IMPORT OF VESSELS

Whether a foreign company wishes to perform temporary works in Russian territorial waters or to open an affiliate Russian company to pass ownership of fleet to it for long-term operation in Russia, necessity for customs clearance of vessels shall arise.

In order for a vessel to lawfully operate in Russia, she should be declared for Customs services in orderly manner, under one of customs procedures. These are outlined in Chapter 29 of Customs Code of Customs Union (“CCCU”), and not all of them are equally fitting for purposes of foreign company’s shipping business in Russia.

Normally, foreign companies and their Russian affiliate companies use 2 basic customs procedures to import a vessel: release for home use and temporary import. The choice depends on if customs applicant wishes for vessels to be considered as goods for free use on Russian territory, or not. Both procedures have advantages and expenses related to them.

RELEASE FOR HOME USE

The procedure is regulated by Chapter 30 of CCCU, and goods declared under this procedure are available for free and unlimited use on territory of Russian Federation and Customs Union, including a possibility to sale those goods.

In order to release the vessel for home use, the customs applicant must pay full amount of customs duties and taxes, which are calculated on the basis of customs value of the vessel. The amount can be fairly large due to high value of fleet, in general. The actual amount to be paid is calculated after establishment of real customs value of vessel, as per rules of Agreement between Governments of Russian Federation, Republic of Belarus and Republic of Kazakhstan, dated 25.01.2008, “On establishment of customs value of goods carried through customs border of Customs Union”.

Duty rates for different types of vessels can be fount in Nomenclature of Goods subject to Foreign Trade, applied as per Chapter 6 of CCCU. The named rates vary from 0% to 25% of customs value of vessel, depending on her type, age, country of origin, etc.

Nevertheless, for shipowners who are interested in bringing the vessel for permanent operation on Russian and Customs Union territory, the law opens a possibility to avoid payment of customs duties and taxes on her release for home use. This can be achieved by importing a vessel for purpose of her registration under Russian flag in Russian International Registry of Vessels (“RIRV”).

The named register has been created specially for commercially sound and efficient operation of vessels, and it offers significant tax advantages for all shipowners whose vessels are registered there. One of such advantages is full release of the shipowner (customs applicant) from payment of customs duties and taxes when the vessel is released for home use by Customs Services. The right of exemption is granted by Decree of Customs Union Commission, dated 27.11.2009, N 130 “About single customs tariff regulation of customs union of Republic of Belarus, Republic of Kazakhstan and Russian Federation”. Clause 7.1.6. of the named Decree provides that vessels which are registered in international registries of shipping are exempt from customs duty payment. The same is provided by clause 1 of Decree of Government of Russian Federation, dated 16.07.2007, N 448.

In addition, clause 12 of Article 12 of Tax Code of Russian Federation (“TC”) provides that no VAT shall be paid in relation to vessels which are imported into Russian Federation and registered in RIRV. The size of VAT payment is up to 18% of vessel’s value, which provides for a significant saving for the shipowner.

There are other advantages of registering a vessel under Russian flag in RIRV, however these will be dealt with separately, in other articles because they are not related to customs clearance of the vessel.

TEMPORARY IMPORT

For those foreign shipowners who wish to bring the vessel to Russia for season works or time-charter, customs procedure of temporary import will serve as best solution. It is regulated by Chapter 37 of CCCU, and provides for goods to be temporary imported to Russian Federation for a certain period of time without payment of full amount of customs duties and taxes, with export of goods from Russian territory afterwards.

Vessels are goods which can be placed under the named procedure, because they are not perishable and can be easily identified. The maximum period for temporary import is 2 years, after which the vessel must be exported, and temporary import once again applied for (Article 280of CCCU). In the named period the vessel cannot be transferred to any other persons or entities, other that the customs applicant, without approval from the Customs Services.

The burden of customs duties and tax payments is significantly decreased for shipowners applying for temporary import regime. For some vessels (ferry boats for carriage of passengers in Crimea region and for cargo carriage between Ust-Luga and Kaliningrad ports) there are no customs duties and taxes at all (full exemption). For other vessels the exemption is partial. The shipowner shall be obliged to pay 3% from the overall amount of customs duties and taxes which should have been paid for the vessel in case she was released for home use, for every month the vessel is temporary imported.

This procedure is suited for short voyage charters and cabotage works, which can be performed by vessels under foreign flag in Russian territorial waters. Expenses for such customs clearance of the vessel can be considered as minimal.

The choice of customs procedure for import of vessel to Russia is not an easy task, which requires knowledge of Russian customs law and assessment of shipowner’s project and goals of vessel’s operation. It is fully justified to address maritime lawyers for a written or oral consultation on the issue before considering any customs regime at all.

If you would like to receive more information about customs procedures which are available and suitable for you and your partners in Russia, do not hesitate to send us a message on sos@inmarin.ru or to give us a call on +7 (812) 363-13-64. We are prepared to provide legal assistance for customs clearance of your vessel, calculation of customs duties and all aspects of chosen regime.

Inmarine St. Petersburg Law Offices, 2016