Area of Focus: Customs. Will the New Customs Code Help Solve Business Problems?

Ukraine’s Customs Reform: What Business Expects from the New Customs Code

Relations with the State Customs Service of Ukraine (SCS) remain one of the most sensitive and problematic areas for businesses. Inconsistent customs clearance practices at border checkpoints, disputes over customs valuation, reclassification of goods, excessive bureaucracy, and procedural delays result in additional costs for importers and exporters and create opportunities for corruption.

Businesses have high expectations for the draft new Customs Code of Ukraine, which was submitted to the European Commission for assessment in autumn last year. According to Mind, in January 2026 the European Commission provided Ukraine with its assessment of the document, while the revised draft is expected to be submitted to Parliament no later than April. Ukraine is already significantly behind the timeline previously committed to the European Union.

The key objective of the new Customs Code is not simply to update existing legislation, but to rebuild Ukraine’s customs system in line with the European model, with a focus on risk management, digitalisation, post-clearance audits, and integration into the EU’s common customs framework. In effect, the reform is intended to lay the groundwork for Ukraine’s future EU membership and the alignment of trade rules.

At the same time, it is clear that adopting a new Customs Code alone will not resolve systemic problems unless the way customs rules are applied in practice also changes substantially. This is particularly important if an unreformed customs authority is granted law enforcement powers under the updated legislation.

For this reason, alongside legislative reform, the institutional dimension is equally critical — particularly the appointment of a new Head of the State Customs Service. The effectiveness of the new model will largely depend on its leadership and whether the reform becomes a genuinely functioning system rather than a formal approximation of Ukrainian legislation to EU standards.

Only last week, two finalists were selected in the competition for the position of Head of the State Customs Service. Once the new head is appointed, a broader personnel overhaul may begin, including staff assessments, integrity checks, and other measures. However, this remains a lengthy process if the objective is to achieve genuine institutional transformation rather than simply demonstrate formal progress in implementing reforms.

As part of its special series “Control Zone: Customs,” Mind examined the regulatory changes required to bring Ukrainian customs closer to European standards while reducing administrative and regulatory pressure on businesses.

Systemic Problems: Where Are the Main Pain Points?

Various studies reveal a broadly similar picture of the challenges businesses face in their interactions with customs authorities.

According to the “Customs Performance Monitoring Through the Eyes of Business – 2024” survey, prepared with the participation of the Institute for Economic Research and Policy Consulting and the International Renaissance Foundation, the Customs Performance Perception Index stood at 0.30 on a scale from -1 (“poor”) to +1 (“good”).

The survey covered 344 companies engaged in export and import activities.

More than 66% of respondents considered customs generally effective but believed that further reform was necessary. At the same time, around 20% described the customs system as highly ineffective and requiring a complete institutional overhaul.

Among the main problems identified by exporters and importers were:

• border queues — 49%;
• insufficient transparency and openness — 44%;
• deficiencies in customs legislation — 38%;
• corruption — 30%;
• insufficient capacity at border checkpoints — 29%.

Around 20% of respondents also considered the State Customs Service’s tax collection powers problematic, while 15% reported abuses related to the overvaluation of imported goods for customs purposes.

According to information provided by the Business Ombudsman Council to Mind, customs-related matters ranked fourth among all business complaints received by the organisation in 2025. Most difficulties arise specifically during customs clearance.

Almost half of customs-related complaints — 44.2% — concern adjustments to customs value, while another 29.5% relate to delays or customs clearance refusal decisions. These remain the two most acute areas of concern.

The Business Ombudsman Council has also reported an increase in cases where customs authorities refuse to apply the reduced 7% VAT rate to imports of medicines and medical devices into Ukraine. The number of complaints involving EUR.1 certificates has also increased, particularly where certificates cannot be verified by customs authorities, preventing businesses from benefiting from preferential customs duty rates.

The European Business Association (EBA) similarly identified customs valuation adjustments as one of the most serious problems facing businesses.

In 2025, 60% of companies surveyed by the EBA reported difficulties related to customs valuation adjustments. The proportion has increased consistently: from 37% in 2022 to 46% in 2023 and 60% in 2025.

Bureaucracy and Ineffective Procedures

Business representatives confirm that excessive regulation, formalism, and a lack of transparency can lead to abuses and generate disputes between businesses and customs authorities.

Even procedures intended to simplify customs clearance may remain excessively bureaucratic. These include obtaining or renewing authorised exporter status and accessing customs simplifications.

Businesses also point to multi-layered inspections at the border, where additional authorities may duplicate certain control functions, including veterinary, phytosanitary, environmental, and other inspections. This can result in significant delays.

The lack of uniform customs procedures and incomplete digitalisation also leave considerable discretion to individual customs officers.

Although Ukraine operates an Automated Risk Management System (ASUR), customs officials may still have substantial discretion in deciding whether goods should undergo physical inspection. At the same time, inconsistent approaches to commodity classification can result in a situation where a CN code accepted by one customs office is rejected by another.

Incomplete digitalisation also means that businesses continue to face extensive paperwork. Importers may still be required to provide original documents bearing physical stamps and other hard-copy documentation, even though many European counterparties have long since moved away from such practices and may operate entirely without corporate stamps.

Delays in customs clearance are also associated with staffing and professional capacity, particularly at international road border crossings, where frequent personnel rotations may result in a loss of accumulated expertise.

Customs Valuation: One of the Main Areas of Dispute

Alongside bureaucracy and a lack of procedural transparency, customs valuation adjustments remain one of the most significant challenges for businesses.

According to the Ukrainian Centre for European Policy, the State Customs Service issued approximately 15,200 customs valuation adjustment decisions in 2024 and 12,500 in 2025.

The Business Ombudsman Council confirms that customs valuation is the most common subject of customs-related complaints, with many businesses reporting systemic rather than isolated cases.

In practice, customs authorities may increase the declared customs value of imported goods, resulting in higher taxes and duties payable by the importer.

At the same time, Ukrainian Supreme Court case law indicates that the transaction value should generally serve as the primary method for determining customs value, and departure from this method requires proper justification by the customs authority.

Nevertheless, instead of relying on the contractual price, customs authorities may in certain cases apply alternative valuation methods based on internal databases and non-public risk profiles. As a result, businesses may either accept an adjustment that increases their tax burden or provide a financial guarantee, potentially tying up working capital for an extended period.

Practice also demonstrates that challenging customs decisions administratively before the central office of the State Customs Service does not always produce an effective remedy.

Only several hundred administrative complaints concerning customs valuation decisions reach the central office each year, while Ukrainian courts consider many times more cases involving the same issue.

This disparity suggests a broader problem of business confidence in the customs appeals system: companies often prefer to seek judicial review rather than rely on the customs authorities to reconsider their own decisions objectively.