Released On 8th Mar 2021
Importing goods into Ukraine
This guide contains useful information for anyone thinking of importing goods into Ukraine. There is a specific focus on imports of telecommunication, IT and medical equipment, as these are specialist areas for Mouse & Bear; however, much of the information will be of general interest to anyone seeking a greater economic and regulatory understanding of this complex country.
- An introduction to Ukraine
- Ukraine’s emerging economy
- Ukraine’s economic growth in the IT, technology and medical tech sectors
- Doing business with Ukraine
- Importing telecommunications equipment into Ukraine
- Required documents for clearing Ukraine customs
- Ukrainian import taxes
- Ukrainian VAT rates
Ukraine is the second largest country in Europe, with a current population of approximately 38 million. Ukraine gained its independence in 1991, following the dissolution of the Soviet Union.
It is a member of the United Nations, as well as the Council of Europe, but it is not yet a complete EU member. On 1st September 2017, the EU–Ukraine Association Agreement entered fully into force after a long period of ratification.
Ukraine is an emerging economy, growing at an impressive rate. The workforce is well educated, well trained, driven, and has a good level of written and spoken English.
Ukraine’s global trade has grown year-on-year over the past 5 years, and continued to grow in 2019, but imports significantly outpace exports, resulting in Ukraine’s trade deficit nearly tripling to $10.3 billion.
Ukraine’s trade balance surplus in services increased by approximately 8% to $6.4 billion in 2019, reflecting Ukraine’s growing role as an information technology (IT) leader.
Goods exported from Ukraine increased by 5% in 2019 (source: Trade.gov), however the country has challenges; market analysts believe that if Ukraine were to capitalise on its true potential and work force, it would have an economy that reflected something like Poland’s.
Ukraine’s thirst for IT and the Internet has seen tremendous growth in the last decade. The country ranks 8th globally for the fastest internet speeds. As a result, Ukraine’s IT industry employs close to 100,000 workers, with half of those being software developers.
There are well over 1000 IT companies in Ukraine, and the number of businesses requiring IT tech is exponential. More than 100 multinational tech companies have R&D labs in Ukraine, driving a huge need for the latest next generation technology.
Medical technology is also in high demand as the country’s health system goes through a major overhaul, never seen before in its history.
Significant market challenges exist in Ukraine that include, but are not limited to:
- A complicated court system, unable to fairly adjudicate business disputes
- High tax rates
- Opaque and costly regulatory environment
Despite the challenges the country is working to overcome, it has many opportunities:
In 2019, the Ukrainian medical device market was worth $524.7 million, and was projected to reach $549.6 million in 2020. Many factors are driving this growth: new healthcare legislation, which changes the way healthcare is financed; the comprehensive hospital sector; the ongoing World Bank project approved in March 2015; and Ministry of Health plans to expand the network of clinics in rural areas.
In 2019, imports accounted for 90% of medical device sales in Ukraine. Sub-sector best prospects include:
- Diagnostic imaging equipment (ultrasound, computer tomography, magnetic-resonance tomography)
- Laser surgery devices
- Stents, pacemakers, and other equipment used in the treatment of heart conditions
- Orthopedics and prosthetics
- Dental equipment and materials
The opportunities for technology cross into all sectors. From Education to Defence and Security, to Food Processing and to Oil and Gas businesses, all these markets have driven a consumption and need for IT goods into the country.
Ukraine recognises that it needs to have a modern and current technical infrastructure in order to keep up with both European and international business markets, and it is working hard to change its ways.
On the 1st January 2018, a new electronic system was introduced at customs. The ‘Single Window’ is an exchange customs system that allows different customs departments to exchange information about the goods that are being imported, lessening the need for human intervention to minimise interaction and diversify.
Most of the licences are granted through the Ministry of Economic Development and Trade, Regional and Kyiv City Administration. Other import licenses or approvals for technology or medical goods are issued by other agencies:
- National Commission for the State Regulation of Communications and Informatization (NCSRCI) – for radio frequency devices and emitters
- Security Service of Ukraine – for routers & similar products
- State Service of Ukraine on Medicines and Drugs Control – for medicine and drugs
The required documents for customs clearance in Ukraine include:
- Minimum 5 x Originals of Commercial Invoice (or proforma Invoice if the delivery is done on the Free of Charge basis)
- 3 x Packing Lists
- 1 x Certificate of Origin (if the country of origin is not indicated in the Invoice)
- Transport document
- Export Declaration or T1
- Data Sheets
- Certificate of Conformity or Declaration of Conformity (depends on the requirements of the Ukrainian HS code to which this product refers). The application for these certificates can either be long-term (either on the Manufacturer or the Consignee of the Goods) or short-term (per each shipment).
For some specific items (for example original mobile phones, routers, computers, laptops, switch (commutator), other) the customs clearance process may require two additional steps:
- Intellectual property rights authorisation. This procedure may take from 1 to 10 working days. Counterfeit mobile phones will not be accepted for import.
- Declaration of Conformity to technical regulations. This procedure may take up to 1 month.
Importers as legal entities or private entrepreneurs in connection with the customs clearance process, must be accredited (registered) at the Customs Office as an entity fulfilling foreign trade activity.
Stated in the Article VII of the Law of Ukraine on Foreign Economic Activity, Ukraine’s tariff schedule includes three rates of import duties:
Full duty rate – The full rate of import duties can be from two to ten times higher than the preferential duty rate. This rate is rarely used (it may be applied to some products that are not defined in terms of country of origin, or to some products that have no preferential duty rate for some reason)
- Anti-dumping duty rate – This rate is implemented for some specific products that can be a threat to the products of national Ukrainian manufacturing. It is rarely used (for a very few products).
- Preferential rate – preferential rates apply to imports from countries with which Ukraine has a Free Trade Agreement (FTA) or other preferential trade agreement, i.e., imports primarily from CIS countries. The preferential rate is the most commonly used import tax rate in Ukraine. In most cases the duty rate for IT equipment is 0%.
- Rates for Most Favoured Nation (MFN) – These rates apply to those products that are delivered or originate from the very short list of countries having special agreements validated by Ukraine; those are: EU, EFTA, Canada, Israel.
The VAT rate for Ukraine remains stable at 20% on most goods. For some medical products, if they are included in the preferential medical products lists of the Cabinet of Ministers, a preferential VAT rate of 7% applies.