Cross-border regulatory landscape to change in days

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Martin Palmer, Hurricane’s Chief Content and Compliance Officer


Sweeping regulatory change is set to change the cross-border trade landscape forever, according to eCommerce technology specialist, Hurricane. The first shockwaves are just days away with end of the Brexit transition period and the expected full enforcement of the US STOP Act.

“If 2020 was the year of the Coronavirus pandemic, for those involved in cross-border eCommerce trade 2021 will be the year of large scale regulatory change,” Martin Palmer, chief content and compliance officer at Hurricane Commerce. “Brexit and the US STOP Act will make the provision of complete and valid customs clearance data essential.

“Ten weeks later will see the implementation of Import Control System 2 (ICS2) requiring postal operators to provide entry summary declarations on goods into or through EU customs territory.

“As if that was not enough to occupy the minds of everyone involved in cross-border trade, both the UK and EU are removing the exemption from VAT on low value items and there is the launch of the EU’s Import One-Stop Shop (IOSS).”

For postal operators, good planning and preparation in terms of data enhancement means avoiding the nightmare scenario of parcels being stuck at customs resulting in huge delays and additional costs including warehousing, storage and returns.

For merchants and marketplaces, meeting the higher threshold for parcel data will be essential if they want to ensure the frictionless passage of goods to their end customers. Failure to do so will inevitably result in lost customers and reputational damage.

Martin added: “We know from our work with customers across all of the different segments of cross-border trade that some have invested the time and resource to get prepared for January 1st.

“They have tackled head-on the knowledge that the compliance landscape will look very different in just a few days’ time to what they have been used to. Combined, this plethora of regulations – all impacting in the first half of 2021 – will test postal operators, carriers, merchants, marketplaces and platforms to the absolute limit.

“The final quarter of 2020 has seen increased activity among those whose businesses depend on seamless cross-border trade as the realisation dawned that January 1st really was going to mean a different way of doing things.”

Below is a recap of the big changes coming in 2021 and their timescales:

January 1 – Brexit: complete and valid data (including HS6 codes, product descriptions and correct values) will be required from the UK into the EU and vice versa.

January 1 – UK Import VAT Threshold: New regulations will make an overseas supplier who sends parcels containing goods valued at £135 or less to the UK responsible for paying any import VAT that is due.

January 1 – US STOP Act: the USPS has made it plain that from this date parcels will be refused entry into the United States and returned to origin if they do not meet the higher threshold level for advance electronic data (AED).

Martha Johnson, a spokesperson for the USPS, said: “Postal shipments containing goods not accompanied by AED will be considered inadmissible.”

March 15 – ICS2: Postal operators will no longer be exempt from having to make entry summary declarations into the Import Control System before moving goods into or through EU customs territory.

Under ICS2, shipments without the right data will no longer be allowed with the likelihood of severe delays in customs and increased costs.

July – EU VAT Exemption Removal: Abolition of exemption from VAT on low value items under 22. The changes mean that EU and non-EU sellers will charge VAT at the point of sale for consignments of 150 or below.

July – Import One-Stop Shop (IOSS): Modernising of VAT for cross-border eCommerce via the Import One Stop Shop (IOSS) making the retailer, web shop or marketplace liable for the declaration and payment of VAT to the country of destination.