Indirect Taxation Authority of BiH: Negative checks for 3,280 imported passenger motor vehicles

(Patria) - After the Ministry of Foreign Trade and Economic Relations of BiH informed the Indirect Taxation Authority (UIO) that manufacturers of AUDI, BMW, and VW motor vehicles decided that from the beginning of 2016, they will no longer issue statements for used vehicles based on which customs services of exporting countries issue EUR 1 origin certificates, the UIO has initiated enhanced subsequent control procedures for origin certificates for imported vehicles of the mentioned brands, it was announced today from the UIO BiH.

They remind that when an importer of any goods, including vehicles, into Bosnia and Herzegovina, along with other documentation, submits proof of origin – Form EUR 1 – in the customs import procedure, they are entitled to be exempted from paying customs duty, as it concerns a product originating from a country with which BiH has a free trade agreement.

Given that the German Association of the Automotive Industry decided not to issue the necessary document for obtaining the EUR 1 form for used AUDI, BMW, and VW vehicles from 2016 onwards, because significant efforts are required to prove European origin for used vehicles, the Indirect Taxation Authority, in the period from 2016 to August 2019, sent a total of 10,988 proofs of origin for passenger motor vehicles for subsequent verification procedures, of which 9,496 requests have been answered to date. In subsequent checks, the UIO received 6,132 positive checks, 24 partially positive checks, and 3,280 negative checks from the competent customs services, while the results of other requests for subsequent control are still pending.

For each negative check of the proof of origin, the UIO initiated a procedure for subsequent collection of import duties and collected a multi-million amount on that basis. This concerns the subsequent collection of import duties from a larger number of individuals and legal entities who imported used passenger vehicles into Bosnia and Herzegovina. 

Here, we particularly point out the problem of inconsistent treatment by European Union member states regarding the issuance, certification, and subsequent verification of proofs of origin – EUR 1 forms for used passenger motor vehicles. A large number of negative checks came from Germany and Austria, while the Netherlands continues to issue proofs of European origin and confirm European origin for the same type of goods – used vehicles. This is the reason why a large number of importers of such cars buy them in one of the EU countries, as seen from the attached invoice, and carry out export customs clearance in the Netherlands, as they can mostly only obtain proof of origin there. A similar practice existed in Slovenia earlier, but it has been discontinued.

Furthermore, as the UIO has been receiving a large number of negative results from the Customs Administration of Belgium for subsequent verification of proofs of origin for used vehicles from the same exporter and the same importer during this period, the question arises as to why the Customs Administration of Belgium first issues positive origin certificates and then, after conducting the subsequent verification procedure, sends negative results to the UIO!?

Inconsistent treatment in this manner has put importers in BiH (individuals and legal entities), as well as exporters of these goods from the EU, in an unequal position, significantly increased costs, expanded the workload of customs services, increased suspicion about the fulfillment of conditions for issuing proofs, as well as the application of preferential customs rates, about which the UIO has informed the customs administrations of the Netherlands and Belgium and the European Commission in Brussels, seeking concrete clarifications and uniform treatment. Unfortunately, the UIO has not received a concrete and clear answer to date.

Due to all of the above, the UIO has also approached the Ministry of Foreign Trade and Economic Relations of BiH with a request to consider the possibility of finding a solution regarding the issuance and subsequent control of issued proofs of origin of goods within the framework of the valid Stabilization and Association Agreements of BiH with the EU and the Pan-Euro-Mediterranean Convention on preferential rules of origin.

Such different treatment by EU countries, when it comes to the issuance and subsequent control of EUR-1 proof of origin forms, has an extremely negative impact on the business operations of taxpayers engaged in the import of motor vehicles into BiH, causes additional costs for citizens of BiH, and fuels various misinformation in the public.

It is the duty of the Indirect Taxation Authority, the Ministry of Foreign Trade and Economic Relations of BiH, and all other signatory institutions of the Stabilization and Association Agreement to ensure free trade and the application of valid regulations, which is currently not the case regarding the treatment by EU member states in the procedure of issuing and subsequently verifying proofs of origin for used passenger motor vehicles.