are found in Articles 133 to 139 of the Customs Code.

More detailed instruction related to Processing under Customs control are found in Articles 327 and 328 of the “Administrative Instruction No. 11/2009 Laying down provisions for the Implementation of the Customs Code”.

SIMPLIFIED CUSTOMS PROCEDURES

Simplified procedures are an important part of modern customs administration. Simplified procedures can make the customs treatment of imported goods much less complicated and also, according to the type of procedure, less time-consuming. The principal advantage they offer is in permitting initially a declaration to be filed for the goods that does not contain all the particulars otherwise required. The omitted particulars need be communicated only at a later date. Subject to appropriate authorization, these particulars may also be combined for the goods imported within a specific period in a single, supplementary declaration and the import duties and taxes paid in a single amount. Simplified procedures (sometimes referred to a “local procedures”) are intended to reduce import and export clearance times and costs for traders who have a history of voluntary compliance with customs legal and regulatory requirements, and who consequently are categorized as “low-risk”.

The Customs Code of Kosovo (2008) authorizes simplified procedures in Article 80.  The Code was amended in 2011 (Law No. 04/L-099) to authorize additional simplified procedures in connection with Authorized Economic Operators and the use of summary declarations. These additional simplified procedures have not yet been implemented.

Additional Information about Simplified Procedures

In summary, Article 80 of the Customs Code provides:

“In order to simplify completion of formalities and procedures as far as possible while ensuring that operations are conducted in a proper manner, the Customs may, under conditions laid down in the Administrative Instruction implementing this Code, grant permission for:

  • The declaration to omit certain of the particulars, or for some of the documents normally required not to be attached to the declaration;
  • A commercial or administrative document, accompanied by request for the goods to be placed under the customs procedure in question, to be lodged in place of the declaration;
  • The goods to be entered for the procedure in question by means of an entry in the records; in this case, the Customs may waive the requirement that the declarant presents the goods to customs.

The simplified declaration, commercial or administrative document or entry in the records must contain at least the particulars necessary for identification of the goods.  Where the goods are entered in the records, the date of such entry must be included.”

Simplified procedures actually represent streamlined obligations, which may be offered at the discretion of the local Customs Office manager, usually because the trader and the trader’s transactions represent no or low risk of non-compliance.  In some cases, simplified customs procedures may take the form of simplified form of customs declarations.