Processing on customs territory – Customs procedure for exporters

Abstract

Processing in the customs territory (inward processing) is a customs procedure designed to support exports. Its key advantage for exporters is the ability to use imported goods in the production of goods for export without paying customs duties and taxes. What impedes application of inward processing by companies using foreign raw materials and components for the production of goods for export? In the article, the author analyzes the existing limitations regarding the inward processing procedure that results in additional costs sometimes equal to the benefits obtained from tax exemptions on the imported goods to be used in processing of goods for export. Based on the analysis, the author describes the current urgent problems related to the regulation and application of inward processing in the EAEU and the Russian Federation, as well as the limitations. Besides, the author considers particular aspects of inward processing in the European Union. The author concludes that the existing customs regulation in the EAEU and the Russian Federation does not provide for comprehensive solutions to the accumulated problems with regard to inward processing and incentives for customs authorities to make such processing effectively used.