In the conditions of a critical financial situation caused by the war and the need to support the army, Ukraine is actively working on reforming state institutions. One of the key changes that can significantly impact the economic situation in the country is the reform of the State Customs Service (SCS). This reform involves structural changes aimed at increasing state revenues and combating corruption at customs.
“Kick” by the Americans
The Ukrainian government is currently discussing a possible tax increase, but foreign partners, particularly the United States, insist on the urgent necessity of customs reform. The U.S. Special Representative for Ukraine Economic Recovery, Penny Pritzker, emphasized during a briefing in Kyiv in June 2023 the importance of obtaining revenues from customs, which are currently being lost due to corruption and shadow markets.
Essence of the Changes
The draft law on customs reform has already passed the first reading in the Verkhovna Rada of Ukraine. The main changes envisaged by the document include:
- Appointment of independent managers: One of the key objectives of the reform is to ensure transparent and independent selection of the Customs Service manager, which is expected to increase trust in the service.
- Staff re-evaluation: A full re-evaluation of over 90% of customs personnel is planned to take place over three years.
- Independent audit: An annual external audit of customs activities is a crucial component of the reform, the results of which could lead to the dismissal of managers in case of a negative assessment.
Prospects and Challenges of the Reform
The customs reform is a priority task for the Ukrainian government, especially in light of the need for financing the Armed Forces and social programs. According to Deputy Yaroslav Zheleznyak, the reform process may take several years, but active preparation for the implementation of this initiative is already underway.
Corruption Schemes
One of the main reasons driving the reform of the customs service is corruption schemes that cause significant losses to the state budget. According to the Ukrainian Business Council (UBC), inefficient customs operations lead to annual budget losses of around 120-150 billion UAH. Some of the main schemes include:
- Distorted Declarations: Moving goods with concealment from customs control or undervaluation of the customs value.
- Black Smuggling: Illegal movement of goods outside customs control.
- Abuse of Privileges: Masking the importation of industrial goods as personal imports.
Need for Systemic Changes
Ukrainian businesses and society actively support customs reform, seeing it as an important step towards increasing transparency and efficiency in public administration. Although the reform requires time and effort, its implementation can significantly strengthen the country’s economy and help address the financial challenges facing Ukraine.
