37 customs payment codes: which go into the cost of goods and which become an expense?

It is easy to record every soum paid at customs to a single account. But then the cost of the goods ends up either too high or too low. The right way: first identify the payment code, then compare its nature with NAS No. 4.

How does the Code divide customs payments into types?

The Customs Code lists four main payments: customs duty, value added tax, excise tax and customs fees. Other payments may also be established by law (Article 289). Duties in turn are divided into import, export, special (special safeguard, anti-dumping, countervailing) and seasonal duties (Article 290). A fee, on the other hand, is charged for a specific action performed by the customs authority. Article 291 lists seven such actions: - customs clearance of goods - clearance outside the place designated for clearance or after customs working hours - storage of goods in a warehouse belonging to the customs authority - providing customs escort for a vehicle - issuing a preliminary decision - entering an intellectual property object in the customs register - clearance of cash foreign currency imported by a legal entity

The criterion for accounting is in NAS No. 4. Under paragraph 15, the cost of inventories includes, among other things, customs duties and fees. Other taxes and fees related to the purchase are added to cost only if they are not recoverable (not offset). Paragraph 17, in turn, excludes from cost expenses not directly related to the purchase of the asset. They are expensed in the period in which they arise.

Where does each code in Annex 13 go?

The table below reproduces Annex 13 of the Instruction on the Procedure for Completing the CCD in full. The last column is the author's conclusion for an importer's accountant: it relies on paragraphs of NAS No. 4 and NAS No. 21. In the rows marked "In the accounting policy" the standards do not give an unambiguous answer: paragraph 15 includes customs fees in cost, while paragraph 17 excludes from cost an expense not directly related to the purchase. The company decides once, in its accounting policy, which of these such a fee falls under.

Group	Code	Payment	In the importer's accounts
Clearance fees	10	Fee for customs clearance of goods	To cost (NAS No. 4, paragraph 15)
Clearance fees	11	Clearance fee under the procedures of processing within the territory, processing outside the territory and transit	Linked to the processing or transit operation, in the accounting policy
Clearance fees	12	Fee for clearing the CCD outside working hours	To cost (customs fee, paragraph 15)
Clearance fees	13	Fee for examination, inspection or reloading outside the designated place or outside working hours	To cost (customs fee, paragraph 15)
Clearance fees	14	Fee for clearance of cash foreign currency imported by a legal entity	Not a purchase of inventories: not included in the cost of goods
Duties and taxes	20	Import customs duty	To cost (paragraph 15)
Duties and taxes	25	Export customs duty	Not relevant to imports
Duties and taxes	27	Excise tax on imported goods	To cost if not recoverable (paragraph 15)
Duties and taxes	28	Excise tax on exported goods	Not relevant to imports
Duties and taxes	29	Value added tax	Not included in cost if offset (paragraph 23), to cost if not offset (paragraph 15)
Duties and taxes	30	Single customs payment	Simplified procedure for non-commercial goods of individuals (Articles 289, 163 and 169)
Other fees	40	Fee for storage in a customs authority warehouse	To cost (paragraph 15)
Other fees	41	Fee for customs escort of a vehicle	To cost (paragraph 15)
Other fees	42	Fee for issuing a processing permit	Linked to the processing operation, in the accounting policy
Other fees	43	Fee for amending the CCD at the declarant's request	In the accounting policy
Other fees	44	Fee for exceeding the delivery period under customs control	In the accounting policy
Other fees	45	Fee for failure to take a temporarily admitted motor vehicle out on time	Not a purchase of inventories: not included in the cost of goods
Other fees	46	Other fees provided for by law	Depending on their nature
Other fees	50	Fee for issuing a preliminary decision	In the accounting policy
Other fees	52	Fee for temporary storage at a border post	To cost (paragraph 15)
Proceeds and fines	60	Proceeds from the sale of confiscated goods	Not an importer's expense
Proceeds and fines	61	Proceeds from the sale of pledged property	Not an importer's expense
Proceeds and fines	62	Fines	Expense: paragraph 410 lists fines within 9430
Other payments	70	Interest for deferred or instalment payment	Expense: paragraph 423 shows interest expenses in 9610
Other payments	72	Late payment interest	Expense: paragraph 410 lists late payment interest within 9430
Other payments	74	Other payments collected by customs authorities	Depending on their nature
Other payments	75	Amount of security for payments	Not a payment but security (Article 339): not charged to expenses
Other payments	78	Additional fees in response to discriminatory actions	To cost (paragraph 15)
Other payments	79	Recycling fee	If related to the imported goods and not recoverable, to cost (paragraph 15)
Special duties	80	Special duty	To cost (paragraph 15)
Special duties	81	Provisional special duty	To cost (paragraph 15)
Special duties	82	Anti-dumping duty	To cost (paragraph 15)
Special duties	83	Provisional anti-dumping duty	To cost (paragraph 15)
Special duties	84	Countervailing duty	To cost (paragraph 15)
Special duties	85	Provisional countervailing duty	To cost (paragraph 15)
Special duties	86	Seasonal duty	To cost (paragraph 15)
State duties	90	State duty for a licence for a customs warehouse, free warehouse or duty-free shop	Not to the cost of goods (paragraph 17)

The annex contains 37 codes in total. Of these, the ones an importer encounters most often are 10, 20, 27, 29 and 72.

How are late payment interest and fines recorded?

Late payment interest is charged when a customs payment debt is not paid on time. Its total amount must not exceed the amount of the debt (Customs Code, Article 349). This is not a purchase of goods but a consequence of delay, so it is not added to the cost of the goods.

NAS No. 21 has no model journal entry line for customs late payment interest or customs fines. The fine entry in line 16 of paragraph 412 relates only to fines charged under decisions of tax authorities and cannot be transferred to customs. What the standard does contain is a description of accounts: paragraph 410 lists fines and late payment interest within 9430 "Other operating expenses", and paragraph 273 says that liabilities to the budget are summarised in 6410. The company sets out in its accounting policy which accounts customs late payment interest and fines are recorded through.

Example: separating the payments for one batch

The calculation is compiled by the author. The duty rate and the fee and late payment interest amounts are hypothetical, not real rates. Actual duty rates are set by the President and fee rates by the Cabinet of Ministers (Customs Code, Articles 289 and 291).

"Navro'z Elektr" LLC imported goods with a customs value of 400 000 000 soum. The hypothetical duty rate is 5%, and the clearance fee is a hypothetical 900 000 soum. In addition, late payment interest of 150 000 soum was charged because an additionally assessed payment on a previous batch was paid late.

VAT base = customs value + duty (the goods are not excisable; Customs Code, Article 322): 400 000 000 + 20 000 000 = 420 000 000 soum. VAT at 12%: 50 400 000 soum.

Whether there is a right to offset (deduct) import VAT later is decided not in the Customs Code but in the Tax Code. NAS No. 4 answers both cases: a recoverable tax is excluded from cost (paragraph 23), and a non-recoverable tax is added to cost (paragraph 15). That is why there are two columns below:

Code	Payment	Amount	If VAT is offset	If VAT is not offset
10	Clearance fee	900 000	Cost	Cost
20	Import duty (5%)	20 000 000	Cost	Cost
29	VAT (12%)	50 400 000	Not included in cost	Cost
72	Late payment interest	150 000	Expense	Expense
	Total paid to customs	71 450 000
	Of which to the cost of goods		20 900 000	71 300 000

Where VAT is offset, only 20 900 000 soum of the customs payments is added to cost. If the accountant records all 71 450 000 soum in cost, the batch will look 50 550 000 soum more expensive: both the VAT deduction and the profit on sale will come out wrong. Even where VAT is not offset, the late payment interest (150 000 soum) is still not included in cost.

Practical tips

If, under the accounting policy, customs payments are kept through 6410, open separate analytical accounts for them. Paragraph 274 of NAS No. 21 requires analytical accounting for 6410 to be kept separately for each type of tax. Then reconciling with customs becomes easy
Do not immediately expense money transferred in advance to the customs authority's personal treasury account (Customs Code, Article 328). It is allocated to cost, VAT or expenses only when it becomes a specific payment under a CCD
The security amount (code 75) is not an expense. Do not mix it up with duty