Authored by: Vijendra Kargudri

The Deal

The year 2020 ended on a positive note for those who voted for BREXIT. Before the cessation of transition period for the UK’s withdrawal from the EU on December 31, 2020, the Brexit Deal was signed successfully. With this, the UK formally has transitioned into a third country. The EU laws no longer applies to UK and for the purposes of customs, this also means that the UK will be treated as any other non-EU country from January 01, 2021. In other words, customs procedures & formalities apply to all the trade activities between the UK and the EU.

In accordance to the agreed Protocol on Ireland & Northern Ireland, the only exception – EU Customs Rules & Procedures will continue to apply to goods entering/leaving Northern Ireland.

A question that crosses most business owners’ mind is – How does this deal impact my business?

The Impact

The Brexit Deal will impact your business, if you:

• sell goods or supplies services to the UK
• buy goods or receives services from the UK
• move goods through the UK
• use UK materials & goods to trade under preferential schemes with EU partner countries.

Double Whammy

Additionally, a new strain of COVID-19 emerging out of UK has again forced the entire EU into lockdown. For businesses, the Brexit deal & lockdown have coincided at an inappropriate time.

Owing to this situation, over the last couple of weeks tons of disruption have been observed by businesses. The changes in Rules of Origin and VAT  are affecting businesses, as they dictate whether a good qualifies for tariff-free entry. The hit from the new customs processes have amplified due to fewer transportation options. Manufacturing in EU has drastically fallen due to the reinforced lockdown. Conflicting trade & business environment will likely add to rise in unemployment. Rubbing salt into the wound, the lockdown & travel ban, has impacted services. The long-term relationship between the UK & EU will be laced with uncertainty and possible instability. Regional trade disruption will slow down the recovery process for all the businesses.

What Businesses Need?

In the realm of tax & customs businesses will need to:

• file customs declaration to import/export any goods to/from Great Britain (the UK excluding Northern Ireland) or when moving goods through Great Britain
• provide security & safety data, in addition to the customs declaration
• have a special license to import/export certain goods (e.g. certain hazardous chemicals, waste, GMOs)
• fulfil additional formalities to import/export excise goods (viz., alcohol, tobacco, or fuel) to/from Great Britain
• adhere to different VAT rules & procedures while transacting with Great Britain (than for transactions within the EU and with Northern Ireland).

Guidelines

To help businesses post-Brexit, the EU Commission has published detailed guidelines on a wide range of specific topics:

• Excise duties
• Value added tax (VAT) – Goods
• Value added tax (VAT) – Services
• Customs including preferential origin
• Annex – Business Export Scenarios
• Use of GB and XI geo-nomenclature codes

Readiness Notices

The following are readiness notices post-Brexit:

• Communication “Getting ready for changes”
• SECTORAL GUIDANCE NOTICES
• ‘BREXIT Readiness Checklist’ – for companies doing business with the UK
• Dual use export controls
• Excise duties
• Export/import of hazardous chemicals (“prior informed consent”)
• Tariff rate quotas

How can Krypt help?

Krypt as an SAP preferred partner, can help global businesses mitigate the inevitable post-Brexit implications, in form of customs procedures & regulatory checks through accurate customs filing, mitigating ensuing sanctions, tariffs, hefty penalties, taxes, duties, etc.

If you wish to know about our products/services, please request a DEMO or do Contact Us.

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