Common transit and issuance of guarantees by insurers

As part of the European integration program Ukraine joined the Convention on a common transit procedure and from October 01, 2022 received simplification of formalities in international transit of goods. We are talking about the so-called “customs visa-free” – the regime of common transit. It provides that the Ukrainian export-import business and carriers have the opportunity to move goods between the countries participating in the Convention within a transit procedure according to the principle: one declaration – one guarantee.

The basis of the Convention is a NCTS technology (New Computerized Transit System) which is available only to the members of the Convention and links their customs services to exchange by customs data.

All goods placed under common transit are subject to guarantee.

The guarantee is provided as:

– Individual guarantee, covering a single operation, in the form of i) cash deposit, ii) obligation provided by a guarantor, iii) vouchers.

– Comprehensive guarantee, covering a number of operations, in the form of an obligation provided by a guarantor.

Previously, at the national phase of the application of NCTS, the guarantee was carried out mainly with cash deposit by blocking funds in the treasury account of the company, that was indicated by the subject of the regime in column 50 of the special declaration (T1UA).

Guarantors can be banks, insurance companies, independent financial intermediaries who have received the appropriate status and entered into the register of financial guarantors by the customs administration.

Insurance companies issue their guarantees indirectly through the conclusion of an insurance contract. As a regulator of insurance activity the National Bank of Ukraine provided for this procedure by the Regulation on licensing and registration of financial service providers and the conditions for their performance of financial services activities (Decision of the NBU dated 24.12.2021 No. 153). The insurance rules developed by the insurer must contain the terms of liability insurance for the payment of customs debt for goods moved under the common transit procedure.