1. Customs Index with support of InMind research company EBA Customs INDEX Based on results of I/II quarters of 2012 Conducted by the EBA with support of InMind research company August 2012

2. Customs Index with support of InMind research company 2 Project Design The represented results of EBA Customs Index are based on data of expert survey conducted among EBA members. It represents evaluation of 5 factors characterizing customs procedures, being undergone by companies while interacting with customs. Calculation of the customs index is based on weighted means of each factor. In addition to experts’ evaluation of factors, the survey includes de facto assessments of each factor indices As additional information for customs procedures the survey also included the questions related to : Use of electronic declaration practice The level of corruption and bureaucracy in the customs authorities Changes due to the adoption of the new Customs Code Evaluation of procedures of customs clearance of one supply (25%) duration of customs clearance of one supply(12,5%) percentage of shipments selected for physical inspection (10%) percentage of cargo classification codes changes by customs authorities (2,5%) Evaluation of customs value identification procedure (25%) Volume of paperwork (25%) Number (5%) and duration (5%) of inspections Level of competence and professional expertise of customs officers(15%) Factors and weight coefficients EBA Customs Index Additional information

3. Customs Index with support of InMind research company 3 The report is structured by information regarding each factor and contains the following data: Measures of central tendencies of expert evaluations of each factor (mean and median) Distribution of expert evaluations of each factor by 5-point scale Mean values of indexes characterising each factor (in dynamics) The results are also segmented by company size: small/medium and large business Report Comment The results are based on data of the 5 th wave of expert survey regarding practical experience of companies dealing with customs. The expert evaluations of factors characterising customs procedures and the calculation of the integral index are conducted for the first time. Participants: 79 representatives of EBA companies-members and participants of EBA Customs Committee Timeframes: data collected in July-August 2012 and reflects the situation inthe 1 st half 2012 Conducted: The research is conducted by the EBA, analytical support: InMind research company

4. Customs Index with support of InMind research company 4 Overall results: Customs Index 1 st half 2012 CUSTOMS INDEX (integral index) 3,97 Customs clearance of one supply:4,41 - duration of customs clearance of one supply4,43 - percentage of shipments selected for physical inspection4,62 - percentage of cargo classification codes changes by customs authorities 3,50 Customs value4,38 Volume of paperwork2,95 Inspections 4,82 - number of inspections 6,87 - duration of inspections 2,77 Level of competence and professional expertise of customs officers 3,68 1 – minimum/negative index value 3 – average/neutral index value 5– maximum/positive index value Scale from 1 to 5, where:

5. Customs Index with support of InMind research company 5 1 st half 2010 2 nd half 2010 1 st half 2011 2 nd half 2011 1 st half 2012 Average number of days spent on the customs clearance of a shipment 2,42,02,52,82,52,5 Share of goods selected for physical inspections (%) 55%52%26%41%22% Cargo classification codes changes by customs authorities(%) N/A6%8%9% Customs value: overall number of customs authority refusals (%) 34%38%27%33%27% Average number of documents demanded for customs clearance of one supply 10,810,99,810,68,0 Average share of companies, which experienced inspections after customs clearance N/A22%40%23%3% Overall results: experience of companies

6. Customs Index with support of InMind research company 6 EBA Customs INDEX: Components

7. Customs Index with support of InMind research company Duration of customs clearance of one supply Average number of days, spent on customs clearance of one supply: from the moment of the border control start to the moment of customs clearance finish in the destination customs HALF Average number of hours, spent on authorization of one customs declaration: from the moment of application of customs declaration to a customs authority to the moment of its authorisation completed 6,45 hours Duration of customs clearance of one supply is NOT reasonable and NOT acceptable for our company Duration of customs clearance of one supply is completely reasonable and acceptable for our company Average Index of duration of customs clearance of one supply Total N=63 Small/medium business N=31 Big business N=32 Scale from 1 to 5 Negative value Positive value

8. Customs Index with support of InMind research company Share of goods selected for physical inspections Average share of goods chosen for physical inspection Comparing to total number of supplies in %: number of physical inspections / total number of supplies* 100% The share of goods chosen for physical inspection is NOT reasonable regarding the total number of supplies in our company The share of goods chosen for physical inspection is completely reasonable regarding the total number of supplies in our company Average Index of reasonability of share of goods chosen for physical inspection Total N=61 Small/medium business N=28 Big business N=33 Scale from 1 to 5 Negative value Positive value

9. Customs Index with support of InMind research company Share of goods, the classification code of which has been changed Average share of goods, classification code of which has been changed by customs authorities, comparing to the total number of goods (%): number of goods, classification code of which has been changed / total number of goods * 100 HALF In majority of cases I DO NOT agree with the customs classification conclusion In majority of cases I agree with the customs classification conclusion Average Index of customs classification conclusion Total N=54 Small/medium business N=25 Big business N=29 Scale from 1 to 5 Negative value Positive value

10. Customs Index with support of InMind research company Customs value Average number of customs authority refusals to apply the first method for identification of the customs value (i.e. by agreed value, share of total number of custom declarations) HALF Occurrences of unreasonable refusals to to use 1st first customs valuation method are systematic (more than 4 times a month) There are no occurrences of unreasonable refusals to use 1 st method, or such occurrences are sporadic Average Index of reasonability of refusals to use 1 st first customs valuation method Total N=63 Small/medium business N=28 Big business N=35 Did you receive any written explanations of the reasons for refusal to apply the first method? Yes, 31% Has it ever happened that custom authorities invoked using indicative prices without application of methods 2-5? Yes, 60% Scale from 1 to 5 Negative value Positive value

11. Customs Index with support of InMind research company Volume of paperwork Average number of documents, application of which to customs authority and other inspections was demanded for customs clearance of one supply: (sanitary, phytosanitary, epidemiological, etc. ) HALF The number of documents is large and oppressive for business-processes The number of documents is reasonable and NOToppressive for business-processes Average Index of paperwork impact on company business- processes Total N=65 Small/medium business N=30 Big business N=35 Scale from 1 to 5 Negative value Positive value

12. Customs Index with support of InMind research company Inspections Average share of companies, which have experienced inspections after customs clearance is completed HALF Average Index of influence of inspections on regular business activity of a company Total N=72 Small/medium business N=36 Big business N=36 Average Index of duration of inspections Total N=13 Small/medium business N=6 Big business N=7 Average duration of customs inspection: number of days 30 days Scale from 1 to 5

13. Customs Index with support of InMind research company Level of competence and professional expertise of customs officers Professional level of customs authorities is mostly low Customs authorities mainly own high level of professionalism Average Index of professional level of customs authorities Total N=68 Small/medium business N=35 Big business N=33 Scale from 1 to 5 Negative value Positive value

14. Customs Index with support of InMind research company 14 EBA Customs INDEX: Additional results

15. Customs Index with support of InMind research company Electronic declaration Does your company use electronic customs declarations/electronic pre-alert declarations in its business activity? Yes No, but we plan to No, and we don’t plan to Average share of pre-alert declarations, which are applied electronically 78% Average share of customs declarations, which are applied electronically 34% Electronic declaring doesn’t lead to simplification and acceleration of the cargo customs clearance process Electronic declaring really simplifies and accelerates the cargo customs clearance process

16. Customs Index with support of InMind research company Corruption level From your point of view, during the last 6 months, corruption in customs authorities:

17. Customs Index with support of InMind research company The New Tax Code Is adoption of new edition of the Tax Code a positive event for your company?

18. Customs Index with support of InMind research company Changes due to the adoption of the new Customs Code Customs clearance outside the place of registration In order of loss of usage frequency: Dispatch of goods against financial guarantees when correcting customs value Confirmation of customs value Electronic declaration

19. Customs Index with support of InMind research company +38 044 496 06 01 office@eba.com.ua www.eba.com.ua