## Preface and Mission ## Source details **Canonical URL:** [Preface and Mission](https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025079-source-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/tar/2025/english/tarea2025079-source-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/tar/2025/english/tarea2025079-source-pdf.pdf.json) --- ### Mission and purpose - IMF Fiscal Affairs Department (FAD) mission in Vienna, Austria, from February 17 to 21, 2025, to assist the Ukrainian Ministry of Finance (MoF) and the State Customs Service (SCS) in implementing the National Revenue Strategy (NRS) of Ukraine. - Mission objectives included review of customs components of NRS and advice on: - change management; - use of advance cargo information, random selection, and centers of excellence in risk management; - information technology development in SCS. - Discussed plan for FAD capacity development (CD) on customs administration. ### Team and interlocutors - Mission led by Mr. Tadatsugu Matsudaira (FAD); team included Mr. Mohammad Ehteshamul Hoque (FAD), Ms. Barbara Hebert, and Mr. Tadashi Yasui (FAD experts). - Ukrainian delegation led by Mr. Oleksandr Moskalenko (Director of Customs Policy Department, MoF) and Mr. Vladyslav Suvorov (Deputy Head of the SCS). - Key SCS participants: Ms. Alina Brendak; Ms. Valentyna Perepelytsia; Ms. Tetiana Rudolska; Ms. Iuliia Soldatova. - Hybrid/virtual participants included Mr. Oleh Nikolaichuk, Mr. Oleksandr Stoiev, EU4PFM representatives Mr. Vytenis Ališauskas, Ms Kateryna Danilchanka, Mr. Dragan Jeremic, and World Customs Organization staff Andrea Hampton. ### Output - Note summarizes mission observations and recommendations; detailed work in separate annexes. --- ### Executive Summary — Key Macro and Revenue Outcomes (2024) - Imports grew approximately 11 percent in 2024 compared to the previous year. - Customs revenue grew by 28.7 percent in 2024. - Customs collections accounted for approximately 10.8 percent of GDP and 38.4 percent of total tax revenue. - The foregone revenue in 2024 was equivalent to 39.0 percent of customs revenue. - Customs revenue composition in 2024 (percent): - VAT on imports: 78.8 - Excise on imports: 13.0 - Tariffs: 8.0 ### Drivers of performance - Reforms in trade-related tax policy, customs administration, procedures, and compliance management. - Government measures: temporary exemption from VAT on key imports and suspension of certain tariffs on critical goods until the end of martial law. - SCS follows the National Revenue Strategy of Ukraine for 2024-2030 (NRS) and adopted SCS Reform Plan 2024-2030 (RP30) with KPIs; SCS NRS Steering Committee (SC) and reporting mechanism in use. ### Implementation progress and gaps - Firm progress in first year of NRS implementation; many KPIs adopted but predominantly technical and supply-side. - Need for high-level and outcome-oriented KPIs to better serve senior decision makers. - Customs law amendments modernizing the customs legal framework were submitted to Parliament. - Several IT systems were created/updated. --- ### Recommendations (High-Level and Timelines) ### Customs implementation of NRS - 2.1 Develop a set of high-level and outcome-oriented KPIs to track the implementation of the NRS as well as to undertake revenue trend analyses. - Q2 2025 - 2.2 Consider carefully all key aspects of a formal rotation policy of the SCS officials and develop a multifunctional mechanism of support, including funding, and flexibility to meet the SCS’s needs in this area going forth. - Q2 2026 - 2.3 Rationalize the AEO program in terms of participation, requirements and conformity assessment. - Q4 2025 ### Change management and stakeholder engagement - 3.1 Develop and implement an internal and external engagement strategy to address the anticipated resistance to the reform agenda. - Q3 2025 - 3.2 Update the Communications Strategy to develop and implement comprehensive approaches for targeted audiences with tailored messaging. - Q4 2025 - 3.3 Identify, in the Communications Strategy, which activities lend themselves to communication and information approaches, and which ones would benefit from consultation and feedback. - Q4 2025 ### Selected issues in customs risk management - 4.1 Ensure operational procedures are established to deal with high-risk cargo identified through advance cargo information. - Q4 2026 - 4.2 Ensure the planned roll-out of Automated Customs Clearance System (ACCS) “Center” according to schedule and further development of the unit for customs competencies with automated allocation of declarations. - Q4 2025 - 4.3 Ensure the automated system sends a clear message mentioning the reasons and other details for physical examinations. - Q2 2026 - 4.4 Consider the use of artificial intelligence and machine learning in strengthening selectivity-based targeting practices. - Q1 2027 ### IT Development and MoF Digital Transformation Program - 5.1 Compile a list of revenue related IT systems, including customs and tax administration data exchange, special regimes, and special duty exemptions in a group, and include this group in the grand design of SCS IT resources. - Q1 2025 - 5.2 Improve the IT development process by enhancing teamwork and project management expertise with possible internal and external support. - Q3 2025 - 5.3 Support drafting the MoF DTP by sharing SCS’s information and lessons learned, ensuring alignment with SCS IT strategy, and ensuring DTP improves on-going SCS IT projects’ planning, development, and implementation. - Q1 2025 --- ### I. Background and Context - Ukraine demonstrated an import growth of approximately 11 percent in 2024 despite the war. - Major imports: energy products (natural gas and oil), machinery, agricultural equipment, pharmaceuticals, and food products. - Primary import sources: EU countries (notably Poland, Germany, and Italy), the United States, Canada, and China. - Customs revenue grew by 28.7 percent in 2024, outpacing import growth. - Customs collections represented approximately 10.8 percent of GDP and 38.4 percent of total tax revenue. - The foregone revenue in 2024 was equivalent to 39.0 percent of customs revenue. - SCS, following the NRS, introduced streamlined customs procedures with risk-based targeting, enhanced IT, and a strengthened legal framework. --- ### II. Customs Implementation of the NRS — Findings and Advice ### Implementation status and legal framework - RP30 progress: SCS reports 27 percent (42 of 156 measures) of planned activities completed. - September 2024: Parliament passed “the law on Customs Reform” (registered under number 6490-d, and Law Number 3977-IX), referred to as "the new law." - Key provisions include: transparent recruitment for Head of SCS with international panel assistance; independence of Head of SCS with due process for removal; anti-corruption measures; re-certification of customs officials; determination of minimum salary (Base salary calculated as a multiple of the minimum wage). - Steering Committee (SC) established; meets quarterly; initial KPIs approved in October 2024 and under review to develop selected high-level Strategic KPIs (likely up to ten), some to be published. ### KPIs — guiding principles and design - KPIs should be clear, accurate, relevant, and measurable. - KPIs should be representative of workstreams and avoid overlap to prevent dilution of attention, reduced clarity, and complicated decision-making. - Hierarchical structure: lower-hierarchy KPIs are supply-side, output-oriented; higher-hierarchy KPIs should be few and outcome-oriented. - Baseline performance information is important for comparison. - Box 1 example: ratio ‘P’ indicates overall customs revenue performance benchmarked to annual growth of imports; defense-related imports should be removed from both imports and customs revenue. ### Anti-corruption and staff rotation policy - New law introduces HR conditions: professional certifications, integrity checks (polygraph tests), staff rotation, creation of reserve personnel, motivation and social guarantee schemes. - Body cameras pilot for anti-corruption purposes. - Rotation policy purposes may include addressing corruption, operational capacity, enhancing skills and retention. - Design considerations: - Clarify career expectations and consult staff representatives. - Front-line rotations sometimes between 6 and 24 months; specialized positions may require longer tenures (example: three years minimum). - Human resources database/management system critical for staff profiling, assignments, performance, training, and career aspirations. - Box 2 implementation tips: apply initially to new recruits; specify rotation in job offers; consider regional rotation area (example: within 200 kms.); provide support mechanisms for remote deployments; allocate funds for implementation; allow compassionate exceptions. ### Authorized Economic Operator (AEO) program - AEO status: 77 companies had obtained AEO status by end-2024 (compared to 23 in 2023 and two in 2020). - Most Ukrainian AEOs are certified for Customs Compliance (AEO-C); only three companies meet criteria for both compliance and security (AEO-F). - SCS needs to clarify medium-term AEO goal: pursue MRAs by tightening criteria and conformity assessment, or expand participation by relaxing conditions and promoting benefits. - Consultative mechanism dedicated to AEOs is recommended regardless of direction. --- ### Change Management and Stakeholder Engagement ### Findings - SCS has detailed planning for NRS, quarterly SC monitoring/reporting, internal monthly monitoring, and many outreach activities. - No structured change management plan yet; SCS intends to develop a formal documented change management plan. - Digitalization objectives: improved risk management, increased automation, reduced direct interface between clients and customs officers. - SCS risk register (approved late 2024) identified stakeholder resistance impact as high. - Public perception: 54 percent of survey participants believe transparency has improved. - SCS holds virtual meetings with heads of its 26 administrative regions. ### Advice and implementation elements - Reform management should be guided by one strategic document under MoF and the NRS; consolidate parallel initiatives into NRS. - Strategic roadmap should include detailed operational/project plans, stakeholder management strategy, and communications and consultation strategy. - Change viewed through leadership, business readiness, and communications/consultation: - Leadership: strong visible leadership; SC senior leadership responsible for execution, resource allocation, support, and obstacle resolution; training/coaching for managers may be required. - Stakeholder engagement: internal briefings, engagement with employee representatives; external committees or new bodies meeting quarterly or semi-annually. - Communications: update to reflect NRS, identify audiences and tailored messaging, sequence communications (internal informed no later than external), distinguish information vs consultation events, train communicators. - Institutionalization: anchor new behaviors in organizational culture and balance focus on systems/processes and people’s behavior/values. ### Change management lessons and short-term wins - Short-term visible improvements facilitate acceptance and institutionalization; ensure improvements are sustainable and recognize contributors. - Key steps to address resistance: focus on people issues, equip managers with tools, ensure consistent messaging. - Box 3 Lessons Learned highlights clarity of vision, champions, extensive communication, coalition building, short-term wins, embedding changes in culture, continuous measurement, recognition and reward, and investment in learning and technology. --- ### Selected Issues in Customs Risk Management ### Systems and coverage - ACCS with ARMS processes selectivity for 100 percent of cargo imported to Ukraine. - Currently, 99 percent of goods declarations are filed electronically in ACCS. - Accordingly, 100 percent of cargo imported to Ukraine was processed by ARMS. - ARMS randomly selects no-risk cargo for documentary examination or physical inspection for verification. ### Advance Cargo Information (ACI) — practices and considerations - Japan Customs ACI by mode: - Maritime containers: Master Bill of Lading (B/L) and House B/L submitted loading by shipping companies and Non-Vessel Operating Common Carriers (NVOCC). - Air cargo and express cargo: Air Waybill (AWB) and House Manifest three hours before arrival. - Postal parcels: Electronic Advance Data (EAD) to be filed before arrival. - Japan Customs can order ‘no-load’ as last resort; high-risk cargo generally allowed to discharge then processed under goods declaration selectivity. - Postal parcels identified as high risk are screened by X-ray scanners with image analysis supported by AI. - SCS similarities and challenges with Japan: targeting methodology and IT system similarity; challenges improving ACI quality and effective AI use; accurate ACI may require 24/7 operations and raises operational cost. - Customs administrations may interrupt cargo at multiple times based on ACI risk management: (i) before ship departs exporting country, (ii) before ship discharges in importing country, (iii) when cargo is discharged, (iv) during goods declaration clearance process. Maritime operators usually prefer option (i). ### Centers of Excellence and targeting - Japan’s National Intelligence and Targeting Center (NITC) classifies cargo into 10 clusters from low to high risk and determines control actions. - SCS operates targeting units and targeting centers for information collection, risk identification, coordination of procedures, and countermeasures but faces staffing challenges due to wartime constraints. - Customs Competence Division (CCD) pilot: - CCD officers process declarations transferred by customs clearance division via ARMS; returns results via ARMS. - Pilot at ten western regional customs offices covering specific goods (used forklifts; other loaders; bulldozers; buses designed to transport 10 or more people). - Staffing constraint: five employees currently filling roles originally intended for 20 in CCD staffing table. - CCD can reach full functionality with ACCS “Center” centralization. ### Recommendations (customs risk management) - 4.1 Ensure operational procedures are established to deal with high-risk cargo identified through advance cargo information. - 4.2 Ensure the planned roll-out of ACCS “Center” according to schedule and further develop customs competencies unit with automated allocation of declarations. - 4.3 Ensure the automated system sends a clear message mentioning the reasons and other details for physical examinations. - 4.4 Consider use of artificial intelligence and machine learning to strengthen selectivity-based targeting practices. --- ### Information Technology Development and MoF Digital Transformation Program (DTP) ### Findings - Customs IT Strategy approved as MoF Order No. 63 on September 2, 2024. - Title: “Long term national strategic plan for digital development, digital transformation and digitalization of the State Customs Service of Ukraine and its territorial units based on the EU eCustoms Multi Annual Strategic Plan (MASP-C)”. - IT Strategy to be refined by end of 2025 in view of EU IT trends and a new Customs Code of Ukraine. - 2024 SCS achievements: - Launch of ACCS “Center” with Border Check Point Log. - Customs decision system. - EU compatible transit system (New Computerized Transit System (NCTS) phase V). - Cyber help desk. - Automated release of goods. - Application of AI to support risk analysis and targeting. - Automated exchange of pre-arrival goods information with certain countries. - Single Window covering permits/certificates of 12 ministries/agencies. - SCS obtained IT system certificates from the State Service of Special Communications and Information Protection (SSSCIP). - Centralization: decentralized ACCS “Inspector” being replaced by centralized ACCS “Center” for remote processing and workload equalization. - IT development options: in-house, outsourcing, or hybrid; stakeholders prefer outsourcing or hybrid though historical systems were mostly in-house. - MoF DTP aims to consolidate IT resources and services of STS and SCS via: - consolidation of IT infrastructure/human resources under ‘Open Public Finance’ (OPF) using clouding technology; - development of unified data warehouse aggregating STS, SCS, treasury, and other public finance data for compliance risk management, performance management, fiscal analytics, business intelligence, and transparency; - modernization of core business systems across fiscal institutions. - SCS supports DTP concept and seeks compatibility between Customs IT Strategy and DTP; clarity needed on roles in IT design, development, and use. - Examples of SCS IT advancement: 99 percent of goods declarations submitted electronically; 100 percent screened by risk-based selectivity. ### Advice and IT governance - SAIS should capture customs IT landscape and include revenue collection and revenue leakage-related systems: - revenue accounting and reporting information; - SCS and STS data exchange platform; - special regime management (customs warehousing, bonded manufacturer/inward processing, temporary admission); - special purpose exemption functionality (conditional exemption such as end-use) requiring inventory log, reconciliation, and tracing. - Documentation importance: technical requirements, terms of reference, technical specifications, acceptance test reports, etc., required regardless of development option. - In-house risks: possible documentation shortfalls; mitigate by hiring temporary IT experts for business analysis and documentation. - Outsourcing risks: outcomes depend on contract quality and alignment; require strong contract design/management and conformity assessment capacity in SCS. - DTP alignment: DTP should leverage ongoing SCS IT developments and SCS should champion change management and co-ownership to safeguard satisfaction in IT design, development, and use. - Potential need to amend the Customs Code of Ukraine for proper administration of existing customs IT systems. ### IT systems inventory and integration recommendations - 5.1 Compile a list of revenue related IT systems, including customs and tax administration data exchange, special regimes, and special duty exemptions; include this group in SCS IT grand design. - 5.2 Improve IT development process by enhancing teamwork and project management expertise with internal and external support. - 5.3 Support MoF DTP drafting by sharing SCS lessons learned and ensuring alignment to improve on-going SCS IT project planning, development, and implementation. --- ### Capacity Development, Progress Tracking, and Development Partners - Progress on earlier recommendations: 17 of 22 recommendations of earlier FAD missions fully achieved; 4 partially achieved; 1 not yet started. - EU4PFM support to SCS since 2019, current phase ends in 2026; focus areas include customs law alignment with EU Common Customs Code, IT development along MASP-C, HR management/competence model, anti-corruption, and communication policy. - WCO (Norwegian trust fund) supported anti-corruption initiatives including an independent survey. - FAD to maintain communication with development partners to maximize synergies for capacity development. - Future CD plan and HQ-led mission: timing, venue and scope of next FAD customs administration HQ-led CD mission to be determined considering appointment of new Head of Customs (expected in June 2025). - Requested CD areas and timing notes: - Strategic KPIs — support through desk assessment or video conference [timing in relation to next SCS NRS Steering Committee (expected in May 2025)] - Customs rotation policy [timing to be determined] - Internal control/internal audit [timing to be determined] --- *IMF Technical Assistance Report — Preface and selected sections (tarea2025079-source-pdf)* ### Preface ................................................................................................................ ### Preface ### Mission and purpose - An IMF Fiscal Affairs Department (FAD) mission took place in Vienna, Austria, from February 17 to 21, 2025, aimed at assisting the Ukrainian Ministry of Finance (MoF) and the State Customs Service (SCS) in implementing the National Revenue Strategy (NRS) of Ukraine. - The mission’s purpose was to review the implementation of customs components of NRS and, on request, provide advice on: - change management; - use of advance cargo information, random selection, and centers of excellence in risk management; - information technology development in SCS. - The mission discussed a plan for FAD capacity development (CD) on customs administration. ### Team and interlocutors - Mission led by Mr. Tadatsugu Matsudaira (FAD), comprising Mr. Mohammad Ehteshamul Hoque (FAD), Ms. Barbara Hebert, and Mr. Tadashi Yasui (FAD experts). - Ukrainian delegation led by Mr. Oleksandr Moskalenko, Director of Customs Policy Department, MoF, and Mr. Vladyslav Suvorov, Deputy Head of the SCS. - Key SCS participants included: - Ms. Alina Brendak, Director of Department for Digital Development, Digital Transformations and Digitization; - Ms. Valentyna Perepelytsia, Head of the Division, Customs Risks Profiling Department; - Ms. Tetiana Rudolska, Chief State Inspector of the Information and Analytical Support Unit; - Ms. Iuliia Soldatova, National mid-term expert on customs legislation and customs business processes. - Hybrid session on IT Development included Mr. Oleh Nikolaichuk, Deputy Head of SCS on digital development, digital transformations, and digitalization, and Mr. Oleksandr Stoiev, Deputy Director of the Department for digital development (joined remotely from Kiev). - Virtual meetings held with representatives from the European Union (EU) Public Finance Management Support Programme for Ukraine (EU4PFM): Mr. Vytenis Ališauskas, Ms Kateryna Danilchanka and Mr. Dragan Jeremic; and the World Customs Organization staff, Andrea Hampton. ### Output - This note summarizes the mission team's observations and recommendations, with detailed outlines of the work provided in separate annexes. --- ### Executive Summary ### Key macro and revenue outcomes (2024) - Imports grew approximately 11 percent in 2024 compared to the previous year. - Customs revenue grew by 28.7 percent in 2024. - Customs collections accounted for approximately 10.8 percent of GDP and 38.4 percent of total tax revenue. - The foregone revenue in 2024 was equivalent to 39.0 percent of customs revenue. - Customs revenue composition in 2024 (percent): - VAT on imports: 78.8 - Excise on imports: 13.0 - Tariffs: 8.0 ### Drivers of performance - Combination of reforms in trade-related tax policy, customs administration, procedures, and compliance management. - Government measures to promote economic recovery included temporary exemption from VAT on key imports and suspension of certain tariffs on critical goods until the end of martial law. - SCS follows the National Revenue Strategy of Ukraine for 2024-2030 (NRS) and adopted the SCS Reform Plan 2024-2030 (RP30) with KPIs; SCS NRS Steering Committee (SC) and reporting mechanism developed and in use. ### Implementation progress and gaps - Firm progress in first year of NRS implementation; many KPIs adopted but predominantly technical and supply-side. - Need for a set of high-level and outcome-oriented KPIs to better serve senior decision makers. - Customs law amendments modernizing the customs legal framework were submitted to Parliament. - Several IT systems were created/updated. ### Specific operational and programmatic issues discussed - Rotation policy: SCS encouraged to pursue first formal rotation policy to address anti-corruption and re-assign personnel. - Authorized Economic Operators (AEO) program: SCS needs to decide whether to increase AEO numbers under current program or to pursue Mutual Recognition Agreements (MRA) by tightening criteria and conformity assessment; consultative mechanism for AEOs is needed. - Change management: SCS identified stakeholder resistance as a high risk; recommended development of stakeholder engagement strategy (internal and external) and update of Communications Strategy with targeted messaging and consultation approaches. - Risk management and Advance Cargo Information (ACI): Improvement in automated risk management and targeting is important; SCS has learned from international experience (including Japan) for institutional risk management through a national targeting center and use of ACI in selectivity. - IT and Digital Transformation Program (DTP): SCS implemented Customs IT Strategy with EU support; MoF launched a DTP for consolidation of IT infrastructure, unified data warehouse, and modernization of core business systems; SCS conceptually supports MoF’s DTP and provides information on IT resources and projects. --- ### Recommendations ### Customs implementation of NRS - 2.1 Develop a set of high-level and outcome-oriented KPIs to track the implementation of the NRS as well as to undertake revenue trend analyses. - Q2 2025 - 2.2 Consider carefully all key aspects of a formal rotation policy of the SCS officials and develop a multifunctional mechanism of support, including funding, and flexibility to meet the SCS’s needs in this area going forth. - Q2 2026 - 2.3 Rationalize the AEO program in terms of participation, requirements and conformity assessment. - Q4 2025 ### Change management and stakeholder engagement - 3.1 Develop and implement an internal and external engagement strategy to address the anticipated resistance to the reform agenda. - Q3 2025 - 3.2 Update the Communications Strategy to develop and implement comprehensive approaches for targeted audiences with tailored messaging. - Q4 2025 - 3.3 Identify, in the Communications Strategy, which activities lend themselves to communication and information approaches, and which ones would benefit from consultation and feedback. - Q4 2025 ### Selected issues in customs risk management - 4.1 Ensure operational procedures are established to deal with high-risk cargo identified through advance cargo information. - Q4 2026 - 4.2 Ensure the planned roll-out of Automated Customs Clearance System (ACCS) “Center” according to schedule and further development of the unit for customs competencies with automated allocation of declarations. - Q4 2025 - 4.3 Ensure the automated system sends a clear message mentioning the reasons and other details for physical examinations. - Q2 2026 - 4.4 Consider the use of artificial intelligence and machine learning in strengthening selectivity-based targeting practices. - Q1 2027 ### IT Development and MoF Digital Transformation Program - 5.1 Compile a list of revenue related IT systems, including customs and tax administration data exchange, special regimes, and special duty exemptions in a group, and include this group in the grand design of SCS IT resources. - Q1 2025 - 5.2 Improve the IT development process by enhancing teamwork and project management expertise with possible internal and external support. - Q3 2025 - 5.3 Support drafting the MoF DTP by sharing SCS’s information and lessons learned, ensuring alignment with SCS IT strategy, and ensuring DTP improves on-going SCS IT projects’ planning, development, and implementation. - Q1 2025 --- ### I. Background - Despite the war, Ukraine demonstrated an import growth of approximately 11 percent in 2024 compared to the previous year, reflecting increased demand for essential goods. - Major imports included energy products (such as natural gas and oil), machinery, agricultural equipment, pharmaceuticals, and food products. - Primary import sources included EU countries (notably Poland, Germany, and Italy), the United States, Canada, and China. - Customs revenue grew by 28.7 percent in 2024, outpacing import growth. - Customs collections represented approximately 10.8 percent of GDP and 38.4 percent of total tax revenue. - The foregone revenue in 2024 was equivalent to 39.0 percent of customs revenue. - SCS, following the NRS, introduced streamlined customs procedures with risk-based targeting, enhanced IT, and a strengthened legal framework. --- ### II. Customs Implementation of the NRS ### A. Findings - Implementation of the NRS through the SCS Reform Plan 2024-2030 (RP30) has made firm progress in its first year; SCS reports 27 percent (42 of 156 measures) of the planned activities have been completed. - Achievements primarily include development of draft legislation and regulations that lay groundwork for more challenging measures. - In September 2024, Parliament passed “the law on Customs Reform” (registered under number 6490-d, and Law Number 3977-IX), referred to as "the new law." - Next major challenge: ensure the new law is fully compliant with the EU’s Union Customs Code (UCC) and regulations. - Other important provisions in the new law include: - Transparent process for recruitment of the Head of SCS with the help of an international panel of experts; - Independence of the Head of SCS from political pressure and removal would only be possible after due process; - Anti-corruption measures; - Re-certification of customs officials; - Determination of the minimum salary of customs staff (Base salary is calculated as a multiple of the minimum wage). - A Steering Committee (SC), chaired by the (acting) Head of the SCS, was established to monitor, evaluate, and guide NRS implementation; SC includes Reform Leaders and meets quarterly. - KPIs: - Initial list of KPIs for implementation of NRS measures approved in October 2024 and subject to ongoing review. - SCS developed primary results for 2024 in a short period and, following FAD recommendation, is reviewing the list aiming to develop selected high-level and outcome-oriented KPIs (Strategic KPIs), likely up to ten, some of which will be published. - Anti-corruption measures in NRS: - New law introduces human resources conditions such as professional certifications, integrity checks through polygraph tests, staff rotation, creation of reserve personnel, and motivation and social guarantee schemes. - Use of body cameras during customs formalities is being pilot tested for multiple purposes, including anti-corruption. - AEO program: - By end-2024, 77 companies had obtained AEO status (compared to 23 in 2023 and two in 2020). - Most Ukrainian AEOs are certified for Customs Compliance (AEO-C); only three companies meet criteria for both compliance and security (AEO-F). - SCS aims to increase AEO numbers and enhance the program to facilitate future Mutual Recognition Agreements (MRA) with foreign countries. ### B. Advice - KPIs: SCS is encouraged to continue reviewing and improving KPIs with a focus on developing high-level outcome-oriented Strategic KPIs (likely up to ten) to better inform senior decision makers and to publish selected indicators. - Rotation policy: SCS encouraged to develop its first formal rotation policy to address anti-corruption risks and to facilitate re-assignment of qualified personnel to areas of need. - AEO program: SCS advised to decide between expanding AEO participation under current criteria or pursuing MRAs by making criteria and conformity assessment more stringent; regardless of choice, establish a consultative mechanism dedicated to AEOs. --- *Italic: IMF Technical Assistance Report — Preface and selected sections (tarea2025079-source-pdf)* ### 10. In the KPIs review, guiding principles are needed. The KPIs should be clear, accurate, ### 10. In the KPIs review, guiding principles are needed. The KPIs should be clear, accurate, ### KPIs: guiding principles and design - KPIs should be clear, accurate, relevant, and measurable. - KPIs should be representative of the workstreams and avoid overlap (e.g., similar KPIs) to prevent information overload that: - dilutes attention and resources; - reduces clarity; and - complicates decision-making processes. - Newer, well-chosen KPIs will help maintain focus on key objectives and ensure efforts are aligned with strategic goals. - Baseline performance information is important and should be used for comparison whenever possible. - KPIs have a hierarchical structure aligned with strategic objectives and actions: - Lower-hierarchy KPIs tend to be supply-side, output-oriented (example: the number of post clearance audits conducted). - Higher-hierarchy KPIs are for higher decision makers, should be few, and outcome-oriented. - The example in Box 1 indicates the sensitivity of outcome KPIs to external changes (trade policy, taxation policy, logistics availability, disaster, and other distractions within a year). - Appendix A: Examples of Customs Administration Key Performance Indicators (referenced in the source). Box 1. An example: outcome-oriented KPIs - The ratio ‘P’ indicates overall customs revenue performance (including collection through post clearance audit (PCA), penalties). - The benchmark is the annual growth of imports (customs revenue base). - Defense-related imports should be removed from both imports and customs revenue. - The baseline depends on the country’s trade policy, trade pattern, and compliance level. It may start with 100 percent and be tested. - (Source. FAD mission team) ### Anti-corruption and staff rotation policy - The SCS is seeking a more robust and formal rotation policy and sought advice from the FAD mission team. - Purpose(s) of rotation policy may include: - address concerns about corruption and integrity; - address operational capacity at key border crossings or offices; - enhance skills and retention; or - a combination of the above. - Situations where staff rotation may be effective include: - Assignment of good managers/officers to other sites to improve performance of lower-performing sites; - Mitigation of the perception or occurrence that officers staying in one location too long may participate in inappropriate conduct; - Standardization of operational procedures across SCS so traders have confidence that procedures are consistent across all border crossings. - Rotation policy should be part of a comprehensive anti-corruption suite that includes: - an up-to-date Code of Conduct and Ethics, understood by all and enforced via a transparent disciplinary process; - performance management to set clear expectations and hold staff accountable; and - capable and confident supervisors (potentially requiring training or coaching). Key operational considerations for rotation design: - Clarify career expectations for officers to facilitate rollout of assignments and relocations and consider communication/consultation with staff representatives. - Adapt rotation policy to different positions: - Front-line customs officers at border crossings are sometimes rotated between 6 and 24 months. - Specialized positions requiring extended periods to develop expertise (post-clearance auditors, intelligence officers, risk assessment officers, customs investigators) should have longer tenures; rotating these too early thwarts investment. - Human resources database/management system is critical: - Repository should contain staff profile data, assignments, performance assessments, training completed, demonstrated competencies, and career aspirations to enable optimal scheduling and allocation. Box 2. Tips for Designing and Implementing a Staff Rotation Policy - Apply initially to new recruits; then roll principles out to other officers. - Ensure job offers (terms and conditions of employment) clearly specify that rotation is part of officers’ future. - Ensure relevant legal or implicit employer obligations support the rotation policy (job descriptions, employment contracts, institutional agreements with staff representatives). - Have generic job descriptions for similar positions so deployments do not constitute a change in duties. - Consider a regional rotation area or specified distance (example: within 200 kms.) for deployments. - Provide support mechanisms for officers assigned to remote/harsh locations (family housing, educational facilities, medical services, difference in cost of living). - Allocate necessary funds to implement support mechanisms and management tools (HR management system). - Upon recruiting, specify officers will not be deployed to the geographical area where they were brought up or live to mitigate perception of preferential treatment. - Adopt flexibility for compassionate circumstances (health, disability, family educational requirements). - Apply rotation prudently to positions requiring extended periods to develop expertise. If applied to specialized streams, consider a longer period (example: three years minimum). - (Source: FAD mission team) - SCS is enhancing internal control and internal audit systems as part of anti-corruption initiatives and has requested capacity building assistance from the FAD. ### Authorized Economic Operator (AEO) program - The SCS needs to clarify the medium-term goal for the AEO program: either - improve the AEO program to facilitate negotiating mutual recognition arrangements with foreign countries, or - increase the number of AEOs. - Trade-offs: - Enhancing conditions and conformity assessments could be required to meet partners’ standards; this might disincentivize new applicants and cause some current AEOs to withdraw. - Increasing the number of AEOs could involve promotion measures such as improving benefits and relaxing conditions and conformity assessments. - In many countries a dedicated rapport with customs and other trade-related government agencies is regarded as an AEO benefit. - Regardless of choice, creation of a consultative mechanism dedicated to AEOs is advisable. - Footnote example: an AEO must create a mechanism to ensure compliance in its business partners and its monitoring. ### Recommendations (explicit) - 2.1 Develop a set of high-level and outcome-oriented KPIs to track the implementation of the NRS as well as to undertake revenue trend analyses. - 2.2 Carefully consider all key aspects of a formal rotation policy of the SCS officials and develop a multifunctional mechanism of support including funding and flexibility to meet the SCS’s needs in this area going forth. - 2.3 Rationalize the AEO program in terms of participation, requirements and conformity assessment. ### Change Management and Stakeholder Engagement — Findings - SCS has detailed planning to support the NRS, built a quarterly monitoring and reporting structure to the SC and the MoF, has internal monthly monitoring, and conducts many outreach activities with stakeholder groups. - SCS does not have a structured change management plan to institutionalize reforms into the organization’s business and culture; SCS intends to develop a more formal and documented change management plan. - SCS aims for maximum digitalization in Ukraine, including improvements in risk management, increased automation for better workload management, and reduced direct interface between clients and customs officers — expected to improve efficiency and reduce opportunities for corruption. - Resistance to change is anticipated; SCS’ risk register (approved in late 2024) identified potential impact of stakeholder resistance as high. - Public perception is fundamental: the public wants customs to reform before authorizing new powers (e.g., for law enforcement). Increasing public trust is a prerequisite for progress. - Independent survey finding: 54 percent of participants believe transparency has improved. - SCS holds virtual meetings with the heads of its 26 administrative regions to communicate information and receive feedback. ### Change Management and Stakeholder Engagement — Advice and implementation elements - Reform management should be guided by one strategic document under the ministry responsible for customs administration (MoF) and the NRS; parallel customs reform initiatives should be avoided and consolidated into the NRS. - Strategic roadmap should be supported by: - detailed operational and project plans; - a stakeholder management strategy; and - a communications and consultation strategy. - View change through three key elements: leadership, business readiness, and communications and consultation. - Leadership: - Strong and visible leadership is critical to manage, promote, and communicate the reform agenda. - Senior leadership of the SC is responsible for execution, resource allocation, securing higher-level and horizontal support, and addressing obstacles. - Leaders at all levels must understand and be engaged in the vision; additional training/coaching may be required for managers and supervisors. - Stakeholder engagement: - Internal: regular briefings to staff to provide progress updates and opportunities for clarification; include mechanisms to engage with employee representatives (staff associations or labor unions). - External: use existing committee structures or create new ones; meet regularly (quarterly or semi-annually depending on NRS implementation) to discuss progress and impacts for clients and other government entities (example: STS). - Discuss both broad direction of the NRS and detailed initiatives to ensure stakeholder understanding of long-term direction. - Communications strategy: - Update to reflect the NRS; identify audiences, prepare tailored messaging, use different tools (in person, video conferencing, website publications, social media). - Plan sequencing and timing of communications (internal audiences should be informed of changes at least no later than external audiences). - Distinguish between events to transmit information and those intended for consultation/input; set clear expectations in advance about management’s goal for each event. - Training may be required for new or inexperienced communicators (e.g., managers). - The communications strategy will be updated in 2025 with support of the EU Public Finance Management Support Programme for Ukraine (EU4PFM). - Institutionalization of reform: - Anchor new approaches and ways of doing business in organizational culture by articulating connection between expected new behaviors and organizational success. - Balance focus between “what” (systems, processes) and “how” (people’s behavior, culture, and values), with greater attention on the latter. *IMF Technical Assistance Report | excerpt* ### 31. Being able to demonstrate some short-term wins will facilitate acceptance and ### Being able to demonstrate some short-term wins will facilitate acceptance and ### Change management: Summary findings and lessons learned - Short-term visible improvements in performance facilitate acceptance and institutionalization of reforms; management should plan and communicate these as evidence of progress. - Caution: ensure improvements will be sustained; declaring success too early may produce the opposite result. - Recognizing and rewarding people who made wins possible builds motivation, faith in the effort, attracts support, and mitigates cynicism. - Resistance to change is normal and frequent; organizations need to be proactive in managing it. - Key steps to address resistance: - Ensure sufficient time is spent on people issues. - Equip managers and supervisors with tools to discuss issues with staff and clients. - Ensure consistent messages for all stakeholders to avoid feeding doubt. - The SCS is implementing many good practices and can enhance change management by adopting additional ones summarized in Box 3. Box 3. Some Lessons Learned in Implementing a Reform Agenda (as presented) - Clarity of vision - Mandating a change and explaining why it is needed - Creating a champion/advocate for the change initiative - Not assuming people “know” what to do, how to do it, etc. - Extensive communication and consultation – clear, simple and sincere - Creating coalitions to get buy-in from leaders, staff and all stakeholders; stakeholder management plans to outline how to engage - Removing the obstacles to implementation - Systematically planning for and creating short-term wins - Having the changes embedded in the organizational culture - Leaders should be models of behavior - Leaders are not only at the highest organizational level – they exist throughout it - Clear roles and responsibilities - Clear expectations of what each unit and person is supposed to do (plans) - Continuous effort to measure progress/performance - Recognize and reward people on their progress - Hire, promote, and develop people who embrace the organization’s vision - Invest in learning and technology (Source. FAD mission) Recommendations (change management) - 3.1 Develop and implement an internal and external engagement strategy to address the anticipated resistance to the reform agenda - 3.2 Update the Communications Strategy to develop and implement comprehensive approaches for targeted audiences with tailored messaging - 3.3 Identify in the Communications Strategy which activities lend themselves to communication and information approaches, and which ones would benefit from consultation and feedback *IMF Technical Assistance Report | pages 20–21* --- ### Selected Issues in Customs Risk Management: findings - The SCS developed the customs clearance ICT system, Automated Customs Clearance System (ACCS), with Automated Risk Management System (ARMS), which processes selectivity for 100 percent of cargo imported to Ukraine. - Currently, 99 percent of goods declarations are filed electronically in ACCS. - Accordingly, 100 percent of cargo imported to Ukraine was processed by ARMS. - ARMS is an automated risk-based selectivity system and also randomly selects a no-risk cargo to documentary examination or physical inspection for verification purposes. - The SCS is improving targeting via targeting centers and the use of advance cargo information (ACI) in selectivity; it is learning from other countries, specifically Japan (Annex 1: use of ACI in risk management; Annex 2: center of excellence). - The SCS is centralizing ACCS: replacing decentralized ACCS (“Inspector”) with centralized ACCS (“Center”) to enable remote declaration processing for documentary verification or by the competence center for certain specified goods. A. Advance Cargo Information (ACI) - Japan Customs ACI requirements by mode of transport: - Maritime containers: Master Bill of Lading (B/L) and House B/L must be submitted loading by shipping companies and Non-Vessel Operating Common Carriers (NVOCC). - Air cargo and express cargo: Air Waybill (AWB) and House Manifest three hours before arrival. - Postal parcels: Electronic Advance Data (EAD) to be filed before arrival. - Japan Customs emphasizes timely and accurate data submission to avoid operational delays and potential physical inspections. - Japan Customs legal provision: can order ‘no-load’ to the means of transport destined to Japan; used as a last resort after consulting transport companies and NVOCC to submit revised ACI before deadlines. - In practice, high-risk cargo is generally allowed to discharge in Japan and moves to goods declaration where selectivity may choose it for physical inspection. - Postal parcels identified high risk are screened by X-ray scanners with image analysis supported by artificial intelligence (AI). - SCS identified similarities and common challenges with Japan’s practices: - Similarities: targeting methodology and IT system for targeting. - Common challenges: improving quality of ACI and effective use of AI for targeting. - Possible solution learned: obtaining accurate ACI in a timely manner may require 24/7 operations and raises operational cost. - Customs administrations interrupt cargo at multiple times based on ACI risk management: - (i) Before the ship departs from the exporting country, the importing country’s customs can order ‘no load’. - (ii) Before the ship discharges the cargo in the importing country, the ship cannot discharge the cargo without customs consent (stipulated in the IMO general declaration and cargo declaration). - (iii) When the cargo is discharged. - (iv) When the cargo is under the goods declaration clearance process. - Maritime transport operators usually prefer option (i) to avoid potential return costs. B. Centers of Excellence - Japan’s National Intelligence and Targeting Center (NITC): - Uses comprehensive data analysis and IT systems to evaluate cargo information. - Systematically classifies cargo into 10 clusters from low to high risk and determines control actions. - Focuses on continuous improvement and adaptation to emerging threats. - SCS current targeting capacities: - Operates units authorized to perform targeting centers that oversee collection and analysis of information, risk identification, coordination and control of customs procedures, and management of countermeasures. - Faces staffing challenges, exacerbated by the wartime situation. - Customs Competence Division (CCD) pilot: - CCD officers carry out specific customs formalities on declarations transferred by the customs clearance division via ARMS; results are returned via ARMS. - Pilot at ten western regional customs offices covering a few specific goods (used forklifts; other loaders; bulldozers; and buses designed to transport 10 or more people). - The SCS needs to further develop the CCD with appropriate staffing; the pilot currently has staffing constraints (footnote: Due to wartime constraints, only five employees are currently filling the roles originally intended for 20 in the staffing table for CCD). - CCD can reach full functionality with ACCS “Center”. Recommendations (customs risk management) - 4.1 Ensure operational procedures are established to deal with high-risk cargo identified through advance cargo information. - 4.2 Ensure the planned roll-out of ACCS “Center” according to schedule and further development of the unit for customs competencies with automated allocation of declarations. - 4.3 Ensure the automated system sends a clear message mentioning the reasons and other details for physical examinations. - 4.4 Consider the use of artificial intelligence and machine learning in strengthening selectivity-based targeting practices. *IMF Technical Assistance Report | pages 21–24* --- ### Information Technology Development and the Ministry of Finance Digital Transformation Program (Findings and Advice) Findings - Customs IT Strategy: approved and issued as a MoF Order No. 63 on September 2, 2024. - Formal title: “Long term national strategic plan for digital development, digital transformation and digitalization of the State Customs Service of Ukraine and its territorial units based on the EU eCustoms Multi Annual Strategic Plan (MASP-C)”. - The IT Strategy shall be refined by the end of 2025 in view of new trends in the EU IT systems and drafting of a new Customs Code of Ukraine. - SCS implementation and 2024 achievements: - Launch of ACCS “Center” with Border Check Point Log. - Customs decision system. - EU compatible transit system (New Computerized Transit System (NCTS) phase V). - Cyber help desk. - Automated release of goods. - Application of artificial intelligence (AI) to support risk analysis and targeting. - Automated exchange of pre-arrival goods information with certain countries. - Single Window currently covering permits/certificates of 12 ministries/agencies. - SCS obtained certificates for its IT systems from the State Service of Special Communications and Information Protection (SSSCIP). - IT landscape: Single Automated Information System of Customs Authorities (SAIS) indicating core components and linkages. - Centralization: decentralized ACCS “Inspector” gradually replaced with centralized ACCS “Center” to facilitate remote customs clearance and equalize workload. - IT development options: SCS considering in-house option with external assistance; stakeholders prefer outsourcing or hybrid. Historically, SCS IT systems were mostly developed in-house with a few outsourcing exceptions. - Ministry of Finance Digital Transformation Program (DTP) (with FAD support) aims to consolidate IT resources and services of STS and SCS via: - Consolidation of IT infrastructure and human resources under the ‘Open Public Finance’ (OPF) state-owned company using clouding technology. - Development of unified data warehouse aggregating information from STS and SCS, treasury, and other public finance departments to facilitate compliance risk management, performance management, fiscal analytics, business intelligence, and transparency. - Modernization of core business systems across fiscal institutions, primarily STS and SCS. - SCS supports DTP concept and shares information; interested in compatibility between Customs IT Strategy and DTP and clarity on who does what in IT design, development, and use. - Importance of proper administration of existing customs IT systems and potential need to amend the Customs Code of Ukraine. Advice - SAIS should capture the customs IT landscape and include revenue collection and revenue leakage-related IT systems, including: - Revenue accounting and reporting information. - SCS and STS data exchange platform. - Special regime management (customs warehousing, bonded manufacturer/inward processing, temporary admission). - Special purposed exemption functionality (conditional exemption, such as end-use) requiring inventory log, reconciliation, and tracing. - IT development options (in-house vs outsourcing): - Both options have advantages and disadvantages; the best option depends on local context. - Importance of basic documentation regardless of the option (technical requirements, terms of reference, technical specifications, acceptance test reports, etc.) for future assessment, maintenance, improvements, updating, and replacement. - In-house option may have more issues regarding documentation; mitigate by recruiting temporary IT experts for business analysis and documentation. - Outsourcing option’s outcomes depend on contract quality and alignment; contract design and management and conformity assessment capacity are needed in SCS. - DTP alignment and SCS role: - DTP should better align with the Customs IT Strategy and on-going SCS ICT projects (design, development, use). - DTP development should leverage existing SCS IT development in terms of timing, availability of resources, accessibility, and data (database query). - SCS should champion change management in developing and implementing the DTP and take joint ownership to safeguard satisfaction in IT design, development, and use. - Examples of SCS IT advancement: - 99 percent of goods declarations were submitted electronically. - 100 percent were screened by risk-based selectivity. Notes and references within the text - Footnote: The SCS uses periodic testing to test the alignment of risk indicators and parameters with reality. - Footnote: The IMO Compendium on Facilitation and Electronic Business. - Footnote: Due to wartime constraints, only five employees are currently filling the roles originally intended for 20 in the staffing table for CCD. - Footnote: Currently, technical requirements for the creation of a private cloud of the public finance management system are currently being developed; this cloud will allow to combination the resources of the existing data centers of the MoF, the STS, the SCS, and the State Treasury Service of Ukraine. - Footnote: For example, Andja, et al (2025). “”. IMF Technical Assistance Report (February 2025). - Footnote: Cybersecurity example referenced. *IMF Technical Assistance Report | pages 24–26* ### 5.1 Compile a list of revenue related IT systems, including customs and tax administration data ### 5.1 Compile a list of revenue related IT systems, including customs and tax administration data ### IT systems inventory and integration - Compile a list of revenue related IT systems, including customs and tax administration data exchange, special regimes, and special duty exemptions in a group. - Include this group in the grand design of SCS IT resources. ### IT development process and capacity building - Improve the IT development process by enhancing teamwork and project management expertise with possible internal and external support. - Support drafting the MoF DTP by sharing SCS’s information and lessons learned, ensuring alignment with SCS IT strategy, and ensuring DTP improves on-going SCS’s IT projects planning, development, and implementation. ### Data migration and centralization timing - Concern is expressed about the timing of data migration and timing of centralization (ACCS is in the middle of phased centralization). ### Progress on earlier recommendations - Seventeen of 22 recommendations of earlier FAD missions have been fully achieved. - Four recommendations are assessed partially achieved (initiatives have started in the SCS but their outcomes have not yet been produced). - One recommendation is assessed as not yet started (waiting for the supporting law’s legislative process). - The assessment of remaining past recommendations is indicated in Annex 4. ### Other development partners and cooperation themes - The EU4PFM provided support for the SCS since 2019, including currently for NRS implementation; focused areas include: - customs law revision for alignment with EU’s Common Customs Code, - IT development along MASP-C, - human resource management (developing competence model), - anti-corruption measures, - communication policy. - The current EU4PFM phase will end in 2026. - The World Customs Organization (WCO), using its Norwegian trust fund, has supported anti-corruption initiatives, notably an independent survey. - FAD will maintain communication with these development partners to seek maximum synergies in capacity development for Ukraine. - The SCS cooperates with other development partners including customs administrations of European countries on themes including: - experience exchange of institutional development, - organization of learning and training seminars (including development of anti-corruption measures), - support and development of IT capabilities, - providing the SCS with technical knowledge and equipment of customs control, - support for the fight against smuggling and violations of customs rules, - adaptation of customs legislation to EU standards and norms, - cooperation with business, - support in obtaining law enforcement status for the SCS. ### Future capacity development (CD) plan and HQ-led mission - FAD and the authorities agreed on future CD activity subject to internal clearance by each side and funding availability. - HQ-led mission: the timing, venue, and scope of the next FAD customs administration HQ-led CD mission will be determined considering the schedule of an appointment of new Head of Customs (expected in June 2025). ### Requested CD areas and timing notes - Strategic KPIs – support through desk assessment or video conference [timing in relation to next SCS NRS Steering Committee (expected in May 2025)] - Customs rotation policy [timing to be determined] - Internal control/ internal audit [timing to be determined] ### Annexes (availability note) - The following documents are available in the "Annexes [ENG]" folder (stored separately from this technical assistance report due to their file sizes): - Annex I. Advance cargo information processing Japan Customs’ practices and experience [ENG].pptx - Annex II. National Intelligence and Targeting Center (NITC) [ENG].pptx - Annex III. Advantages and Disadvantages of different options of IT development [ENG].docx - Annex IV. Implementation Status of Earlier Recommendations [ENG].docx - Note: This folder has limited access; for additional user access, contact FADR1AST@imf.org for assistance. *IMF Technical Assistance Report | 27–30* --- _Source: https://www.imf.org/-/media/files/publications/tar/2025/english/tarea2025079-source-pdf.pdf_