Free warehouse (code 73): if foreign goods are stored duty-free and without a time limit, what may be done there and how is cost calculated when part is imported?

A free warehouse is a special place where foreign goods sit without customs payments. The code of this procedure in the declaration is 73 (Instruction on the procedure for filling in the cargo customs declaration, Annex 3).

1. Definition. Goods are placed in certain places and areas without payment of customs duties and taxes and without application of economic policy measures (Customs Code, Article 100). The free warehouse itself is a building and (or) open area specially equipped for storage under customs control (Article 175).

1. Which goods may go in? Any goods, with two exceptions: goods whose importation into the customs territory is prohibited and Uzbek goods whose exportation is prohibited (Article 101). Goods under another procedure may also be moved to a free warehouse. The procedure does not apply to Uzbek goods needed for the warehouse itself to operate (Article 175). For placement, a CCD and accompanying documents are submitted (Article 102).

1. The term is unlimited (Article 104). This is the procedure's biggest advantage: goods may stay there as long as desired.

1. Full list of permitted works (Article 103): ensuring the preservation of goods in unchanged condition; preparing them for sale and transport (splitting into batches, forming shipments, sorting, packing, repacking, marking, except excise stamps, and similar operations); simple assembly; using goods within the free warehouse itself as technological equipment, its spare parts, loading and unloading machinery or other technical means. Retail trade is prohibited. Additional prohibitions and restrictions on certain operations may be set by law.

1. Goods may be transferred to another person (Article 103¹), that is, the right to own, use or dispose of them may be granted, but on two conditions: the transferor notifies customs in writing in advance; the transferee submits a CCD in compliance with the requirements of the procedure it has chosen. The right and the obligation to comply with the procedure pass to the transferee from the moment the CCD is submitted.

1. What payment is due on leaving the warehouse? If foreign goods are brought into the customs territory, then, unless the law provides otherwise, payments and measures apply as if they had been imported directly from abroad (Article 105, part two). In other words, a free warehouse does not cancel the payment, it only postpones it to the day the goods enter the domestic market. If Uzbek goods leave the warehouse for abroad, the usual export rules apply. If goods exported from a free warehouse have no certificate of origin, they are treated as Uzbek goods for the purposes of customs payments and economic policy measures, and as foreign goods for other purposes.

1. Six months for goods intended for export. If exemption from payments or their refund is provided for on export, goods placed in a free warehouse for export are exempted (or the amount is refunded), but they must be exported no later than six months from that day. If they come back or are not exported in time, duties and taxes are paid (Article 105).

1. What if the warehouse closes? Free warehouse activity is licensed by the customs authorities, and the relationship with the owner is based on a contract (Article 176). If the licence expires or is revoked, the goods in the warehouse are treated as goods under the temporary storage procedure, and fifteen calendar days are given to move them to another free warehouse or place them under a new procedure (Article 177). Before signing a contract, check that the warehouse is on the State Customs Committee register.

Example (hypothetical). "Sharq Ehtiyot Qism" LLC bought 1 000 boxes of car spare parts at 120 dollars a box and placed them in a free warehouse. Rate: 1 dollar = 12 500 soum (hypothetical). The goods are the company's property, so they go onto the balance sheet: Dt 2910 – Ct 6010, 1 500 000 000 soum (NAS No. 21, paragraph 154, line 2). In November 600 boxes were released under the import procedure (code 40), and the duty and fees on them came to a hypothetical 135 000 000 soum. As costs related to the purchase, they are added only to the cost of these 600 boxes (NAS No. 4, paragraph 15). The remaining 400 boxes sit duty-free in the warehouse:

The cost of identical boxes from one consignment differs by 225 000 soum. That is why it is useful to split the analytical records on 2910 into two locations (free warehouse and main warehouse): otherwise an average price results and the cost of goods sold (Dt 9120 – Ct 2910, paragraph 154, line 13) comes out wrong. The NAS No. 21 table has no specific line for the entry paying customs payments: set out in your accounting policy which liability account they pass through. Import VAT is not shown in this example: whether it is included in cost depends on whether it is recoverable (offset) (NAS No. 4, paragraphs 15 and 23).