Russia is member of the Eurasian Economic Union and abides by its rules. Last November, the Eurasian Economic Commission promulgated a decision of November 01, 2016 No. 133 changing the procedure of application of the mechanism of deferred determination of the customs value of the goods".
Let us recall that the mechanism of deferred determination of the customs value may be applied in cases where on the date of importation of goods the price at which they will be sold in the Russian Federation can not be exactly determined in advance. However, this mechanism was earlier available only for exchange commodities.
At the same time, the importers traditionally faced the same problems regarding determination of customs value of goods bearing the trademarks in respect of which the declarant has a license agreement concluded with the trademark owner. If according to the provisions of the agreement the amount of royalties was set as a percentage of the sales price of the goods and the exact sales price at the time of filing the customs declaration was not yet determined, there were serious problems with the inclusion of royalties in the customs value, as prescribed in Item 7 of Part 1 of Article 5 of the Agreement between the governments of Russia, Belarus and Kazakhstan of January 25, 2008 "On the Determination of the Customs Value of Goods Transported through the Customs Border of the Customs Union". Incorrect indication of the amount of royalties could result (in case of follow-up inspection of the declarant by the customs authorities) in adjustment of the customs value of previously imported goods and to the imposition of fines on the declarant.
According to the new procedure the determination of the exact amount of the customs value in the above mentioned cases may be postponed for a period of time during which the information on the exact amount of the customs value may be obtained, but not more than for 15 months. In so doing,, preliminary customs value of goods should be determined on the basis of factors reflecting the planned amount of importation, sales of goods, any other use of the goods, or other planned factors, contained in the business plans, standard cost estimates, price lists, catalogs and other similar documents, or, in the absence of such factors, on the basis of accounting data for the corresponding previous period (month, quarter, year).
Besides, the declarant should use documented information for calculation of the exact amount of the customs value of goods.
Additionally, on November 15, 2016 the Recommendation of the Eurasian Economic Commission "On the Regulation on the addition of license and other similar payments for the use of intellectual property to the price actually paid or payable for the imported goods" was adopted. This Recommendation is not a directly applicable document, but there is no doubt that the customs authorities of the Member States of the Eurasian Economic Union (EAEU) will be guided by its provisions.
Among the most important provisions of the said Recommendation we may adduce the following:
- the customs value of the imported goods should include any payments for the right to use the subject matters of intellectual property as well as means of individualization equated to them;
- any payments for the right for reproduction of the imported goods in the customs territory of the Union, as well as payments for the right for their distribution or resale should not be included in the customs value of the imported goods;
- it does not matter whether the rights owner is a resident of the member state of the EAEU or a foreign person.
The annex to the Regulation gives examples that describe certain situations on the provision by the right holder of rights to use particular subject matters of intellectual property, analysis of the conditions of license agreements granting the right to use intellectual property, the conditions of international business agreements (contracts), under which the goods are sold for export to the customs territory of the EAEU, and other factors, the influence of which should be taken into account when making a decision whether the license payments should be added to the price actually paid or payable for the imported goods. The conclusions about the inclusion or non-inclusion of royalties in the customs value of goods, contained in the examples, with certain reservations, may be applied to any types of goods.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.